Overcoming decision flaws from framing

Journal of Indian Business Research - 2010
V.N.Bhattacharya1
1Bangalore, India

Tóm tắt

PurposeThe purpose of this paper is to examine the harmful effects of framing and suggests ways to improve decisions.Design/methodology/approachThe paper uses a number of real life examples of catastrophic failures of decision making by obviously intelligent and experienced people and compares them with less dramatic but common errors of judgement most people make. The way a problem is presented often determines the choices we make and that we are inconsistent. It explains this phenomenon using Kahneman and Tversky's Nobel Prize winning work in behavioural economics.FindingsAll human beings are susceptible to decision flaws from framing. It is possible to recognise signs of the way we may be framing a decision situation and adopt strategies to sidestep the hazards of wrong choice.Practical implicationsBy adopting methods suggested in this paper, individuals can make better decisions in everyday life. Managers can make appropriate choices rather than take too little risk or too much. Organisations can train senior managers in decision strategies and adopt group processes that reduce the risk of flawed decisions.Originality/valueThe paper provides insight into errors all human beings are prone to, no matter how intelligent or experienced they are. Using everyday examples Indian managers are familiar with, the paper highlights the need to improve thinking.

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Tài liệu tham khảo

Bazerman, M.H. (1986), Judgement in Managerial Decision Making, Wiley, New York, NY, pp. 151‐158, pp. 5‐6 “bounded rationality” (Simon, 1957; March and Simon, 1958) refers.

Outlookindia.com (2009), “Hoax bomb call at Delhi airport; man held”, Outlookindia.com, 25 October, available at: http://news.outlookindia.com/item.aspx?668349 (accessed 9 January 2010).

Raju, R. (2009), Letter dated 7 January 2009 to Board of Directors of Satyam Computer Services.

Tversky, A. and Kahneman, D. (1986), “Rational choice and framing of decisions”, The Journal of Business, Vol. 59 No. 4, pp. S251‐78, Part 2, the experiment of McNeil and others refers.

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Journal of Indian Business Research

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