Challenging Assumptions in Decision-Making

The book aims at discussing the compelling drama going on in our minds with two different characters by including twist, drama and tensions which have crucial impacts on the thinking and decision-making skill in our lives. These characters are one the impulsive, intuitive system and automatic and other is calculating system. Our thought and actions depend on the two system which in tur control our brain at different times. The thinking style and dram as well as interaction with others plays a crucial role to determine what we are thinking actually, in our mind, making judgment over the thinking, developing decision and acting. Our mind is lazy, and it leads to failure and making errors, but this thinking procedure in our brain helps to work efficiently by acting and developing appropriate decision. As we have the tendency to use heuristics as a mental shortcut, that allows us to simplify the decision-making process and use less energy to quickly jump to conclusions, we sometime deviate from rational decision in our lives. The study focuses on the discussion of negative consequences that the heuristics resulted, and the aim of the report is to evaluate how the concept in the book can be applied in the business so that it would change the outcome of the business successfully.

The individuals are concerned about the thinking and evaluation process in their brain as people sometime leads to occur different errors in decision making and that has serious consequences in future, for which people try to imporve their critical thinking process in order to make better outcomes. For example, people sometime consider the serious problems as a minor or casual on and thy think that the problem can be solved by itself and here lack of seriousness and lack of thinking process leads the people towards failure. The issue of bat and ball problem demonstrates our mental laziness which is known as law of least effort, where the people are not concerned about thinking process and they do not contribute with their full potential in the decision-making process that would raise the risk in the business outcomes. The research shows that, focused aim and self-control mechanism are helpful for better outcome by ensuring higher intelligence in thinking and problem-solving skill, where it affects our thoughts and behaviour dramatically. Our minds need to mobilise the attention through using more energy and entering a state of cognitive strain, so that people can gain energy to complete the task and utilise different thinking and problem-solving skill in their brain to achieve ultimate and rational outcome. Hereby, the book is beneficial for the people to notice the importance of frequently challenging situation and questioning their own assumption in order to maximise the mental potential and develop rational decision.

The group of economists argued that, as per the utility theory, while making decision, people focuses on the rational facts and choose the most utility so that rational decisions can be made. However, Kahneman suggested that, we are instead often swayed by emotional factors and many others and Kahneman’s prospect theory challenges utility theory by showing that, when we make choices, we do not always act in the most rational way. The book in this regard helps the people to minimise biasness while making decision, rather it is necessary to understand rational outcomes and influence our choices of creating ultimate decision. The book herby, enables to improve the quality of our decision by consciously overriding the heuristics, in which we utilise rational outcomes automatically for making ultimate decision. The knowledge of the book is also beneficial for the executives in the business where the people in the organisations focuses on making rational decision, so that the decision would be advantageous for all the representatives and stakeholders of the companies.

Halo effect is the tendency of creating impression in one area to influence another area, and for example, halo effect influences the decision of the human resource managers, where the presentation of the candidate influences the manager to select him or her for the employment in their organisation. As a human resource manager, when facing the task of recruitment and selection of the best candidate for a certain role in the company, the manager may want to reflect on the misleading factors that can stop him or her from choosing wisely such us on the basis of intuitive judgement. The goal should be to gather as much information as possible about the person’s management skills, for example, instead of going by the ‘Halo effect’ from a single good presentation delivered from the candidate, it is necessary to select the candidate by making effective decision on the basis of the skill and knowledge that the candidate has. The human resource manager should focus on the data of the candidates, past performance and skill rather than on the basis of the impressive behaviour in the interview.

People sometime makes mistake due to optimistic over confidence, where Kahneman’s studies revealed that, highly optimistic leaders took excessive risks and exaggerate their ability to forecast the future. This often happens due to time pressure and constraints, that push the leaders to take right decisions very quickly, without considering rational outcomes as well as whether the competitors are already using the same decision (neglecting competition) and this leads to failure in the decision-making practice at the organisation. As peer the consumer point of view, the organisations focus on marketing through advertisement, so that people can watch the advertisement as it helps to raise concern about the fact that repetition induces cognitive ease and a comforting feeling of familiarity, which in turn leads the consumers to make effective purchase decision. Anchoring can be a powerful tool for the strategists, where in negotiations, naming a high sale price for a business can help to secure an attractive outcome for the seller, as the buyer’s offer will be anchored around that figure. Anchoring works well in advertising too, in which most of the retail-fund managers advertise their funds on the basis of their past performance and this in turn influence the customer’s mind to make rational purchase decision. The book hereby describes the consequences of lazy mind and it also influences the behaviour of the people in making decision by being attentive. We have learnt that, fragmenting problems and keeping judgements independent are helpful to evaluate the past errors so that people can further use the rational outcomes for making effective decision by utilising thinking process in the brain.