Running head: INDIVIDUAL DECISIONS LEADS TO IRRATIONAL DECISIONS 1

Individual Decisions Leads to Irrational Managerial Decision Making

Student’s Name

Institutional Affiliation

 
Running head: INDIVIDUAL DECISIONS LEADS TO IRRATIONAL DECISIONS 2

Proposition: Individual decisions leads to irrational managerial decision making

Introduction

Decisions are made every day within a business environment. Whether it is amongst

leaders, management or employees; the difference is though, if the decision is made as an

individual or as a group. Before deciding which style (Individual vs. Group) is the right one for

each situation, one has to deliberate the pros and cons, the decision types and mechanisms, and

also be aware of the numerous factors that influence decisions in order to create effective and

beneficial solutions for a company. Individual decisions tend to lean more on subjectivity and

intuition rather than objectivity, lucidity and analysis as is the case with group decisions.

Furthermore, rational decisions do follow multiple steps to choose amongst various alternatives,

which entails lengthy considerations that groups can execute seamlessly (Cabantous, & Gond,

2011: 573-586).

Consequently, the present argumentative essay seeks to explore the irrationality

associated with individual decisions. Specifically, the essay seeks to explore the role and benefits

of intuition in individual decisions. Irrational decisions by individuals stems from the lack of

sufficient information to make a deduction with regards to a given set of choices. An individual

may choose to skip some of the steps involved in rational decision making to make decisions

promptly. Subsequently, the omissions of essential steps in rational decision making leaves an

individual to call upon their intuition to aid the process (Kaufmann, Meschnig, & Reimann,

2014:104-112). Intuition leads to different choices which contradict the rational criteria of

decision making which ought to result in similar choices. Ultimately, the individual ends up

basing their decisions on instinctive reflexes rather than intention.

Running head: INDIVIDUAL DECISIONS LEADS TO IRRATIONAL DECISIONS 3

Analysis

Sequentially, irrationality in individual decisions may arise due to evolutionary pressure

to react to changes in their environment. In this regard, exploratory behavior can help individuals

to respond accordingly; however, the resulting choices differ hence failing the rationality test.

During managerial decision making, irrationality manifests from the complexity involved when

trying to comprehend all options of a problem along with the rational preconceptions that cloud

making a decision. Ultimately, individuals end up exchanging some instant efficiency for the

capability to acclimatize. To substantiate these arguments, it is necessary to explore the

biological context of decision making, where neurons in the brain compete while effecting

distinct types of behavior (Damasio, & Damasio, 2012). Initially, the cognitive system shifts

from one attitude to another randomly. Sequentially, the mind makes the right decision by

learning to adopt to the most appropriate behavior with regards to the dynamics of the

environment. However, leaning does not eliminate the inherently random manifestation of the

process.

Irrationality is constrained by the nature of each individual’s exploratory behavior, which

arises from the inherently random constituent of decision making. Therefore, the cognitive biases

that originate from the human cortex, reinforces the occasional irrational reflexes that manifest

during the competing phenomenon of the neurons prior to making a decision. Accordingly, the

supposed irrationality in individual decisions culminates as the price one has to pay for the

capacity to decide based on a need basis. The underlying principle underpins that it is better to

resolve for a bad decision rather than no decision whatsoever. Nonetheless, the exploratory

capability essential allows individuals to adapt accordingly during decision making and

sometimes the irrational decision may prove to be the right decision in a given scenario.
Running head: INDIVIDUAL DECISIONS LEADS TO IRRATIONAL DECISIONS 4

Additionally, individual decisions can be irrational as a result of the herding effect, which

manifests from the assumption that the majority ought to be right regarding a certain scenario.

Therefore, an individual may opt for the majority opinion during managerial decision making. In

this regard the individual has substantial knowledge regarding the outcome of the decision at

hand due to the pre-existing evidence from the crowd. Such scenarios make managerial decision

making a rather swift endeavor as there exist no need to consult or engage in detailed analysis.

Individual decisions may lead to irrational managerial decision making due to the

unstable nature of human preferences. Besides, individuals lack an outright cognitive mechanism

to appropriately assess risks and reward (Halpern, & Stern, 2018). Therefore, individual

decisions can result in irrational managerial decisions due to their apparent deficiencies with

regards to calculating the upside gains and downside costs. Ultimately the underlying reason for

irrationality comes down to the way different people manage their emotions. Emotions represent

a significant determinant of the sort of value one attaches to any given scenario (Simon, 1987:

57-64). Thus, instances of irrationality arises during managerial decision making based on the

rewards and risk one associates to a decision. Specifically, an individual may make a rational

decision in a scenario where they stand to gain more, while opt for an irrational decision when

they do nor value a given scenario.

Contrastingly, individual decisions can influence rational managerial decision making

when presented sufficient information regarding a subject. In such a scenario the individual has

the ability to perform proper analysis and evaluate the viability of competing alternatives.

However, the complexity of the decision may limit the rationality of the final choice.

Conventionally, irrational decision making manifests from the application of probabilistic

models rather than assuming that an individual will end up with the most rational choice. Also,
Running head: INDIVIDUAL DECISIONS LEADS TO IRRATIONAL DECISIONS 5

the willingness of individuals to decide on the basis of the most acceptable option undermines

the rationality of managerial decisions (Simon, 1987: 57-64). Some decisions may be highly

difficulty to evaluate with regards to the costs and benefits that ay accrue with regards to a

selection criteria.

Additionally, rationale in individual decisions represent a lengthy process because of the

need to conform to a certain criteria to explore choices. Therefore, individual decisions may lead

to irrationality as people tend to seek a quicker approach to get to the intended decision.

Irrationality does not necessitate any criteria just general understanding of a certain field. In most

cases irrational decisions lead to losses because they mirror aspects of naivety. Managerial

decisions ought not to rely on individual decisions due to the apparent downfalls involved

(Furnham, 2012). Thus, individual decisions ought to conform to a specific criteria, which

explores all the alternative choices that guarantee the best outcomes. Besides, individual

decisions that lead to irrational managerial decision making may prove costly later on upon

realizing an ostensible mistake.

Moreover, individual decisions do not necessarily lead to irrational decision making.

When individuals develop a clear criteria to make decisions, they end up identifying enough

alternatives that are better than an irrational choice. Having a well-established decision criteria

leads individuals to avoiding making outright mistakes during managerial decision making.

However, the rational approach to decision making embraces several unrealistic assumptions.

The rational approach hold the assumption that individuals conform to a general understanding

of the type of decision required and the available choices in any given scenario. For instance,

Simon, (1987) observes that the rational model of decision making helps individuals to make the
Running head: INDIVIDUAL DECISIONS LEADS TO IRRATIONAL DECISIONS 6

right managerial choices, it does not represent the frequently used approach to making decisions

in an organization.

Conclusion

Ultimately the present argumentative essay explores how individual decisions lead to

irrational managerial decision making and accounts for the various ways throu8gh which

irrationality manifests. The essay points out the influence of cognitive biases and exploratory

capability in influencing irrational choices amongst individuals. Also, according to the

arguments presents on this essay, intuition plays a part in inducing irrational choices in

individuals, which later manifests in managerial decision making. The need to adapt an

individual’s decisions to the context of the environment leads to irrational managerial decision

making. This adaptation alters the random nature of neuron activity within the brain which

makes the cognitive system learn how to respond to the change in recognizable environment.

In conclusion, irrational decision making can be detrimental to managerial decision

making due to the lack of proper evaluation of a scenario to identify the most suitable alternative

choices to substantiate the most appropriate decision. Contrastingly, individual decisions do not

necessarily lead to irrational decision making a rational model is employed. Individual decision

making can lead to rational choices when the person making a decisions follows a clear criteria

involving the assessment of alternatives to select the most appropriate.

Running head: INDIVIDUAL DECISIONS LEADS TO IRRATIONAL DECISIONS 7

References

Cabantous, L., & Gond, J. P. (2011). Rational decision making as performative praxis:

Explaining rationality's Éternel Retour. Organization science, 22(3), 573-586.

Damasio, A. R., & Damasio, H. (Eds.). (2012). Neurobiology of decision-making. Springer

Science & Business Media.

Furnham, A. (2012). The psychology of behaviour at work: The individual in the organization.

Psychology Press.

Halpern, J. J., & Stern, R. C. (Eds.). (2018). Debating rationality: Nonrational aspects of

organizational decision making. Cornell University Press.

Kaufmann, L., Meschnig, G., & Reimann, F. (2014). Rational and intuitive decision-making in

sourcing teams: Effects on decision outcomes. Journal of Purchasing and Supply

Management, 20(2), 104-112.

Simon, H. A. (1987). Making management decisions: The role of intuition and emotion.

Academy of Management Perspectives, 1(1), 57-64.