The illusion of smart decision making: the past is not prologue

Abstract

Purpose

The purpose of this paper is to study the role of misleading experiences, and how decision‐makers' experience can sometimes lead them to think they are right when they are really wrong.

Design/methodology/approach

Literature was reviewed in neuroscience, cognitive psychology and decision theory on how people make decisions and what decision‐making biases influence thinking. A total of 83 strategic decisions were studied to understand what potential biases existed and how those biases affected the quality of decision making.

Findings

Decision making is more often an emotional than rational process, in large part because of how our brains are wired. This process works most of the time, but not always. As a result, it is critical to identify those red flag conditions where our decisions are most vulnerable to error, with misleading experiences being one of the most central of these red flags. The paper discusses how to identify whether misleading experiences are potentially dangerous.

Research limitations/implications

While the paper relies on multiple literatures and the authors' own original empirical work, a topic as complex as how our brains make decisions clearly cannot lead to definitive conclusions. Future research might investigate more of the contingency situations where misleading experiences might be dangerous.

Originality/value

This study is the first that highlights how central misleading experiences can be to mistaken decision making. It is based on significant original research, and has implications that are clearly practical for business leaders.

Citation

Finkelstein, S., Whitehead, J. and Campbell, A. (2009), "The illusion of smart decision making: the past is not prologue", Journal of Business Strategy, Vol. 30 No. 6, pp. 36-43. https://doi.org/10.1108/02756660911003103