Cognitive Biases in Decision Making in Post-Bureaucratic Organizations

Abstract

In today's post-bureaucratic organization, where decision-making is decentralized, most managers are confronted with highly complex situations where time-constraint and availability of information makes the decision-making process essential. Studies show that a great amount of decisions are not taken after a rational decision-making process but rather rely on instinct, emotion or quickly processed information. After briefly describing the journey of thoughts from Rational Choice Theory to the emergence of Behavioral Economics, this chapter will elaborate on the mechanisms that are at play in decision-making in an attempt to understand the root causes of cognitive biases, using the theory of Kahneman's (2011) System 1 and System 2. It will discuss the linkage between the complexity of decision-making and post-bureaucratic organization.

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