Learning from Fiasco: What Causes Decision Error and how to Avoid it

Abstract

All decisions involving uncertainty run the risk of failure. Whilst chance almost invariably influences outcomes, the authors suggest that many costly decision errors made by organisations could be avoided if decision-makers understood more about how and why their ability to exercise rational judgement can become undermined. This paper explains the main non-rational forces likely to impinge upon decision-making, with reference to extant theory and research. The authors discuss how, contrary to terminating faltering projects, organisations can end up investing more resources in them – a phenomenon known as escalation of commitment. The authors then consider how organisations can improve decision-making. Controversially, it is suggested that risk-management techniques may not always reduce danger but actually add to it.

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