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Judgment in Managerial Decision Making

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Judgment in Managerial Decision Making


15 min read
10 take-aways
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What's inside?

You’re paid to make sound, smart decisions. Whoops! Yours are biased, illogical and emotional. Welcome to the human race.

Editorial Rating



  • Innovative
  • Applicable


Consider this scenario: Two groups are playing basketball. One group wears black, the other white. Researchers film each group separately passing a basketball back and forth, and superimpose the two films on a television monitor. They ask research participants to add up the number of passes the players make. Because the separate images of basketballs flying here and there overlap, the counters must pay close attention. Under such circumstances, how many of the observers would fail to see a man dressed as a gorilla stroll through the basketball court while dramatically thumping his chest? Believe it or not, eight out of ten. Scientists call this “inattentional blindness.” Distinguished Harvard professor Max H. Bazerman refers to such tests as he explains the concept of “bounded awareness.” When people fail to notice information, their lack of perception may preclude them from making sound decisions. Bazerman fills his book with learned insights, fascinating research and intriguing tests. He exposes the mental biases, skewed logic, false premises and misleading emotions that interfere with good decision making. getAbstract recommends this tantalizing book to those who want to understand the nuts-and-bolts of the thinking process, and to enhance their decision-making prowess.


Decision-Making Bias

When Enron went bankrupt in 2001, U.S. federal courts found its auditors, Arthur Andersen, guilty of obstruction of justice. Shortly thereafter, Andersen closed its doors. Andersen’s auditors probably did not willfully misrepresent Enron’s books. Most likely, they were guilty of failed decision making due to a phenomenon called “self-serving bias,” in which individuals are likely to err when their judgments relate to self-interest. Indeed, numerous “cognitive biases” profoundly color people’s viewpoints. Most people try to make rational decisions – or at least they say they do. If you have to make a major managerial decision, having a clear, distinct goal in mind will help. Ironically, decision making sometimes lacks this vital element. Rational decision making follows a formal process referred to as “System 2” thinking, which works like this:

  • “Define the problem” – Don’t mistake the symptoms for the problem.
  • “Identify the criteria” – Pinpoint what is relevant.
  • “Weight the criteria” – Decipher what is important and what is less so.
  • “Generate alternatives” – Come up with possibilities without...

About the Author

Max H. Bazerman is the Straus Professor at the Harvard Business School, and author of Negotiating Rationally and Conflicts of Interest.

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