A Causal Look at the Occurrence of Biases in Strategic Change
InEberlein, R.L.; Diker, V.G. (ed.), Proceedings of the 21st International System Dynamics Conference
21st International System Dynamics Conference
Article in monograph or in proceedings
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Methodologie van de Managementwetenschappen - t/m 2007
Methodenleer - t/m 2007
Eberlein, R.L.; Diker, V.G. (ed.), Proceedings of the 21st International System Dynamics Conference
Information is very important for organizations in deciding whether to change their strategy. Hence, information processing is a fundamental task, which should be done effectively. However, the vast amount of available information coupled with the limited cognitive capabilities make such activities less effective than desired. To reduce mental effort required to collect and analyze information, organizations employ various biases and heuristics. Researchers, both in psychology and strategic decision-making, point out the persistence of biases. Such literature streams, however, mostly pay attention to the occurrence of one bias at a time even though some biases are dependent on each other and occur simultaneously. The proposition of this paper is that the use of biases and heuristics reinforce the factors leading to their use. The importance of this proposition is shown with a system dynamics model by demonstrating that the isolated effects of two biases generate different results than their combined effect.
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