STRATEGIC DECISION-MAKING: A REVIEW OF COGNITIVE BIASES IN MANAGEMENT

Abstract

Strategic decision-making is a critical aspect of management, involving complex judgments that significantly influence organizational outcomes. However, decision-makers often face cognitive biases that can distort rational thinking and affect the quality of these decisions. This review explores the intersection of cognitive biases and strategic decision-making in management, providing an in-depth analysis of the most prevalent biases such as confirmation bias, overconfidence, anchoring, and availability heuristic. These biases can lead to suboptimal decisions by skewing perception, judgment, and interpretation of information. By examining various case studies and empirical research, this review highlights how cognitive biases influence decision-making processes in areas like risk assessment, resource allocation, and competitive strategy. Additionally, it discusses mitigation strategies, including decision-making frameworks, training, and organizational structures designed to minimize the impact of biases. The review emphasizes the importance of recognizing and addressing cognitive biases to improve the quality of strategic decisions and achieve better business outcomes.