Emotions and Risky Decisions

DECISION MAKING 3

Emotionsand Risky Decisions

Emotionsand Risky Decisions

Makingdecision is undoubtedly the most important task of a business managerand certainly the most difficult one. Conventional knowledge dictatesthat business managers should follow certain steps when solvingcomplex problem (Howard, 2003). Elements of analysis of decisionchoices and alternatives, as well as objectives that guide decisionmaking are usually recommended to prevent the manager from beingoverwhelmed by the underlying problems (Bacon, 2015). Nonetheless, itis important to note that, in most cases businesses face differentchallenges that call for tailor made solutions to address the issuesin the a specific setting (Bacon, 2015). This means that decisionmaking in public scenario is different from private settings.Different types of information of varying quality are also used indifferent setting. In every setting choices have to be made after theanalysis of risk inherent in making such choices (Howard, 2003). Mostscholars recommend that decision makers not rely on emotions inmaking judgments, especially in risky decisions (Lerneretal.2014).It is true that many managers are afraid of unwanted results

However,recent studies have established that managers need emotions in orderto be in a position to make a rational judgment whether a certaindecision and related risks are morally acceptable (Bacon, 2015). Thismeans that in our personal goals and in making business decision,especially in privately owned firm, incorporating emotions in thedecision process is paramount. Even though, emotional are irrationaland subjective they should be an important part of our decisionmaking process because they show us our preferences. The key notionis that emotional and rationality are not mutually exclusive, and tobe pragmatically rational in business we need to have emotions(Bacon, 2015). This is more so significant in my personal goalbecause it helps see an alternative perspective and hence a betterand more refined judgment. It is crucial that decision makers combineinformation about probability with the underlying information aboutinterest and desires.

References

Bacon,F. (2015). Toolsfor Decision Analysis: Analysis of Risky Decisions.Retrieved from:http://home.ubalt.edu/ntsbarsh/business-stat/opre/partIX.htm

Howard,N. (2003). The Role of Emotions in Multi-OrganizationalDecision-Making. TheJournal of the Operational Research Society, Vol. 44, No. 6,

Lerner,J.S., Ye Li., Piercarlo Valdesolo., Kassam, K. (2014). Emotions andDecision Making, AnnualReview of Psychology