Question

Do managers as well as people, in general, make "rational" decisions or do we really just make "emotional" decisions that we "pretend" are "reational".

Answer 1

Despite the growing dependance on "big data" to find out every decision, it is quite clear to everybody who are even a liitle self aware that human being are not capable of constantly making rational decision. Managers or people in general neither have the time nor the capacity to make a calculative decisions about everything keeping in mind the statistical probabilities and potential riska for every choice that come their way.

Even if people were able to live life with such detailed calculations always running in there mind, it would be a great disadvantage because we live in a world which is full of uncertainity, neat logic simply cannot take us through everything. It is a well established fact that calculative decision cannot immune us against irrationality or prejudice, but even if it was able create decision making model which is based on rationality keeping in our past experiences, this cannot provide us with a fullproof guide to the uncertainities of future.

In almost every situation, instead of relying on big data, complex statistics to make choices, human being in general make decsions based on their instincts. Often these instincts rely on mental shortcuts to make a decision, where in the focus is on one key factor rather than taking into account every tiny detail to reach to a informed decision but people often confuse them with using their rationality for making decisions.