STRATEGIC MINDS, BIASED CHOICES: COGNITIVE REFLECTION AND RESOURCE ALLOCATION DECISIONS

Abstract

The resource allocation decisions are the foundation of corporate strategies and are made by individuals susceptible to cognitive biases. Given that execution is potentially where strategic management fails, the research aims to investigate the relationship between the degree of cognitive reflection, indicative of a predisposition to employ heuristics, and decision biases under conditions of uncertainty in resource allocation. Employing an ex-post facto methodology, an online survey was conducted using convenience sampling, characterized by its non-probabilistic and unrestricted nature. The research focused on evaluating resource allocation decisions within a case featuring two distinct commitment levels. The individual's cognitive reflection level emerges as a significant factor contributing to decision biases, while the magnitude of resource commitment influences cognitive dedication and the decision-making process. Consequently, there exists a discernible risk of resource allocation decisions deviating from the formal strategy, particularly when decision-makers exhibit lower cognitive reflection levels or demonstrate a diminished commitment of resources. This study sheds light on the intricate dynamics of resource allocation shaping strategy and emphasizes the importance of cognitive considerations in fostering strategic alignment.

 Keywords: Biases, Cognitive Reflection, Decision, Resource allocation, Strategy