A Study on Overcoming Cognitive Biases in Leadership Decision-Making

Abstract

This study attempts to recognize, investigate, and showcase a research paradigm of cognitive biases impacting leadership decision-making. A questionnaire was systematically framed and distributed among leaders of the Indian corporate sector, and 400 proper responses were accepted at the end. The study utilizes structure equation modelling and partial-least square method (SEM-PLS) to examine the impact of cognitive biases on the leadership decision-making process. It finally suggests various ways to overcome the most prominent biases found in the study. Overconfidence and optimism bias have the largest influence on the leadership decisions of corporate leaders followed by representativeness and hindsight bias. Uniqueness and availability bias had the least impact on the participants and their decisions. The study will contribute to academicians, scholars, analysts, practitioners, policymakers, and firms to make feasible leadership decisions for the cognitive biases considered in it. The impact of the factors on leaders' decision-making process will vary with region and sample size.