IDEAS home Printed from https://ideas.repec.org/a/spr/busres/v12y2019i1d10.1007_s40685-019-0096-4.html
   My bibliography  Save this article

When rational decision-making becomes irrational: a critical assessment and re-conceptualization of intuition effectiveness

Author

Listed:
  • Christian Julmi

    (FernUniversität in Hagen)

Abstract

Intuition can lead to more effective decision-making than analysis under certain conditions. This assumption can be regarded as common sense. However, dominant research streams on intuition effectiveness in decision-making conceptualize intuition inadequately, because intuition is considered either detrimental or as a form of analysis. Current findings in general intuition research show that intuition is a holistic form of information processing that is distinct from analysis and can be superior in some cases. To reconcile this mismatch, this article first critically assesses dominant conceptions on intuition effectiveness and then offers a re-conceptualization that builds on current findings of general intuition research. Basically, the article suggests the structuredness of the decision problem as the main criterion for intuition effectiveness, and proposes organization information processing theory to establish this link conceptually. It is not the uncertainty but the equivocality of decision problems that call for an intuitive approach. The article conclusively derives implications for further research and discusses potential restrictions and constraints.

Suggested Citation

  • Christian Julmi, 2019. "When rational decision-making becomes irrational: a critical assessment and re-conceptualization of intuition effectiveness," Business Research, Springer;German Academic Association for Business Research, vol. 12(1), pages 291-314, April.
    • Handle: RePEc:spr:busres:v:12:y:2019:i:1:d:10.1007_s40685-019-0096-4
    DOI: 10.1007/s40685-019-0096-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40685-019-0096-4
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1007/s40685-019-0096-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nils Plambeck & K. Weber, 2009. "CEO Ambivalence and Responses to Strategic Issues," Post-Print hal-00464009, HAL.
    2. Jarrahi, Mohammad Hossein, 2018. "Artificial intelligence and the future of work: Human-AI symbiosis in organizational decision making," Business Horizons, Elsevier, vol. 61(4), pages 577-586.
    3. Winkler, Jens & Kuklinski, Christian Paul Jian-Wei & Moser, Roger, 2015. "Decision making in emerging markets: The Delphi approach's contribution to coping with uncertainty and equivocality," Journal of Business Research, Elsevier, vol. 68(5), pages 1118-1126.
    4. Blake E. Ashforth & Kristie M. Rogers & Michael G. Pratt & Camille Pradies, 2014. "Ambivalence in Organizations: A Multilevel Approach," Organization Science, INFORMS, vol. 25(5), pages 1453-1478, October.
    5. Weber,Elke U. & Baron,Jonathan & Loomes,Graham (ed.), 2001. "Conflict and Tradeoffs in Decision Making," Cambridge Books, Cambridge University Press, number 9780521772389.
    6. Becker, Markus C. & Knudsen, Thorbjorn, 2005. "The role of routines in reducing pervasive uncertainty," Journal of Business Research, Elsevier, vol. 58(6), pages 746-757, June.
    7. Foss,Nicolai J. & Klein,Peter G., 2012. "Organizing Entrepreneurial Judgment," Cambridge Books, Cambridge University Press, number 9780521697262.
    8. Richard L. Daft & Robert H. Lengel, 1986. "Organizational Information Requirements, Media Richness and Structural Design," Management Science, INFORMS, vol. 32(5), pages 554-571, May.
    9. Frantz, Roger, 2003. "Herbert Simon. Artificial intelligence as a framework for understanding intuition," Journal of Economic Psychology, Elsevier, vol. 24(2), pages 265-277, April.
    10. Alós-Ferrer, Carlos & Strack, Fritz, 2014. "From dual processes to multiple selves: Implications for economic behavior," Journal of Economic Psychology, Elsevier, vol. 41(C), pages 1-11.
    11. Hensman, Ann & Sadler-Smith, Eugene, 2011. "Intuitive decision making in banking and finance," European Management Journal, Elsevier, vol. 29(1), pages 51-66, February.
    12. Mousavi, Shabnam & Gigerenzer, Gerd, 2014. "Risk, uncertainty, and heuristics," Journal of Business Research, Elsevier, vol. 67(8), pages 1671-1678.
    13. Leonard Lee & On Amir & Dan Ariely, 2009. "In Search of Homo Economicus: Cognitive Noise and the Role of Emotion in Preference Consistency," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 36(2), pages 173-187.
    14. Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
    15. Dane, Erik & Rockmann, Kevin W. & Pratt, Michael G., 2012. "When should I trust my gut? Linking domain expertise to intuitive decision-making effectiveness," Organizational Behavior and Human Decision Processes, Elsevier, vol. 119(2), pages 187-194.
    16. Neill, Stern & Rose, Gregory M., 2007. "Achieving adaptive ends through equivocality: A study of organizational antecedents and consequences," Journal of Business Research, Elsevier, vol. 60(4), pages 305-313, April.
    17. Kahneman, Daniel, 2002. "Maps of Bounded Rationality," Nobel Prize in Economics documents 2002-4, Nobel Prize Committee.
    18. repec:cup:judgdm:v:6:y:2011:i:4:p:351-358 is not listed on IDEAS
    19. Gilberto Montibeller & Detlof von Winterfeldt, 2015. "Cognitive and Motivational Biases in Decision and Risk Analysis," Risk Analysis, John Wiley & Sons, vol. 35(7), pages 1230-1251, July.
    20. Tversky, Amos & Kahneman, Daniel, 1986. "Rational Choice and the Framing of Decisions," The Journal of Business, University of Chicago Press, vol. 59(4), pages 251-278, October.
    21. Wood, Robert E., 1986. "Task complexity: Definition of the construct," Organizational Behavior and Human Decision Processes, Elsevier, vol. 37(1), pages 60-82, February.
    22. Shapiro, Stewart & Spence, Mark T., 1997. "Managerial intuition: A conceptual and operational framework," Business Horizons, Elsevier, vol. 40(1), pages 63-68.
    23. Nicolai J. Foss, 2003. "Bounded rationality and tacit knowledge in the organizational capabilities approach: an assessment and a re-evaluation," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 12(2), pages 185-201, April.
    24. Nils Plambeck & Klaus Weber, 2009. "CEO Ambivalence and Responses to Strategic Issues," Organization Science, INFORMS, vol. 20(6), pages 993-1010, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anna Trunk & Hendrik Birkel & Evi Hartmann, 2020. "On the current state of combining human and artificial intelligence for strategic organizational decision making," Business Research, Springer;German Academic Association for Business Research, vol. 13(3), pages 875-919, November.
    2. Colombari, Ruggero & Geuna, Aldo & Helper, Susan & Martins, Raphael & Paolucci, Emilio & Ricci, Riccardo & Seamans, Robert, 2023. "The interplay between data-driven decision-making and digitalization: A firm-level survey of the Italian and U.S. automotive industries," International Journal of Production Economics, Elsevier, vol. 255(C).
    3. Rathi K. N. & Geetha D., 2023. "Influence of Personality Traits and Behavioural Biases on Irrational Investment Decision Making of Public Officials," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 15(1), pages 49-63, June.
    4. Sipos, Norbert & Lukovszki, Lívia & Rideg, András & Vörös, Zsófia, 2023. "A vállalkozói döntéshozatali logikák kognitív megközelítése [Entrepreneurial effectuation through the lens of cognitive processes]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 544-563.
    5. Jessica Rubiano-Moreno & Samuel Nucamendi-Guillén & Alvaro Cordero-Franco & Alejandro Rodríguez-Magaña, 2022. "An improved LINMAP for multicriteria decision: designing customized incentive portfolios in an organization," Operational Research, Springer, vol. 22(4), pages 3489-3520, September.
    6. Legenzova Renata & Leckė Gintarė, 2022. "Exploring Lithuanian Real Estate Crowdfunding Investors’ Rationality," Management of Organizations: Systematic Research, Sciendo, vol. 87(1), pages 83-102, June.
    7. Wei Wang, 2021. "The concept of sustainable construction project management in international practice," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(11), pages 16358-16380, November.
    8. Tomasz Zwęgliński, 2020. "The Use of Drones in Disaster Aerial Needs Reconnaissance and Damage Assessment – Three-Dimensional Modeling and Orthophoto Map Study," Sustainability, MDPI, vol. 12(15), pages 1-20, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vincent, Vinod U., 2021. "Integrating intuition and artificial intelligence in organizational decision-making," Business Horizons, Elsevier, vol. 64(4), pages 425-438.
    2. Xue, Jinjie & Liu, Junqi & Geng, Zizhen & Yuan, Hongping & Chao, Lei, 2023. "Why and when do paradoxical management capabilities matter to paradoxical pressure? An empirical investigation of the role of coopetition," Technovation, Elsevier, vol. 120(C).
    3. Agnès Festré & Pierre Garrouste, 2015. "The ‘Economics of Attention’: A History of Economic Thought Perspective," Post-Print halshs-02314240, HAL.
    4. Zamri Ahmad & Haslindar Ibrahim & Jasman Tuyon, 2017. "Institutional investor behavioral biases: syntheses of theory and evidence," Management Research Review, Emerald Group Publishing Limited, vol. 40(5), pages 578-603, May.
    5. Stefan Schiller, 2017. "The Quest for Rationality: Chief Financial Officers’ and Accounting Master’s Students’ Perception of Economic Rationality," SAGE Open, , vol. 7(2), pages 21582440177, April.
    6. Shu, Ei (Emily), 2022. "Paradoxical framing and coping process on sustainable new product development," Technovation, Elsevier, vol. 111(C).
    7. Raza-Ullah, Tatbeeq & Bengtsson, Maria & Gnyawali, Devi R., 2020. "The nature, consequences, and management of emotions in interfirm paradoxical relationships—A conceptual framework," Scandinavian Journal of Management, Elsevier, vol. 36(4).
    8. Pietro Guarnieri & Tommaso Luzzati, 2018. "Riflessioni intorno al tema della razionalità in economia," Discussion Papers 2018/237, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    9. Rothengatter, Marloes, 2016. "Insights in cognitive patterns : Essays on heuristics and identification," Other publications TiSEM 5f812a9d-8968-48b8-8d1b-0, Tilburg University, School of Economics and Management.
    10. Päivi Karhu & Paavo Ritala, 2020. "The multiple faces of tension: dualities in decision-making," Review of Managerial Science, Springer, vol. 14(3), pages 485-518, June.
    11. Grant, Michael & Nilsson, Fredrik, 2020. "The production of strategic and financial rationales in capital investments: Judgments based on intuitive expertise," The British Accounting Review, Elsevier, vol. 52(3).
    12. Aoife Brophy Haney, 2017. "Threat Interpretation and Innovation in the Context of Climate Change: An Ethical Perspective," Journal of Business Ethics, Springer, vol. 143(2), pages 261-276, June.
    13. Matsuno, Ken & Kohlbacher, Florian, 2020. "Proactive marketing response to population aging: The roles of capabilities and commitment of firms," Journal of Business Research, Elsevier, vol. 113(C), pages 93-104.
    14. Schilirò, Daniele & Graziano, Mario, 2011. "Scelte e razionalità nei modelli economici: un'analisi multidisciplinare [Choices and rationality in economic models: a multidisciplinary analysis]," MPRA Paper 31910, University Library of Munich, Germany.
    15. Volker Thoma & Elliott White & Asha Panigrahi & Vanessa Strowger & Irina Anderson, 2015. "Good Thinking or Gut Feeling? Cognitive Reflection and Intuition in Traders, Bankers and Financial Non-Experts," PLOS ONE, Public Library of Science, vol. 10(4), pages 1-17, April.
    16. H. R. N. van Erp & R. O. Linger & P. H. A. J. M. van Gelder, 2014. "Fact Sheet Research on Bayesian Decision Theory," Papers 1409.8269, arXiv.org, revised Jan 2015.
    17. Dan K. Hsu & Johan Wiklund & Richard D. Cotton, 2017. "Success, Failure, and Entrepreneurial Reentry: An Experimental Assessment of the Veracity of Self–Efficacy and Prospect Theory," Entrepreneurship Theory and Practice, , vol. 41(1), pages 19-47, January.
    18. Barberis, Nicholas & Huang, Ming, 2009. "Preferences with frames: A new utility specification that allows for the framing of risks," Journal of Economic Dynamics and Control, Elsevier, vol. 33(8), pages 1555-1576, August.
    19. Sevda Helpap & Sigrid Bekmeier-Feuerhahn & Luisa Pinkernelle, 2018. "Ambivalenzen in organisationalen Veränderungen [Ambivalence in Organizational Change]," Schmalenbach Journal of Business Research, Springer, vol. 70(3), pages 209-241, August.
    20. Christoph Markmann & Alexander Spickermann & Heiko A. von der Gracht & Alexander Brem, 2021. "Improving the question formulation in Delphi‐like surveys: Analysis of the effects of abstract language and amount of information on response behavior," Futures & Foresight Science, John Wiley & Sons, vol. 3(1), March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:busres:v:12:y:2019:i:1:d:10.1007_s40685-019-0096-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.