Research by esteemed academics has uncovered a wide variety of biases that plague decision makers on a regular basis. Thanks to them, we know that predictable errors lead people to commit sub-optimal acts on a regular basis, ranging from undersaving for retirement to engaging in needless conflict and accepting the wrong jobs. Unfortunately, we have yet to uncover systematic strategies to help people overcome these biases and behave more optimally. The authors get started on this path, focusing on strategies that can lead to better decisions, which involve leveraging the human tendency to default to 'Type 1' -- or automatic -- mental processing.

Nobel Laureate Herbert Simon introduced the concept of 'bounded rationality' as "a behavioral model in which human rationality is very much bounded by the situation and by human computational powers. In this article, the authors propose that awareness can also be bounded, and that this occurs when people fail to see, seek, use or share highly relevant and readily-perceivable information during the decision-making process. They describe three types of bounded awareness: inattentional blindness, change blindness and focalism. As the authors show, the failure to recognize these psychological limitations poses an even greater danger than the limitations themselves.

By the time Merck withdrew its pain relief drug Vioxx from the market in 2004, more than 100 million prescriptions had been filled in the United States alone. Yet researchers now estimate that Vioxx may have been associated with as many as 25,000 heart attacks and strokes. Evidence of the drug's risks was available as early as 2000, so why did so many doctors keep prescribing it? The answer, say the authors, involves the phenomenon of bounded awareness--when cognitive blinders prevent a person from seeing, seeking, using, or sharing highly relevant, easily accessible, and readily perceivable information during the decision-making process. Doctors prescribing Vioxx, for instance, more often than not received positive feedback from patients. So, despite having access to information about the risks, physicians may have been blinded to the actual extent of the risks. Bounded awareness can occur at three points in the decision-making process. First, executives may fail to see or seek out the important information needed to make a sound decision. Second, they may fail to use the information that they do see because they aren't aware of its relevance. Third, executives may fail to share information with others, thereby bounding the organization's awareness. Drawing on examples such as the Challenger disaster and Citibank's failures in Japan, this article examines what prevents executives from seeing what's right in front of them and offers advice on how to increase awareness. Of course, not every decision requires executives to consciously broaden their focus. Collecting too much information for every decision would waste time and other valuable resources. The key is being mindful. If executives think an error could generate almost irrecoverable damage, then they should insist on getting all the information they need to make a wise decision.

Answer true or false: "I am an ethical manager." If you answered "true," here's an uncomfortable fact: You're probably wrong. Most of us believe we can objectively size up a job candidate or a venture deal and reach a fair and rational conclusion that's in our, and our organization's, best interests. But more than two decades of psychological research indicates that most of us harbor unconscious biases that are often at odds with our consciously held beliefs. The flawed judgments arising from these biases are ethically problematic and undermine managers' fundamental work--to recruit and retain superior talent, boost individual and team performance, and collaborate effectively with partners. This article explores four related sources of unintentional unethical decision making: implicit bias--judging according to unconscious stereotypes rather than merit; in-group bias--favoring people in their own circles; a tendency to overclaim credit; and conflicts of interest. To counter these unconscious biases, traditional ethics training is not enough. You should gather better data, rid the work environment of stereotypical cues, and broaden your mind-set when making decisions.