Jelena Nikolic

Faculty of Economics, University of Kragujevac, Kragujevac, The Republic of Serbia

Starting from the normative approach, a decision as the outcome of the decision-making process should represent a rational choice made by a completely informed decision-maker. With the development of the behavioral perspective of the decision-making process, certain mistakes in decision-makers’ behavior have been noticed, emerging as a consequence of their limited cognitive capacities and the information asymmetry. The application of heuristics as simplified mental strategies, as well as certain deformations in decision-makers’ thinking and perception, leads to the different biases that affect their attitudes and approach to problem solving. The aim of the research study is reflected in identifying the biases that most often occur in the decision-making process, as well as their causes and consequences. The qualitative methodology of the research has been applied in parallel with the relevant methods of analysis and synthesis, deduction and induction. On the basis of the conducted empirical studies, the recommendations for overcoming biases have been defined, which represents the main result of the research study. The derived conclusions with respect to the possibilities of overcoming biases can help decision-makers to improve the decision-making process in real situations.

Keywords: decision-making process, decision-makers, bounded rationality, mental strategies, biases

JEL Classification: M10, D81

Economic Horizons2018, 20(1), 43-57. Published online 26 April 2018