Biases and Heuristics in Judgment and Decision Making: The Dark Side of Tacit Knowledge

Article excerpt

Introduction

The main focus of current knowledge management research is to capture the knowledge that tacitly resides in the employees' heads and to turn it into the explicit form for others to use. Researchers agree that knowledge is a very 'messy' and esoteric concept. Therefore, capturing it is a task fraught with difficulties. But if captured and put into explicit form, tacit knowledge is a driving force behind any sort of innovation, be it new technology, new process or a new technique.

Tacit knowledge by its very nature actually 'emerges' from the people's heads. The various mental processes that shape and construct certain knowledge are very difficult to comprehend. This sort of knowledge is a key behind exercising judgment in human decision-making and employing intuition or 'gut-feeling'. It is seen in experienced managers; because of their tacit knowledge and expertise based on this sort of knowledge, they are able to make better-informed and effective intuitive decisions. However, there is also a probability of these managers making a wrong judgment ending up in wrong decisions.

This paper was inspired by the authors' experience when delivering presentations on knowledge management issues. In several cases members of the audience responded by observing that some tacit knowledge is inaccurate, incorrect or inappropriate.

Therefore, it is a possibility that the tacit knowledge that we are trying to capture may not be useful. Their objection seems valid when we find out various examples of big judgmental mistakes made by managers that risk and jeopardize a whole project. Through this short paper we acknowledge this fact and endeavor to explain the factors that affect the effectiveness of the tacit knowledge. The paper also examines what can be done to make sure that tacit knowledge stays effective when captured and used in decision-making.

Human Information Processing--Factors Affecting Knowledge Construction

It is important to know how human information processing occurs as sensing information and utilizing it is a key to further knowledge construction in a human mind. Knowledge is a conclusion drawn from data and information (Stewart, 2000).

Perception and Recognition

The first element involved in the human information processing that facilitates knowledge construction is perception of the event, and then use of memory to give this perception a recognition. As shown in Figure 1, perception of displays occurs through stimuli generated by various sensory inputs--e.g. vision, audition, chemical senses--i.e. smell and taste.

This system recognizes the information, assembles it, and makes comparisons with previously stored material (knowledge). Knowledge is used, reused and hence gets constructed. Perception is a selective process and certain amounts of information from the outside are selected because not all of the information coming in can be assimilated. Perception is affected by factors such as attitudes, values, motives, stress and a person's background.

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Cognitive Styles

van Gigch (1991) defined that cognitive style is "an individual's way of performing perceptual and intellectual activities". It depends upon genetic makeup and environmental factors like education and experience. Managers or thinkers can be classified as systematic, intuitive, receptive and perceptive. The diversity in their education and experience causes differences in their perception and judgment thus rendering their cognitive styles different. Their cognitive structure guides their decision making style whether heuristic or deterministic or a mixture of the two. Cognitive style may also be referred to as high analytical or low analytical.

Heuristics and Biases in Judgment

'Heuristic' is a term used by psychologists to denote general problem solving procedures that often work in solving everyday problems. …