English   Danish

2023/2024  KAN-CCMVI2038U  Psychology of Decision Making - We are not Irrational, are we?

English Title
Psychology of Decision Making - We are not Irrational, are we?

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration Summer
Start time of the course Summer
Timetable Course schedule will be posted at calendar.cbs.dk
Min. participants 30
Max. participants 60
Study board
Study Board for cand.merc. and GMA (CM)
Course coordinator
  • Kinga Konczey
    Pedro Monteiro - Department of Organization (IOA)
For academic questions related to the course, please contact course instructor Kinga Konczey (kiko.ioa@cbs.dk).
Main academic disciplines
  • Customer behaviour
  • Management
  • Business psychology
Teaching methods
  • Face-to-face teaching
Last updated on 17/06/2024

Relevant links

Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors:
  • Demonstrate understanding of the major decision making theories as they apply to various business, management, or real-life settings;
  • Be able to analyse real-world problems, evaluate data appropriately by identifying gaps and making thoughtful assumptions;
  • Identify the mental models that underlie decision makers' thinking processes;
  • Recognise crisis situations and present appropriate strategies for handling them;
  • Recognise the various processes that lead decision makers to be „less than rational” and suggest ways to overcome their limitations and inconsistencies;
  • Identify strategies for dealing with various levels of ambiguity and uncertainty in problem solving and display understanding of the role of intuition in the decision making process.
Course prerequisites
Completed Bachelor degree or equivalent.
Background in Organisational Behaviour or Management will be seen as useful. Work experience is a bonus.
Psychology of Decision Making - We are not irrational, are we?:
Exam ECTS 7.5
Examination form Home assignment - written product
Individual or group exam Individual exam
Size of written product Max. 10 pages
Assignment type Project
Release of assignment An assigned subject is released in class
Duration Written product to be submitted on specified date and time.
Grading scale 7-point grading scale
Examiner(s) One internal examiner
Exam period Summer, Home assignment written in parallel with the course with the submission in week 31

Exam schedules available on https:/​/​www.cbs.dk/​uddannelse/​international-summer-university-programme-isup/​courses-and-exams
Make-up exam/re-exam
Same examination form as the ordinary exam
The retake would be a 72 hour 10 pages written work.
Description of the exam procedure

Home assignment written in parallel with the course.

Course content, structure and pedagogical approach
Having completed business or management education, most of us are searching for the keys to adaptive decision making in classrooms, textbooks and other controlled environments with clear metrics and practical tools. Rigorous analytical methods can help us in well-ordered situations. Frequently, however, what we were taught about making tough choices quickly falls apart, because the dynamic real-world situations are anything but well structured. We have to rely on our experiences, intuition and creativity instead, and look for a different set of approaches.
A major focus of this inter-disciplinary course is whether, or under what conditions, people deviate from normative rules of decision making that have been developed by other disciplines, such as economics or management. We will examine ambiguous situations which are difficult to comprehend, and where conventional methods may not lead to good solutions. We will explore assessments of risk and uncertainty, including research on heuristics and biases. We will approach decision situations from the individual’s perspective, through the different lenses of individual personalities and styles. We will see how decisions are actually made and how psychological processes can explain the apparent deviation from logic and rationality.
This course will help students develop personal competencies in the following areas:
- enhancing mental effectiveness by learning the psychology behind rational thinking, as well as its barriers;
- identifying personal decision making styles and recognising the styles and strategies of others;
- strengthening problem solving, decision making and negotiation skills.
Preliminary assignment:  Preliminary readings (as per syllabus) and completing two tests (on 'canvas')
Class 1: Thinking about thinking: Mental models; tests, case study discussion
Class 2: Personality types; self-awareness, cultural values
Class 3: Stress in decision making, crisis management - in-class experiment
Class 4: Problem solving and decision making; Decision models
Class 5: Are we rational? - concept of rationality; ‘quasi-rationality’
Class 6: Limits to decision making; cognitive biases
Feedback activity: short reflective analysis of a personal decision
Class 7: Ambiguity; Crisis decision making
Class 8: Creative problem solving. Intuition
Class 9: Interactive decision making – negotiation
Class 10:Negotiation styles, psychology of persuasion
Class 11:Comprehensive Review
Description of the teaching methods
Academic concepts and theories will be introduced through readings and focused lectures (a combination of pre-recorded and in class). Experiential learning tools will be incorporated in the study program, such as inventories, problem solving exercises, role plays, case studies, film clips, games, and simulations, as well as in-class experiments. Collective learning will emerge through the creative class work.
Feedback during the teaching period
Continuous feedback opportunities will be provided throughout the course both in-class and in out of class consultations.

Home Assignments are based on a research question (problem formulation) formulated by the students individually. Approval deadline will be defined by the instructor. Hand-in of the problem formulation directly to the instructor by the 3rd teaching week.
Student workload
Preliminary assignment 20 hours
Classroom attendance 30 hours
Preparation 129 hours
Feedback activity 7 hours
Examination 20 hours
Further Information

6-week course.


Preliminary Assignment: The course coordinator uploads Preliminary Assignment on Canvas at the end of May. It is expected that students participate as it will be included in the final exam, but the assignment is without independent assessment and grading.


Expected literature

Mandatory readings:


• Klein, G. (2011) Streetlights and Shadows: Searching for the Keys to Adaptive Decision Making. A Bradford Book The MIT Press. Cambridge, Massachusetts (350 p.)


• Kirby, L.  (1997) Psychological Type and the Myers-Briggs Type Indicator. in Developing Leaders:  Research and Applications in Psychological Type and Leadership Development.  Davies-Black Publishing. CA (30 p.)


• Senge P. Mental Models (1992) adapted from Chapter 10, Senge: The Fifth Discipline: The Art and Practice of the Learning Organization. New York: Doubleday/Currency. (12 p.)


• Arnold, J. and Randall, R. (2010):  Stress and Well-Being ad Work.  in Work Psychology: Understanding Human Behavior at the Workplace. 5th Ed.  Pearson  (60 p.)

• Matzler, K., Bailom, F., and Mooradian, T.A.(2007)   Intuitive Decision Making.  MIT Sloan Management Review. Cambridge: Fall 2007. Vol. 49, Iss. 1; p. 13  (3 p.)

• Harvey, J. B. (1988). The Abeline Paradox: The Management of Agreement. Organizational Dynamics, 1988 Summer, pp. 17-43.

• Hayashi, A. M. (2001). When to Trust Your Gut. Harvard Business Review, Feb 2001. pp 59-65.

• Gigerenzer, G. (2005): I think, Therefore I Err. Social Research. Vol 72. No 1. pp195 -218.

• Goodwin, P., Wright, G. (2014) Decision Analysis for Management Judgement, 5th Edition.  Wiley

• Hammond, J.S., Keeney, R.L. and Raiffa, H. The hidden traps in Decision making. Harvard Business Review. 2006, January.

• Bonabeau, E. (2003) "Don't trust your gut (in complex situations, intuition can be counter intuitive)". Harvard Business Review Vol. 81, Iss. 5, pp. 116 - 124.

• Sadler-Smith, E., and Shefy, E. (2004) "The intuitive executive: Understanding and applying 'gut feel' in decision-making". The Academy of Management Executive Vol. 18, 4, pp. 76 – 91.

• Trailer, J., and Morgan, J. (2004). Making ‘good’ decisions: what intuitive physics reveals about the failure of intuition. Journal of American Academy of Business Vol. 4, 1/2, pp. 42 – 48.

• Case studies, inventories and tests will be made available during the course

• Further reading may be recommended or uploaded on the course website.


Additional relevant readings:


Scott Plous: The Psychology of Judgment And Decision Making ISBN-13: 978-0070504776  ISBN-10: 0070504776 McGRAW-HILL
Harvard Business Essentials, Decision Making: 5 Steps to Better Results by Business Essentials Harvard (Paperback - Jan 31, 2006)
Ariely, Daniel. (2010) Predictably irrational (Expanded edition), Harper Perennial
Baron, Jonathon. (2008) Thinking and Deciding (4th Ed). Cambridge University Press
Stanovich, Keith E. (2010) Decision making and rationality in the modern world. Oxford University Press.
Asle, F., West, R.  (2008). PERSONALITY PROCESSES AND INDIVIDUAL DIFFERENCES. On the Relative Independence of Thinking Biases and Cognitive Ability.  Journal of Personality and Social Psychology, Vol. 94, No. 4, 672–695
Gabor, A. M., and Gamulin, L. (2016). Breaking the myth about rational investor:
Investors’ susceptibility to heuristical and biased reasoning. Review of Psychology, Vol. 23, No. 1-2, 15-25
Hertwig, R. (2009) Fast and Frugal Heuristics: Tools of Social Rationality.
Social Cognition Vol 27, No 5
Polonioli, A. (2016). Adaptive Rationality, Biases, and the Heterogeneity Hypothesis.  Review of Philosophy and Psychology. 7 (4):787-803  Springer
Stanovich, K., Toplak, M., West, R.  (2011). The Cognitive Reflection Test as a predictor of performance on heuristics-and-biases tasks  Memory & Cognition 39
Toet, A. (2016). Effects of personal characteristics on susceptibility to decision bias: a literature study. International Journal of Humanities and Social Sciences Vol 8, No 5
Last updated on 17/06/2024