Our Route Map

 Ethical Decision Making

 Bounded Rationality
 Bounded Awareness
 Bounded Ethicality
 Bounded Rationality leading to Bounded Ethicality
 Impact of Bounded Rationality on Decision Making
Decision Making
 Decision Making occurs as a reaction to a problem or opportunity
 It is defined as choosing between alternatives
 Classic decision making process is the Rational Model, designed to
maximize outcomes
 Define the problem
 Identify criteria for selecting a solution
 Allocate weights to criteria to reflect relative importance
 Develop a list of alternatives
 Rate/Evaluate the alternatives against the criteria
 Multiply out the factors and select the best alternative
 Works best when there are few alternatives to a clearly defined problem
 In the real world, this rarely occurs because of ill-defined problems,
unclear alternatives and selection criteria
Ethics in Decision Making
 Ethics need to be an important criteria in the decision making
process
 3 Ethical Decision Making Criteria
 Utilitarianism – criteria that seek to acquire the greatest good
for the greatest number of people
 Promotes efficiency and productivity but might compromise rights
of minorities
 Rights – criteria that seek to make decisions that protect and
respect fundamental rights and liberties for people
 Protects freedom and privacy but can cause an overly legalistic
environment that harms efficiency and productivity
 Justice – criteria driven by the imposition of rules that ensure
that there is equitable distribution of benefits of a decision
 Protects the underrepresented and less powerful, but reduces risk-
taking and innovation
Factors Affecting Ethical Decision
Making
 Stages of Moral Development – the higher a person’s moral
development the less likely to be influenced by outside
forces
 Locus of Control – People with an internal locus of control
are more likely to take responsibility for their actions and
less likely to be influenced by outside forces
 Organizational Environment – Similar to groupthink, the
organization’s expectations for decision making will affect
outcomes.
Bounded Rationality:
 Suggests that most people are limited in their ability to process
and act on information, making it difficult to identify and
consider every alternative
Bounded Awareness:
 People have "bounded awareness" which prevents them from
focusing on easily observable and relevant data.
 Bounded awareness leads people to not "see" important,
accessible, and perceivable information during the decision-
making process.
Focusing failure:
 ‘Focusing failure' is what occurs when the information needed
and available to make a good decision does not align with the
information a decision maker considers.
--- Chugh and Bazerman (2007)
Behavioural ethics:
 One of the accepted definition of behavioural ethics is ‘‘individual behaviour that is
subject to or judged according to generally accepted moral behaviour”
--Treviño, Weaver, and Reynolds (2006)

Bounded ethicality:
 Bounded ethicality, a part of behavioural ethics is defined bounded ethicality as the
psychological processes that lead people to engage in ethically questionable
behaviours that are inconsistent with their own preferred ethics.
-- (Chugh, Banaji, & Bazerman,2005).

Comparing bounded rationality, bounded awareness and Bounded ethicality

 In all three cases, a cognitive shortcoming keeps the actor from taking the action
that he would choose with greater awareness.
 Importantly, if people overcame these boundaries, they would make decisions that
are more in line with their ethical standards.
Reasons:
Psychological processes of bounded awareness that lead individuals to
ignore others’ unethical behaviour are:
 Outcome bias,
 Role of the slippery slope
 Motivated blindness
 Indirect blindness.

Suggestions:
 Unethical behaviour is often ambiguous.
 One solution to noticing more might involve finding ways to encourage an
investigative mindset, so that when leaders are puzzled about what is
going on, they feel prompted to pursue answers, rather than turning their
attention to other, more clearly specified problems.
Thank You