Article at a glance:

Distortions and deceptions in strategic decisions

• Strategic decisions are never simple to make. They sometimes go wrong because of human shortcomings.
• Behavioral economics shows that any decision with an element of risk is subject to universal human biases such as overoptimism and loss aversion.
• Strategic decisions are also susceptible to the "principal-agent problem": when the incentives of certain employees are not aligned with the interests of the company, those employees look after their own interests in deceptive ways.
• Companies can reduce their exposure to these intertwined and harmful patterns of distortion and deception by adjusting their decision-making processes and strengthening the culture of debate.