Abstract

This study systematically examines the effects of cognitive biases experienced by senior executives in strategic decision-making processes on organizational performance and presents a unique “Strategic Decision Architecture Model” (SDAM) aimed at minimizing these biases. In contrast to the “rational manager” assumption of traditional management theories, the behavioral economics literature highlights the framing effect, status quo bias, overconfidence, and confirmation bias as systematic cognitive traps into which businesses fall. A qualitative model was developed by synthesizing the theoretical framework, ranging from Kahneman [1] Prospect Theory to Thaler [2] choice architecture concept, with the empirical findings in TÜSİAD’s [3] “Sector-Based Applications of Behavioral Economics” report. The results show that structural nudges and default option designs integrated into the decision architecture are powerful mechanisms for reducing strategic errors. SDAM consists of four pillars: default option design, framing optimization, cognitive auditor role, and visual cognitive scorecard, and offers practical tools applicable at the level of top management boards.

Keywords: Cognitive bias; Strategic decision-making; Choice architecture; Nudging; Status quo bias; Overconfidence; Decision architecture