Understanding How We Think and Behave

One of our key pre-occupations as managers, is to understand how we think and behave. It is axiomatic that if we can better understand the drivers and outcomes of psychological processes, we can make better decisions. Much economic and managerial thinking has therefore drawn on psychological concepts for at least the past couple of decades as a way to guide our actions. It is not surprising that the Nobel prize for economics in 2002 was awarded to psychologist Daniel Kahneman and his colleague Amos Tversky for their work on prospect theory that drew heavily on psychological research.

Since then, there have been numerous papers that deal with the relevance of psychological processes and concepts to the practice of management. Indeed, social psychology research distinguishes between three components of the mind: cognition, affect, and conation. Cognition refers to knowing and understanding through encoding, storing, processing, and retrieving information. It attempts to answer the "what" around phenomena. Affect refers to our emotional reaction to perceptions, information, or knowledge. It addresses the question "How do I feel about this knowledge or information?" Finally, conation refers to the connection of cognition and affect to behavior and is primarily concerned with "why." It is therefore intentional, planful, deliberate and goal-oriented. It is often seen as the striving and proactive component of motivation.