Identifying, Counteracting, and Avoiding Heuristics and Biases. The Case of Enron

Seminar paper from the year 2018 in the subject Business economics - Business Management, Corporate Governance, grade: A, University of Malta (Ecnonomics, Management, Accountancy), course: Evidence-Based Management, language: English, abstract: In the ideal world, any state or organisation's governing body should act in the interest of society at large to achieve the best levels of wellbeing possible. Where problems and gaps are identified, it is necessary to carefully design the necessary interventions, which will eventually encourage people to behave in ways that are beneficial to the organisation or community they belong to. 'With great power comes great responsibility' is a phrase, which encompasses public scandals such as the ones of the Enron Corporation. Given that human beings (homo sapiens) are psychologically susceptible to fall victims of heuristics and biases, negligence, or even abuse of power, decision-making processes, and the resulting outcomes tied to them are not always desirable. Enron capitalised on the opportunities deriving from its strategic public relations exercises of lobbying in favour of deregulation, as well as pushing its brand as Fortune's Most Innovative Company for six years in a row. These kept the company afloat and distracted the regulatory bodies as well as the public from noticing any wrongdoings. Senior management framed the Enron brand and business as 'ethical', 'collaborative' and 'considerate'. It appears that the governing bodies and citizens in California trusted Enron blindly and, holistically, decided by availability, that is, upon allowing for the company to operate n the energy markets, they relied on the immediate option.