Cognitive benefits of scenario planning: Its impact on biases and decision quality

Abstract

In this paper, we examine cognitive benefits of scenario planning. Drawing on behavioral decision theory, we analyze the effect of scenario planning on the widely discussed framing bias in decision making as well as on decision quality. In an experiment involving 252 graduate management students, we find that scenario planning reduces the framing bias and that it has a more positive effect on decision quality than tools traditionally used in strategic planning. Thus, our paper contributes to the discussion analyzing the scenario method's benefits by providing additional support for its positive cognitive consequences as well as the method's aggregate effect on decision quality. It presents evidence that popular strategy tools like scenario planning, whose positive cognitive effects are widely claimed in the literature, may in fact alter biases and decision quality.