AI in strategic decision-making: Mitigating or amplifying cognitive biases?

Artificial Intelligence (AI) is increasingly used by executives to improve decision-making processes. However, its influence is paradoxical: while it can potentially reduce cognitive biases, excessive reliance on AI may suppress critical thinking and amplify biases. This study investigates how different levels of AI adoption affect biases such as anchoring, confirmation, and hubris in a strategic market entry scenario. Based on data gathered from an experiment involving 251 business development professionals, we introduce the Paradox-Thinking Matrix, which connects modes of thinking – intuitive, deliberative, and balanced – to varying levels of AI adoption. The findings show that either no AI use or excessive reliance on AI fosters intuitive thinking, increasing biases. Moderate use of AI, on the other hand, encourages deliberative thinking, reducing biases and supporting more balanced decisions. This study contributes to our understanding of how AI shapes thinking processes and offers practical insights into managing its use to minimize biases in strategic contexts.