1.2 Flashcards
Where do organisational goals come from?
- Organizational structure
- Organizational power.
No joint preference ordering.
What is the bargaining process?
Side payments.
In the bargaining process, what are the objectives and the goals?
Objectives as adaptive aspiration levels.
Goals can be contradictory and ambiguous.
What is the administrative man?
It is fundamentally human.
Describes the idealised decision-maker in organisations.
It’s characterised by rational and logical decision-making.
What determines our decisions?
The order in which we search.
What happens as complexity increases?
- Use of approximations & simplifications
- Substantially differ from reality
- Mind is constrained in understanding/computing.
How are the human preferences?
- Unstable
- Contradictory
- Endogenous
What does sociological & psychological base affect?
How we construct the simplified decision problem and how we evaluate it.
What we are determines how we see the world and how we decide.
What is bounded rationality?
Real-world decision makers operate under bounded rationality.
Bounded rationality is when, given constraints, managers make decisions which are good enough, in a given situation, instead of the best possible decision.
Human decision making is constrained by what?
Limited knowledge and computational capacity.
What is the novelty of the stimuli/problem to the decider?
- Decisions are partly determined by previous actions/decisions.
- Humans develop routines/programs/fixed responses. Experience: solution from repertoire from defined stimuli/problem.
- Short-cut/ cessation of scanning information, even choice.
- Choice, if highly habitual, can occur unconsciously.
What is an example of unconscious choice?
Morning coffee (program & routine).
How are humans when comes to making decisions?
Humans frequently ignore their own preferences when making decisions.
Humans are socially embedded.
What are the aspects that influence decisions?
Cognition, affection, relations and routines.
How can we predict strategic action?
By approximating individual’s socio-psychological, experimental, and educational vector.
What is the cognitive bias of overconfidence?
Humans tend to systematically overestimate their knowledge/abilities and their capability to predict. This effect is more pronounced for trained people or experts.
What is the better than average effect linguistically? And technically?
Linguistically: overestimate own abilities, knowledge, and standing relative to others.
Technically: overestimate the mean of uncertain outcomes.
What is miscalibration effect linguistically? And technically?
Linguistically: exaggerated trust in prediction of uncertain events.
Technically: underestimate the variance of uncertain outcomes.
What is CEO overconfidence?
Excessive belief in their abilities and judgement.
What are the negative consequences on strategic action of CEO overconfidence?
- Higher acquisition premiums - Value destroying mergers
- Higher innovation return volatility
- Overoptimistic management forecasts.
What is CEO narcissism?
Inflated sense of self-importance and a focus on personnel success.
What is desire for narcissistic supply?
Striving for fame, applause, and external recognition of (subjective) superiority.
What are the consequences of CEO narcissism on strategic actions?
- Grandiose
- impact on managerial discretion via lack of political acumen and interpersonal sensitivity
- tendency towards unique CSR and sociopolitical activism.
What is CEO greed?
The pursuit of excessive/extraordinary material wealth.
