Ch.7 decision making and creativity Flashcards
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What is the rational choice paradigm of decsision making ?
The View in decision making that people should - and typically do - use logic and all available information to choose the alternitive with the highest value
Subjective expected utility ?
The probability (expectation) of satisfaction (utility) reulting from choosing a specific alternative in a decsion (estimating the best possible alternative) (maximization)
rational choice decision making process (6- steps)
- identify problem or oppertunity
- choose best decision process
- discover/ develop alternative solutions
- choose best alternative
- implement the selected alternative
- evaluate decision outcomes
Problems with identification
stakeholder framing
Stakeholders filter info to amplify or suppress the seriousness of the situation to corporate decision makers because of their intrests
Problems with identification
mental models
Our minds creates its own mental framing through preconcived mental models
(visual or relational images in our mind)
blind us from seeing problems or opportunities
Problems with identification
decisive leadership
Being decisive includes quickly forming an opinion on weather an event signals a problem or opportunity.
Many leaders quickly announce problems or oppertunitys before having the chance to logically assess the situation
Problems with identification
soulution-focused problems
Decision makers have the tendancy to define problems as veiled solutions. (it provides comforting closure to the otherwise ambiguous and uncertain problems
Problems with identification
Perceptual Defence
Blocking out bad news as a coping mechanism.
inherently overlooking negative information
Problems with the Rational Choice Paradigm
Impossible to apply in reality, the model assumes people are logical information processing machines. in reality people have diffuculty recoginzing the problems, and cannot simultaneously process huge volumes of information.
Problem Identification challenges
influenced by cognitive and emotional biases
Identifying problems or opportunities more effectively
Becoming aware of the five problem identification biases
for leaders to never be satisfied with “good enough” (maximization)
what are the five problem identification biases
- stakeholder framing
- mental models
- vdecisive leadership
- soulution focused problems
- perceptual defence
what is bounded rationality?
the view that people are bounded un their decision making capabilities, including access to limited info, limited info pro, and a tendency toward satisfying rather than maximization when making choices
Rational choice paradigm assumptions vs obeservations from O.B (Goals)
r.c: Goals are clear, compatible, and agreed upon
O.B:Goals are ambiguous, conflicting, and lack agreement
Problems information processing (biased based heuristic’s)
People have built in decision heuristics that bias evaluation of alternatives
- anchoring and adjustment heuristic
- availibility heuristic
- representativeness heuristic
Problems with maximization
people tend to satitisfice rather then Maximize, people choose the first alternitive that is “good enough”.
Paralyzed by choice
when presented with a large. number of complex choices people are more likely to not make a choice at all
emotions and making choices (3 ways emotions affect the evaluation of alternatives)
- emotions from preference before we fully evaluate the choices
- moods and emotions influence how well we follow the decision process
- we “listen in” on our emotions and use that information to make choices
Intuition
Ability to know when a problem or opportunity exists and select the best course of action without conscious reasoning
intuition and decision making
gut feelings are emotional signals, but not all emotions signal intution
intuition relies on action scripts: it shortens the decision making process by jumping from problem identification to selection of a soulution
ways to make choices more effectivley
- systematicly evaluate alternatives against relevant factors
- Be aware of effects of emotions on decision prefrences and the evaluation process
- scenario planning (planning for future environments or complications)
what is Escalation of commitment ?
the tendency to repeat an apparently bad decision or allocate more resources to a failing course of action.
what causes esclation of commmitment
- self justification: trying to appear rational and effectively continuing to invest
- prospect theory effect: feeling more dissatisfaction from losses than satisfaction from gaining
- closing costs ( financial and reputation decreased from a failure in a project)
conformation bias in decision making
-inflate positive qualities of selected option, downplay rejected alternatives
(caused by the need to maintain a positive self concept)
Ways to evaluate decisions more effectiivly
- Separate decision makers from those who will later evaluate the decisions
- establish a preset level to abandon the project
- find clear feedback
- involve lots of people in the evaluation process
creativity
- the the development of original ideas that make a socially recognized contribution
- creativity applies to all aspects of the decision making process (problems alternatives, solutions)
the creativity process model
- preparation ( investigating a problem or opportunity)
- incubation (generating difffrent approches to the issue)
- illumoination (lightbulb)
- verification (logical evaluation)
four charicteristics of creative people.
- Cognitive and practical intelligence
- Persistance
- Knowledge and experience
- Independent imagination
creative work environments include
-learning orientation, encourages experimentation, tolerates mistakes
- intrinsically motivating work, feedback, interesting work, autonomy
- open communication and sufficient resources
competition and pressure to a certain extent
activities that encourage creativity
- redefining the problem.
- review old projects, explore issues with others - associative play
- story telling, artistic activities - cross-pollination
- diverse teams, info sharing,
employee involvment in decision making
different levels (low-high) 1.decide alone 2.recive info from others 3. consult with others 4.consult with a team 5.facilitate team decisions varies from situation to situation
emplyee involvement
- the degree to which employees influence how their work is organized and carried out
- diffrent levels and forms of involvement
outcomes of employee involvement
- better problem identification
- more/better solutions
- better at choosing the best choice
- higher decision commitment
contingencies of employee involvement
higher employee involvement is better when:
- decision structure (problem is new and complex)
- Knowledge source (employees have relevant knowledge beyond leader)
- decision commitment: employees would lack commitment unless involved
- risk of conflict (norms support firms goals, employee engagement likely)
