Chapter 11 Flashcards
Decision making
The process of developing a commitment to some course of action.
Problem
perceived gap between an existing state and a desired state.
Perfect Rationality vs Bounded Rationality
Perfect Rationality: A decision strategy that is completely informed, perfectly logical, and oriented toward economic gain
Bounded Rationality: A decision strategy that relies on limited information and that reflects time constraints and political considerations
Framing Effect
Decisions are influenced by how choices are presented (e.g., gain vs. loss framing)
If information is framed positively (gain frame), it encourages conservative decisions (risk averse)
Prospect Theory—Loss Aversion
Value of gain < value of loss…
Escalation of Commitment
Persisting in a failing course of action due to sunk costs, overconfidence, or framing.
o Throw good resources after bad, acting as if one can recoup sunk costs
Perceptual Defense
People unconsciously avoid unpleasant perceptions.
Functional Bias
Problems are framed through one’s own specialty lens (e.g., marketers focusing on marketing solutions).
Premature Solutions
Decisions made based on preconceived solutions rather than actual problem analysis
Symptoms vs. Causes
Addressing surface issues without diagnosing root causes (e.g., addressing morale without considering pay or work conditions).
Availability Bias
Reliance on easily accessible or recent information
Not-Invented-Here Bias
Ignoring external solutions or innovations
Groupthink
A phenomenon where group pressure reduces mental efficiency, reality testing, and moral judgment, leading to suboptimal decisions.
Why does groupthink happen?
- Strong identification with the group
- Concern for group’s approval
- Isolation of the group from other sources of information
- Promotion of decision by group leader
- High level of cohesiveness
Some groupthink symptoms
- Illusion of invulnerability
- Rationalization
- Illusion of morality
- Stereotypes of outsiders
- Pressure to conform
- Self-censorship
- Illusion of unanimity
- Mindguards
Recommendations to Mitigate Groupthink and Enhance Decisions
- Leaders should avoid promoting specific outcomes and focus on decision-making processes.
- Encourage dissent and reward constructive criticism.
- Involve external experts to challenge the group’s perspective.
- Appoint a devil’s advocate to objectively critique proposed plans and strategies.
