Chapter 11

Question 1

Decision-making

Answer 1

process of developing a commitment to some course of actions

Question 2

Well-structured problems

Answer 2

existing state and desired state are clear (how to get from one to the other is clear):

• > repetitive and familiar (can be programmed)
• > go directly from problem to solution
• > rules, routines, standard operating procedures

Question 3

Ill-structured problem

Answer 3

existing state and desired are unclear and method is unknown:

• > unique and unusual problems not discovered before
• > high degree of uncertainty
• > arouse controversy and conflict

Question 4

Perfect rationality

Answer 4

decision strategy completely informed, logical, toward economic gain

Question 5

prototype for perfect rationality

Answer 5

economic person: one criterion for decision making and it is cost

Question 6

bounded rationality

Answer 6

try to act rationally but limited to their capacity to acquire and process information, time constraints, political considerations

Question 7

framing and cognitive biases are to operations of bounded rationality what

Answer 7

emotions and moods are to decision making

Question 8

Framing

Answer 8

huge impact on how we interpret situations: the presentation of information

Question 9

Cognitive bias

Answer 9

tendencies to acquire and process information in a particular way prone to error; involve assumptions & shortcuts

Question 10

Problem identification and framing

Answer 10

bounded rationality can lead to the following difficulties in problem identification:

• > perceptual defence
• > defined in terms of functional specialty
• > defined in terms of solution
• > diagnosed in terms of symptoms

Question 11

Information search

Answer 11

perfect rational decision maker has instant and free access to all information to clarify problem and find alternatives
bounded rationality decision makers say info cost can be slow and costly

Question 12

too little info

Answer 12

cognitive biases because using info most readily available but not always good info –> can lead to confirmation bias where you see only the information that confirms your own opinion

Question 13

Too much info

Answer 13

information overload: reception of more than necessary to make decisions
cognitive bias of value paid for advice over free even if = in value

Question 14

perfect rational decision maker exhibits

Answer 14

maximization: the alternative with greatest expected value

Question 15

bounded rationality decision maker

Answer 15

does not know all possible alternatives

Question 16

satisficing

Answer 16

decision maker reaches adequate level of acceptability and then screens solutions to find one that will exceed it

Question 17

who uses satisficing the most?

Answer 17

bounded rationality decision makers

Question 18

Risky business

Answer 18

problem as choice between losses –> risky decisions
problems from alternative gains –> conservative decisions
“example of framing”

Question 19

Justification

Answer 19

people are overconfident about the adequacy of their decisions
substantial dissonance can happen when a decision is faulty
the decision maker can devote time to justify a faulty decision

Question 20

Hindsight

Answer 20

tendency to review the decision-making process to find what was done right or wrong –> take personal responsibility when positive outcome and deny when unsuccessful

Question 21

escalation of commitment

Answer 21

tendency to invest additional resources in an already failing course of action (groups > individuals)

Question 22

Reasons for escalation of commitment

Answer 22

dissonance reduction
social norms for consistent behavior
motivation to not appear wasteful
the way the problem is framed
personality, moods and emotions

Question 23

Preventing escalation of commitment

Answer 23

• > continuous experimentation with reframing the problem (saving rather than spending)
• > Set specific goals for the project in advance that must be met if more resources are invested
• > place more emphasis in evaluating managers on how they make decisions
• > separate initial and subsequent decision making

Question 24

emotions and moods and decision making

Answer 24

strongly emotions correct ethical errors
strong emotion = creative decision-making = intuition to solve problem
BUT can hinder because leads to self focused

Question 25

Moods

Answer 25

affect what and how people think in making decisions

Question 26

people in positive mood

Answer 26

remember positive information & evaluate object, people and events positively

Question 27

people in good mood

Answer 27

overestimate the likelihood that good events will occur and underestimate the likelihood of bad ones

Question 28

positive moods promote

Answer 28

creative, intuitive decision making

Question 29

moderate optimism

Answer 29

creative decisions

Question 30

moderate pessimism

Answer 30

process info carefully and effectively

Question 31

Pros to using groups to make decisions

Answer 31

Decision quality (vigilant, more ideas, evaluate better) Decision acceptance and commitment (to be approved by a group means it will be approved by more people) Diffusion of responsibility: ability of group members to share the burden/load of negative (punishment for all)

Question 32

Cons to using groups to make decisions

Answer 32

Time (takes more because process losses), Conflict (better decisions when psychologically safe), domination (one individual = not taking advantage of pros), groupthink

Question 33

Group think

Answer 33

capacity for group pressure to damage mental efficiency, reality testing + unanimous is more important than quality

Question 34

factors that contribute to group think

Answer 34

``` high group cohesiveness strong identification with the group concern for approval of the group isolation from the group promotion of particular decision by group leader ```

Question 35

Group think symptoms

Answer 35

illusion of invulnerability: overconfident illusion of unanimity: perception of unanimity for chosen decision illusion of morality: group decisions = moral decisions rationalization: justify somehow stereotypes of outsiders: unfavourable to outside group Pressure for conformity: pressure each other to fall in line and conform self-censorship: avoid voicing opinions contrary to group's Mind guards: members to protect the group from information against decisions

Question 36

strategies to prevent groupthink

Answer 36

encourage and reward responsible dissent | Outside experts to challenge the group's view

Question 37

groups handle risk

Answer 37

group discussions ->new ideas | group members -> better than others but similar

Question 38

risky shift

Answer 38

riskier than average advocated by members

Question 39

conservative shift

Answer 39

less risky than average by members

Question 40

Rational decision making model

Answer 40

1. Identify problem 2. Search for relevant information 3. Develop alternative solutions 4. Evaluate alternative solutions 5. Choose the best solutions 6. Implement the chosen solution 7. Monitor and evaluate the chosen solution