chapter 6 Flashcards
decision making
the action or process of identifying a strategy to resolve problems
types of decisions managers makes:
- programmed
- non-programmed
programmed decisions
routine tasks based on pre-established rules and guidelines
non-programmed decisions
based on reason and/or intuition in response to a unique situation that requires tailored actions
managers often use what to help them make good decisions and find solutions to complex problems:
five-step model of decision making (also called the classical model of decision-making)
identify the steps in the classical decision making model (five step model)
step 1: DEFINE the problem
step 2: IDENTIFY and weigh decision criteria
step. 3: GENERATE multiple alternatives
step 4: RATE alternatives based on the decision criteria
step 5: CHOOSE, IMPLEMENT, AND EVALUATE the best alternative
discuss the different decision making styles used by manages
research has shown that decision-making styles vary along two dimensions: value orientation and tolerance for ambiguity. Combined, the two dimensions form the four styles of decision-making:
the four styles of decision making:
- directive
- analytical
- conceptual
- behavioral
decision-making style
the way in which an individual perceives information and analyzes solutions
identify the factors that influence our decisions in the workplace
while making decisions requires being in the right mindset and following a series of important steps, other factors may influence the way in which we make decisions in the real world
these factors include: bounded rationality, satisficing, intuition, heuristics, and bias
bounded rationality: rational decision making that is limited by time, cognitive abilities, and available info
satisficing: choosing an acceptable solution rather than an optimal solution
intuition: a decision based on feeling, previous experience, and existing knowledge
heuristics: set of informal rules used to simplify and expedite the decision-making process
bias:
nobel prize winning psychologists Kahneman and Tversky suggested three types of heuristic:
- availability heuristic: making judgments on certain events based on how easily an example springs to mind
- anchoring and adjustment heuristic: the tendency for people to base decisions on the first piece of info before adjusting it
- representative heuristic: the tendency to make judgments based on our own mental models and stereotypes
- our heuristics tend to lead to biases and errors relating to how we process information. These biases include common- information
Our heuristics tend to lead to biases and errors relating to how we process information. These biases include:
- common- information bias
- confirmation bias
- sunk cost bias
- hindsight bias
- escalation of commitment
- framing bias
common-information bias
the tendency to place more importance on info held by the majority of people while failing to take into account views held by the minority
confirmation bias
the inclination to seek out information to support our views while disregarding info that does not
sunk cost bias
when people continue a certain behavior because they have already invested too much money in it
hindsight bias
the propensity to overestimate an outcome that could not have possibly been predicted
escalation of commitment
when people increase their level of commitment into a decision despite receiving negative info about it
framing bias
a cognitive bias where decisions are influenced by the way information is presented rather than the facts themselves
discuss how managers can overcome barriers to decision-making
our biases tend to manifest themselves in our behavior, which stifles the creative process, causing barriers to decision-making. People hesitate to make decisions for a number of reasons: fear they may not be right, fear of what others might say or think, or fear of following through on a decision, once it has been made. Several tools are available to help people organize their thoughts and resolve decision-making paralysis: the Ben Franklin balance sheet, the report card method, and partner-in-absentia method
Several tools are available to help people organize their thoughts and resolve decision-making paralysis:
- The Ben Franklin balance sheet
- The report card method
- Partner-in-absentia method
the ben franklin balance sheet:
- founding father ben franklin often used this technique to make decisions
- to start, list your pros and cons: then look at both to see which one wins. This is a useful technique for answering straightforward yes/no questions, for instance whether you should take a job
report card method
- this is helpful for when you want to compare a few things against each other.
- For instance, you would like to buy a new car but can’t decide which model to choose. List the criteria for each model and grade each one on a scale of 1 to 10. The model with the highest number determines your choice
partner-in-absentia method
- It can be difficult to make decisions when our bosses or teammates are away or inaccessible. This is why anticipatory planning is so important.
- The partner-in-absentia method involves finding out the amount of decision-making autonomy you have while your boss is away, who you need to consult when making decisions, and how you can access the info you need to make decisions
groupthink
a usually unconscious mode of group decision-making in which individuals prioritize agreement over analysis
