Chapter 7 Flashcards
decision making
the conscious process of
making choices among
alternatives with the intention
of moving toward some desired
state of affairs
rational choice decision making
the process of using pure logic
and all available information
about all alternatives to choose
the alternative with the highest
value
Rational choice decision relies primarily on two pieces of information:
- the probability that each outcome will occur
- the valence or expected satisfaction of each outcome
What are the steps of the rational choice decision-making process
- to identify the problem or recognize an opportunity
- Choose the best decision process
- Discover or develop possible choices
- Select the choice with the highest value
- implement the selected choice
- Evaluate the selected choice
Programmed decision
Follow standard operating procedures
Nonprogrammed decisions
Require all steps in the decision model because the problems are new, complex, or ill-defined
Problems with problem identification:
5 most widely recognized problems
- solution-focused problems
- Decisive leadership
- Stakeholder framing
- Perceptual defence
- Mental models
Solution-focused problems
Some decision makers describe the problems as a veiled solution.
They fail to fully diagnose the underlying causes that need to be addressed.
Decisive leadership
Many leaders announce problems or opportunities before having a change to logically assess
the situation. The result is often a misguided effort to solve an ill-defined problem or resources
wasted on a poorly identified opportunity.
Stakeholder framing
Stakeholders provide (or hide) information in ways that makes the decision maker see the situation as a problem, opportunity, or steady sailing.
Employees point to external factors rather than their own imperfections as the cause of production delays. Suppliers market their
new products as unique opportunities and competitor products as risky choices. Many
other stakeholders also frame the situation in ways that benefit them
Perceptual defense
People sometimes fail to become aware of problems because they block out bad news as a
coping mechanism.
Mental models
Decision makers are victims of their own problem framing due to existing mental models. Mental models are visual or relational images in our mind of the external world.
bounded rationality
the view that people are
bounded in their decisionmaking capabilities, including access to limited information, limited information processing,
and tendency toward satisficing
rather than maximizing when
making choices
Implicit favorite
A preferred alternative that the decision makes uses repeatedly as a comparison with other choices. Sometimes decision makers aren’t even aware of this favoritism.
Anchoring and adjustment heuristic
This heuristic states that we are influenced by an initial anchor point and do not sufficiently move away from that point as new information is provided. The anchor point might be an initial offer price, initial
opinion of someone, or initial estimated probability that something will occur. This bias is associated with the problem we described a few paragraphs ago,
namely that human beings tend to compare alternatives rather than assess them purely against objective criteria. Therefore, if someone requests a high initial price for a car we want to buy, we naturally compare—and thereby anchor—our alternative offer against that high initial price
Availability heuristic
The availability heuristic is the tendency to estimate the probability of something occurring by how easily we can recall that event. Unfortunately, how easily we recall something is due to several factors, not just how often it occurs (probability). For instance, we overestimate the probability or frequency of recent events as well as emotional events (such as earthquakes and shark attacks) because they are easily remembered.
Representativeness heuristic
Representativeness heuristic states that we pay more attention to whether something resembles (is representative of) something else
and less attention to more objective statistics about its probability. In other words, our decisions tend to rely more on stereotypes than on
objective statistical probabilities. Suppose that 80 percent of the students in a sociology course are sociology majors, but the remaining 20 percent are computer science students taking the course as an interdepartmental elective. we tend to believe a student is from computer science if they look and act like a stereotype of a computer science student
satisficing
selecting an alternative that is
satisfactory or “good enough,”
rather than the alternative with
the highest value
(maximization)
What do people do when they are presented with a large number of alternatives/choices
They don’t choose at all. Because it is less cognitively challenging
Decisionmakers often have/don’t have emotional attachment to the decision
They often have
intuition
the ability to know when a problem or opportunity exists and to select the best course of action without conscious reasoning
How are emotional markers influencing decision making
Our brain very quickly attaches specific emotions to information about each alternative, and our preferred alternative is strongly influences by those initial emotional markers
How does mood influence decision evaluation?
In a negative mood, we pay more attention to details. In a positive mood, we rely more on programmed decision routines
How do emotions shape decision evaluation?
Emotions shape how we evaluate information, not just which choice we select.
How do emotions act as information in decision-making?
We listen to our emotions to gain guidance when making decisions.
Do people consciously recognize all their emotional experiences in decision-making?
Most emotional experiences remain below conscious awareness, but people try to be sensitive to them.
Do people rely solely on intuition or logical analysis?
Some rely more on intuition, others on logical analysis, but they never completely replace each other.
What kind of process is intuition?
Both an emotional and a rapid nonconscious analytic process.
What do gut feelings represent?
Emotional signals that have enough intensity to make us consciously aware of them.
Are all emotional signals intuition?
No, all gut feelings are emotional signals, but not all emotional signals are intuition.
How does intuition function?
It involves rapidly comparing observations with deeply held mental models learned through experience.
Intuition also relies on action
scripts that speed up our response to pattern matches or mismatches. Action scripts are programmed
decisions; they shorten the decision- making process by jumping from problem identification to selection of a solution. Action scripts are also generic, so we need to consciously adapt them to the specific situation.
What does intuition signal?
It signals a problem or opportunity before conscious rational analysis occurs.
What are action scripts?
Programmed decision routines that speed up responses to pattern matches or mistakes.
Are action scripts rigid?
No, they are generic and consciously adapted to specific situations.
scenario planning
a systematic process of thinking
about alternative futures and
what the organization should do
to anticipate and react to those
environments
escalation of commitment
the tendency to repeat an
apparently bad decision or
allocate more resources to a
failing course of action
Do decisive leaders make better decisions?
Decisions tend to have a higher value rate when leaders are decisive rather than contemplative.
What should be remembered when making decisions?
Decisions are influenced by both rational and emotional processes.
Are decision-makers always honest in evaluating their decisions?
No, they often ignore or under-emphasize negative outcomes while overemphasizing new positive information.
What is post-decisional justification?
Decision makers ignore negative outcomes and emphasize positive aspects of their choice.
What is the self-justification effect?
People try to appear rational and competent by continuing a failing course of action.
What is self-enhancement?
A person’s motivation to maintain a positive self-concept, increasing the risk of escalation of commitment.
How does the self-enhancement effect impact decision-making?
It biases interpretation of negative evidence as a temporary aberration.
What is the prospect theory effect?
People feel more dissatisfaction from losing a certain amount than satisfaction from gaining an equal amount.
How does the prospect theory effect lead to escalation of commitment?
It motivates people to take risks to avoid losses by investing more in a losing project.
What is the sunk cost effect?
People feel motivated to invest more in projects with already invested resources.
How do time investments relate to sunk costs?
Time already invested makes it harder to abandon a project.
How can decision evaluation be improved?
Ensure different people evaluate the decision.
- Establish preset abandonment or reevaluation points.
- Find systematic feedback sources.
- Involve multiple people in evaluation.
What is creativity?
The development of original ideas that make a socially recognized contribution.
What are the stages of the creative process?
- Preparation – Investigating the problem and gathering knowledge.
- Incubation – Reflecting on the problem subconsciously.
- Illumination – Sudden awareness of a new idea.
- Verification – Logical evaluation and experimentation of the idea.
What are the characteristics of creative people?
Cognitive and practical intelligence
Persistence
Knowledge and experience
Independent imagination
How do organizations support creativity?
Learning orientation
Motivation from the job itself
Open communication
Job security
Nontraditional workspaces
Leadership and coworker support
What are the three cornerstones of creativity in organizations?
Hiring people with strong creative potential
Providing a supportive work environment
Encouraging creativity-building activities
What are the four types of creativity-building activities?
Redefine the problem – Looking at issues differently.
Associative play – Using unrelated ideas to generate new solutions.
Cross-pollination – Exchanging ideas between different teams or bringing in new perspectives.
Design thinking – A human-centered, solution-focused creative process.
What are the four rules of design thinking?
The Human Rule – Involves teamwork and empathy for end users.
The Ambiguity Rule – Embraces uncertainty to encourage creativity.
The Re-design Rule – Analyzes past solutions to improve future ones.
The Tangible Rule – Prioritizes prototyping over abstract analysis.
What factors determine the optimal level of employee involvement?
- Decision structure – Whether the decision is programmed or nonprogrammed.
- Source of decision knowledge – If the leader lacks knowledge, employees should be involved.
- Decision commitment – If employees are unlikely to accept a decision, involvement is necessary.
- Risk of conflict – If employees’ goals conflict with the organization, involvement may be counterproductive.
