Chapter 7 Decision Making and Creativity

Question 1

What is the composite valence and how is it calculated?

Answer 1

It is the measurement of value in relation to how relevant the outcome is multiplied by the probability the outcome will occur.

This way it helps us measure the value of certain markers when it comes to decision making

Question 2

What are the 6 steps of the rational decision-making process

Answer 2

1. Identify the Problem or Opportunity
2. Choose the best decision process (methodology)
3. Develop or discover possible choices
4. Select a choice (preferably the one with the highest value)
5. Implement the choice
6. Evaluate (review) the selected choice

Question 3

What are some problems with problem identification?

Answer 3

1. Solution-focused problems, essentially jumping on the problem too fast without having a very well-defined outline of what the problem is
2. Decisive Leadership, sometimes being decisive is good but it also leads to pre-firing on problems before a proper solution is established
3. Stakeholder Framing, how the stakeholders (employees, suppliers, etc.) talk about problems and what level of bias or misinformation they convey to the decision maker
4. Perceptual Defence, occurs in high neuroticism decision-makers
5. Mental Models, knowledge structures that are developed to describe, and predict the world around us

Question 4

What is bounded rationality?

Answer 4

The idea that people are bounded in their decision-making capabilities due to:
- limited information
- limited information processing
- the tendency toward satisficing rather than maximizing when making choices

Question 5

What is an implicit favorite?

Answer 5

A preferred alternative out of a selection alternative that usually also becomes the anchor point for all future comparisons

Question 6

What is confirmation bias?

Answer 6

The process of screening out information that is contrary to our values and assumptions, and to more readily accept confirming information

Question 7

What are the three Biased Decision Heuristics?

Answer 7

Anchoring Heuristic - the tendency to anchor the initial goal or starting point
Availability Heuristic - basing choices off of the most readily available memories that we recall, so usually a recency bias but just means basing decisions off of what we most readily remember about something
Representative Heuristic - a natural tendency to evaluate probabilities of events or objects by the degree they’re represented by past happenings and similar events

Question 8

What is satisficing?

Answer 8

Selecting an alternative that is satisfactory or good enough rather than an alternative that maximizes the possible value.

This is usually the case as it is very hard to get the perfect answer

Question 9

What role do emotions and intuition play in the decision-making process?

Answer 9

Emotions form early preferences (which then brings along all the issues of having an earlier preference)

Emotions Change the Decision Evaluation Process (we pay more attention to details when in a negative mood and are more likely to use stereotypes to make decisions)

Emotions Serve as Information when we evaluate alternatives

Question 10

What is intuition?

Answer 10

The ability to know when a problem or opportunity exists and to select the best course of action without conscious reasoning meaning that it involves the subconscious a lot more

Question 11

What is the escalation of commitment? And how is it related to sunk cost fallacy

Answer 11

Escalation of commitment is the tendency to repeat an apparently bad decision or allocate more resources to a failing course of action.

Sunk cost fallacy is essentially this action but based more specifically around the amount already invested in the project and the specific fear of losing that value

Question 12

What is the self-enhancement effect?

Answer 12

The inherent motivation to be perceived positively by others and to take actions that lead to that

Question 13

Prospect theory effect?

Answer 13

The effect of feeling more strongly the negative emotion of losing something as opposed to the positive emotion of gaining something of equal value. This probably plays into some deeper part of human psychology’s sensitivity and responsiveness to negative emotion

Question 14

What are the 4 steps of the creative process?

Answer 14

1. Preparation
2. Incubation
3. Illumination
4. Verification

Question 15

What are the 4 characteristics of a creative person?

Answer 15

1. High openness to experience
2. Cognitive and analytical intelligence
3. Low need for affirmation (Independence)
4. Persistence

1 and 3 are combined but the 5th one is
Knowledge and Experience - with the caveat that the knowledge of a creative person is very open to new possibilities and expanding

Question 16

What are some activities that encourage creativity?

Answer 16

1. Redefine the problem
2. Associative Play
3. Cross-pollination
4. Design Thinking

Question 17

What are the four rules of design thinking?

Answer 17

1. Human rule (involve several people, include clients and end users to enable an iterative process)
2. Ambiguity Rule (preserve ambiguity rather than seeking an answer too fast, redefine the problem, develop multiple solutions)
3. Redesign Rule (review past solutions and reapply them)
4. Tangible Rule (build several low cost prototypes, tolerate failure, don’t analyze alternative purely in concept, try to apply them

Question 18

What are some benefits of employee involvement in decision making?

Answer 18

1. More views to look at the problem from, especially from employees who usually have a lot more recent and specialized knowledge to their respective positions
2. Decisions that might be unsavory to implement and get the employees to use might be adopted more easily if the employees feel that they’ve been listened to and that they’ve contributed to the development of the solution.

Question 19

What are some contingencies of employee involvement?

Answer 19

• Decision structure
• Source of Decision
• Decision commitment
• Risk of conflict