Decision Making Flashcards
what are compensatory strategies?
the search to regard all aspects of a situation
the rules: weighted (sum of all relevant attributes of potential alternatives) and tallying (pro-and-con list). Still, all available info needs to be examined
what are non-compensatory strategies?
help make a sufficiently good decision, not an optimal one
they can be conjunctive rule (exclude) or disjunctive rule (include)
what are the factors in decision-making?
cognition, emotion, context
what are the 2 major challenges of cognition?
- each choice has multiple attributes or no optimal alternative
- more than a bit of information can overwhelm the cognitive capacity
how are cognitive factors?
often sequential, limiting options at every step
emotional decisions
- people dislike making emotional trade-offs
- emotions are direct input into decision processes
=> emotional strategies are more efficient and easier than cognitive
context factors
what influences behaviour depends on what stands out at that time
preferences are often made in the moment of elicitation
social context shape behaviour directly or indirectly
what are the aspects of context shaping decision processes?
- available opportunities
- the importance of default option
- time pressure and constrained resources
- the choices of others
what are the types of social action according to Weber?
- instrumentally rational
- value-rational
- affectual
- traditional
Action cannot be meaningful unless is goal-oriented
Affectual or traditional actions are incompatible with instrumentally rational action
what is behavioural theory?
firms are working collectives of participating stakeholders that have multiple objectives
what is Agency Theory?
the relationship between the principal and an agent that makes the decisions on their behalf
what is the Positive Agency Theory?
firm is a nexus of contracts
