DM Flashcards
“The process of decision are largely techniques for narrowing choices”
Chester Barnard
A person with responsibility for both routine activities and long termplanning is likely to find the routine activities taking greater part of his day
Gresham’s Law
Optimal rational choice between alternate course of action
Herbert Simon
Decision making is categorised into?
3 parts: URC
* Uncertain
* Risky
* Certain
Rational Decision is aka? It is studied through which model?
Maximising Decision
Economic-Man Model
Satisficing Decision is made when we have? What kind of satisfaction is caused? It is aka?
Incomplete Knowledge
Sufficient satisfaction
Bounded Rationality
Satisficing Decision is measured through which model?
Administrative man model
Decisions which are Standard, Routine, well structured and easy to make?
Programmed Decision
Can be taken by lower management
Decision to be made when information is poorly structured and lack full information?
Bounded Rational/Satisficing
Non-standard, non-routine, unstructured problems - not routine or daily occurance.
Non-programmed
Decision that affects long-term direction of business - Non-programmed and non-routine
Strategic decision
Upper and Middle Level Management
Mid-term decisions that are Routine, Repetitive, Rule based, Regular
Tactical Decision
How many staff to recruit, what kind of marketing
What is Policy Decision?
Non-programmed decision that are taken by top-level management
Short term decision aka administrative decision
Operational Decision
Inventory management, resource allocation, cost management, reorganisation of supply chain are examples of?
Operational Decisions
Simon model is based on how many phases?
4 phases: IDCI
- Intelligence
- Design
- Choice
- Implementation
In Simon’s Decision Making Model, What is aka semi-programmed stage? It is which step in the model?
Intelligence phase
1st step in model
Is Simon’s Decision Making Model required for programmed decision making?
No
Which stage of the Simon’s Decision Making Model deals with Defining the problem and contructing a model to solve it?
Design
Step 2
In which phase of Simon’s Decision Making Model is the actual decision being made?
Choice
What are Heuristics?
Mental Shortcuts
Theory introduced by Herbert Simon
Why Heuristics are used?
3 points
- Attribute - to make things simpler
- Effort Reduction
- Fast & Frugal
Type of heuristics that is determined by the readiness of the information available and how easy it is to bring something to mind, is?
Available heuristic
Choosing train after thinking about plane accidents; ordering in instead
Type of Heuristics where we are comparing the present situation to the most representative mental prototype?
Representative Heuristics
Taking a dog in because they remind you of your pet
Type of Heuristic that is dependent on a person’s mood/emotion
Affect heuristics
Good Mood - Fewer risks acknowledged while taking decison
Type of Heuristics with a tendency to be overly influenced by 1st info we hear?
Anchoring Heuristics
Buying offline on seeing discount- realise later that online discount >
A factor influencing DM where we avoid repeating past mistakes or prior positive results can motivate a yes decision
Past Experience
Significant Factors that Influence Decision Making
- Past Experience
- Cognitive Biases
- Escalation of Commitment
- Individual Differences
- Personal Relevance
self-serving bias that confirms what we already believe in?
Confirmation Bias
Higher price = better quality
Overall impression of a person influences how you feel and think about their character
Halo effect
Seems like a good person - anything they do is good. Opp: Horn Effect
Tendency to blame external forces for circumstances?
Self-serving Bias
Good thing happens for my effort - bad is someone else’s fault
Tendency to call an event more predictable after they happen
Hind-sight bias
Your own actions to external causes, others fate to internal causes
Actor Observer Bias or
Fundamental Attribution Error
Avoid information that they perceive as potentially unpleasant
ostritch bias
Who suggested the Bounded Rationality Model and who suggested the economuc man model?
Bounded Rationality: Simon
Economic Man: Webber
Lindbolom Model aka?
Incremental Model
or Branch Technique Model
All steps are incrementally discussed upon
What kind of model is Etizioni Mixed Scanning model
Hybrid Model
Rationalism + Incrementalism
Economic rational model + extra rational model is which type of model?
Drors Optimal Model
What are the 5 main types of power found in an organisation?
Political model
- Legitimate power - due to position
- Reward power - managers ability
- Expert power - knowledge
- Reference power - Charisman or identification
- Coercive Power - emotional or physical threat
Prospect Theory is given by?
Amos Tversky, Daniel Kahneman
A theory that Reflects empirical finding - contrary to rational choice theory, people fear losses more than value gains
Prospect Theory
2 phases of prospect theory
editing & evaluation
What are 2 kind of biases?
Cognitive (7) & Emotional (3)
Garbage can model of decision making is based on?
Limited Knowledge & uncertainty
Intuitive Decision Making is based on?
Instinct
A DM model where a small number of alternatives & consequences are considered at each stage of the DM Process. The cost of making a decision is minimised as each step is proposing only a small change and imediate effect is minimal and not disruptive.
Lindblom Model
Strategy for risk averse people who want to minimize risk by selecting a decision with least possible loss
Maximin
Strategy for risk takers, who want to maximise gains by selecting the best possible outcome
Maximax
Strategy for risk neutral people, who want to minimise potential regret, loss or missing out.
Minimax
A DM model that presents 7 yes-no questions to answer, followed by 5 decision making styles to choose from. It is the most complex DM model and requires decision makers to utilize a decision tree to arrive at the right decision style
Vroom-Yetton DM Model
Similar to intuitive DM Model, it heavily relies on the decision makers experience and instinct. However, it is a little bit more structured
Recognition primed model
Vroom yetton DM model was specifically designed for?
Collaborative decision making - best for multiple team members
How many steps are there in rational DM model?
8
What are the Steps in Rational DM Model?
- Define the Problem
- Define the criteria
- Weigh the criteria
- Find alternatives - brainstorm to meet criteria
- Evaluate alternatives
- Choose
- Implement
- Evaluate results
Who developed the synectics method of problem solving?
George Prince & William Gordon
A problem solving method that combines seemingly unrelated elements using problem analogies and placing them in different environments. It is based on the idea that people are more creative when they understand how creativity works.
Synectics
Trial & Error is a kind of?
Heuristics
Routine & repetitive decisions that are usually guided by SOPs or habitual responses, making them predictable and easy to manage?
Mechanistic DM
Acc to prodpect theory, how do people typically evaluate options that involve risk and uncertainty
Minimizing losses
A theory that maintains that the whole is greater than the sum of its parts. It is considered a top-down approach.
Gestalt’s Theory
(8 points)
Mostly used in healthcare
Who is known as the father of Heuristics?
Herbert Simon
Who developed the theory of heuristics
Amos Tversky, Daniel Kahneman
Tendency to perceive patterns in random occurances?
Apophenia
To present a situation in a way that it gives a certain impression
Framing
A decision making model which states that people make decisions by recognising patterns and then choosing the best course of action
if this, then this
Recognition primed Model
Recognition primed model is by?
Garth Saloner and David A Rosenkrantz
What are the Gesalts Principles?
- Similarity
- Continuation
- Closure
- Proximity
- Figure/ground
- Symmetry & order
Pareto analysis believes in what rule?
80:20 rule
When one cognition follows on from or fits with, another cognition, reinforcing initial piece of knowledge, it is called?
Cognitive consonance
Individual ends up agreeing to the strong opinion of the group in spite of their own judgement
Normative influence
If decision maker is neither optimistic or pesimistic, decides to chose between these extremes by assigning them weights. The decision with max weight gives max profit -it is the decision chosen
Hurwicz Criteria
Who is associated with behaviourism in DM
Herbert Simon
