EXAM 2 Flashcards
Bounded Rationality
A simplified approach to decision making based on perceiving and interpreting the essential features of a problem.
Satisficing
Seeking solutions that are good enough rather than optimal (more efficient, takes less time, may create more relevant solutions)
Intuitive decision making
An unconscious process created from distilled experience.
Intuitive decision making occurs outside ____________________ .
conscious thought.
Intuitive decision making relies on ______________________________ or links between disparate information
holistic associations
Intuitive decision making is ______________________, meaning it engages the emotions.
affectively charged
Ways which we can address bounded rationality to increase its effectiveness:
- ask to understand
- draw on multiple sources of information
- evaluate those sources of information
- leave enough time to decide
The rational decision making model assumes that the decision maker has _____________________.
complete information
The rational decision making model assumes that the decision maker can identify all relevant options without ______.
Bias
The rational decision making model assumes that the decision maker can choose the option with the ______________________.
highest utility
6 steps to rational decision making:
- Define the problem
- Identify the decision criteria
- Allocate weights to the criteria
- Develop the Alternatives
- Evaluate the alternatives
Select the best alternatives
Overconfidence bias:
The tendency to be over confident about our own abilities or the abilities of others.
There is a poor correlation between confidence and ____________.
accuracy
Anchoring Bias
A tendency to fixate on initial information.
Confirmation Bias
A tendency to seek out information that reaffirms past choices and to discount information that contradicts past judgements.
Availability bias
the tendency to base judgement on information that is readily available.
Escalation of commitment
an increased commitment to a previous decision, despite negative information
Risk Aversion
The tendency to prefer a sure gain of moderate amount over a riskier outcome (even if the riskier outcome has a higher overall expected gain)
Hindsight bias
The tendency to believe that you would have accurately predicted the outcome of an event after the outcome is known.
whistle blowers
people who report unethical behavior by their employer to outsiders.
behavioral ethics
examine why people behave the way they do when confronted with an ethical dilemma
Group think
The tendency to suppress dissent in group settings. People seek group harmony.
group think is most likely when a group is
1
2
3
- Cohesive
- there is isolation from dissenting ideas
- the leader signals what decision she favors
symptoms of group think- might and right
we have the power and we are right for making this decision (Iraq war is an example)
-Illusion of invulnerability/excessive optimism
-Unquestioned belief in group’s morality