lecture 4 Flashcards
rational decision making
define problem- identify decision criteria-allocate weights to the criteria- develop alternatives-evaluating alternatives- select best alternatives
rationality
decisionmaking process that is logically expected to lead to the optimal result
rational problem
prescriptive -> based on a set of assumptions that describe how decisions should be made
bound rationality
attention is limited- intelligence and self knowledge are limited- information available is limited
introspection
exploration of own conscious thoughts feelings, desires and needs
illusion of introspection
poeple wrongly think they have a direct insight into their preference,desires, mental states
overconfidence bias
tendency to be overconfidence about your availability and of others -> bad decisionmaking
anchoring effect
tendency to fixate on initial information and fail to adequately adjust for subsequent information when decisionmaking -> negotiating: you want to make the first offer
availability heuristic
people assess the frequency, probability or likely causes of an event by the degree to which instances or occurance of that event are readily available in memory-> people overestimate things that come more easily to mind
sunk cost effect and escalation of commitment
tendency to keep investing resources in an apparently losing situation, because of earlier money time, energy spent on it
sunc cost effect in organizations
invested a lot in product thus you bring it to the market anyway-> reduce this-> reduce penalties for failure , let others make initial decisions
improve decisionmaking
taking outsiders view- adjusting estimate to the mean
intuition
unconcious-fast-leads to affectively changed judgements-based on experience
