Lecture 7 - Decision Making

Question 1

Definition of decision making

Answer 1

• a conscious process for making choices with an intention of moving towards a desired course of action (Mintzberg, 1979)
  1) Organisational level, politics and conflict
  2) Group, individuals perceptions and behaviours
  3) Individual- cognitive psychology, information overload personal biases

Question 2

What is perception

Answer 2

• Different individuals ‘see’ the same thing in different ways (Gibson et al, 1994)
• Our perceptions becomes the reality from which we act (Robbins and Judge, 2017)

Question 3

Factors that Influence perception

Answer 3

1) piercers factors: Attitudes, motives, interests, experience, EXPECTATIONS
2) situations factors: TIME, work setting, social setting
3) targets factors: what watching- NOVELTY/DISTINCTIVENESS, motion, sounds, size, background, proximity, similarity

Question 4

Attribution theory - how we judge people differently

- in attributing and judging behaviour we consider if it is externally or internally forced behaviour,

Answer 4

1) Distinctiveness - different behaviours in different situation
High distinctiveness = ext
2) Consensus - all people in same position took same action
High consensus = ext
3) Consistency - responding the same way over time
High consistency = Int

Question 5

Are bad outcomes always caused by bad decisions

Answer 5

1) an optimal decision is one that a decision maker would regard as the right choice regardless of whether she was evaluating her own decision or someone else’s (Milkman, et al 2009)
2) ‘satisfying’ - gather enough info reach acceptable threshold (Herbert Simon, 1956)

Question 6

System 1 vs System 2, Best approach

Answer 6

West, 2000)

1) Intuitive system - fast, automatic, effortless, emotional
2) Slower, conscious, effortful,, logical
- context, task, individual, experience, how we frame the decision

Question 7

System 1 ‘gut feeling’

Answer 7

• busy/perceived time pressure, little/highly complex information, unimportant
  2) Making emotional choices (marry someone) better than system 2 (Craft, 1993)
  3) Complex decisions complex info (move house)
• sometimes lead poor results e.g. limited attention

Question 8

System 2

Answer 8

• have time/energy/motivation, information available, deemed important
• have good reasoning strategies to draw on

Question 9

Decision framing

Answer 9

• Perceive outcome as loss or gain (Kahneman, 1981)

- used in 2014 Scottish referendum ‘do you agree that?’

Question 10

Decision making shortcuts

Answer 10

1) Availability thinking (recently/quickly remember)
2) Confirmation thinking (Computer- unwilling change decisions based on earlier info)
3) Simulation ( judging the outcome of an event based on how easily different outcomes come to mind)
4) Anchoring (no info so use similar event as reference point
5) Satisficing (make first choice meet minimum requirements)
6) Priming (unconscious perceptions created by others- power)

Question 11

Decision making biases

Answer 11

• Attribution errors (late - not commited more emphasis on internal factors)
• Anchoring bias
• Confirmation bias
• Availability bias
• Primacy recency (last experience)
• Halo/horns (see one bad think rest good)
• Stereotype - self- fulfilling

Question 12

Group decision making

Answer 12

1) Group polarisation (one extreme or others)
- illusion of invulnerability (opt, risky)
- false consensus reached
- separation between opposing views
- lack consideration consequences decisions
- lack consideration alternative solutions
2) Risky shift (shared accountability)
3) Groupthink (close-knit, cohesive grouped, perceived status lead
4) The hidden profile (piece of info that other don’t have)

Question 13

Group decision making - what can we do

Answer 13

1) make people aware of their biases (impartial observer, get rid person issues)
2) Machine support humans where required (voting system, knowledge sharing)
- but utilise human strengths workplace

Question 14

The organisational level & where gone wrong

Answer 14

• org decisions cyclical
  1) Political theory model (like a state - alliances make decision best them not org)
  2) Bureaucratic model (rules regulations restrict way make decision)
  3) ‘Garbage can’ (all influences above effect , cant track through linearly)

Question 15

Organisational decision making & execution

Answer 15

• critical decision
  1) Clarity and alignment (know goals/same page, know how each role helps goal)
  2) Roles and structure (right people right place, simple structure supports value creation)
  3) Processes and information (how process/communicate in company)
  4) People and performance (how to make people perform)
  5) Leadership and culture (winning culture, employees personality engage)

Question 16

What can we do to improve our decision making

Answer 16

1) Recruit right people for role
2) Make decisions more often
3) teach new processes (decision trees, mindmap, bayes theorem)
4) Watch/copy others
5) make people accountable (Larrick, 2004)
6) Organisation constraints/facilitators, remove emotion, good job design (avoid overload)
7) nudge (thought design) (Sunstein, 2008)

Question 17

Cognitive Styles for different jobs

Answer 17

1) Task mode - differences in terms of the information processing demands made by people (research lab, fire)
2) Cognitive mode - differences in individuals preferred cognitive styles (every aspect, inspired judgements)

Question 18

What can we do to improve our decision making

Answer 18

• learn from design thinking for complex challenges, separate into
  1) Data gathering + synthesising + idea generation
  2) Idea iteration + improving ideas + rapid prototyping (test feasibility
  3) Idea selection
  4) Piloting
  5) Implementation