m4ch2 Flashcards
What are the two ways or systems of thinking?
system 1: intuition
system 2: slow and logical
What is the rational model of decision making?
explains how managers should make decisions
What are the 4 steps of rational model of decision making?
1- identify the problem
2- generate alternative solutions
3- evaluate alternatives and select a solution
4- implement and evaluate the solution chosen
What is the problem with that model?
people are not rational when making complex decisions
What is bounded rationality?
ability to make decisions bounded by constraints
What is satisficing?
choosing a solution that meets some minimum qualifications, one that is “good enough”
What is intuition?
judgments, insights, or decisions that come to mind on their own without evoking cues
What is the two forms of intuition: holistic hunch vs automated experience?
holistic hunch: a subconsious judgement
automated: a choice based on familiar situations
What are the two sources of intuition?
expertise and feelings
What are the two types of expertise?
explicit and tacit
What are judgmental heuristics?
cognitive shortcuts or biases that are used to simplify decision making
What is confirmation bias?
selective information gathering
What is overconfidence bias?
results in us overestimating our skills relative to those of others and accuracy of our predictions
What is the availability heuristic?
tendency to based decisions on information that is readily available in memory
What is the representativeness heuristic?
used when people estimate the probability of an event occurring
What is anchoring bias?
decision makes are influenced by the first information received about a decision, even if its irrelevant
What is hindsight bias?
when knowledge of an outcome influences our belief that we could have predicted the outcome earlier
What is framing bias?
relates to the manner in which a question is posed or framed
What is escalation of commitment bias?
tendency to stick to an ineffective course of action when it prob won’t change
What is decision making style?
how an individual perceives stimuli and the general manner in which they chose to respond to such information
What are the two dimensions of the decision making model?
tolerance for ambiguity and value orientation
What is directive? Analytical? Conceptual? Behavioral?
Directive- low abmiguity, task oriented
Analytical- high abmiguity, task oriented
Conceptual- high abmiguity, people oriented
Behavioral- low abmiguity, people oriented
