MGT 110 exam #2 flashcards
What is FAE?
Fundamental Attribution Error, people place an undue emphasis on internal characteristics of the agent in explaining other peoples behavior
- “The tendency to believe that what people do reflects who they are”
Four Steps to Remember a Person Name?
Focus, Ask, Comment, Employ
1. Focus: Lock in on the person’s face, lean forward and turn your head slightly to one side
2. Ask: inquire about his name, ask or clarify that you heard the name correctly, genuinely pay attention
3. Comment: say something about the name and cross-references it in your head
4. Employ: put name to use right away, a great aid to memory is to teach material to someone else, you can introduce them to someone else, don’t forget to end the conversation using their name, its a pleasure to meet you
Solving Problems
Most important step in decision making,
deviation between the current and desired situation
Self Serving Bias
the tendency for people to take personal credit for success but blame failure on external factors
We make bad decisions because intuition?
Intuition*The ability to immediately understand something without conscious reasoning or evident rational thought
- can lead to cognitive biases: FAE & self-serving bias
Heurtics
mental shortcut that saves time when making problem and make judgements quickly and efficiently but at the cost of occassionally sending us off course
Judgement Errors
- Availability
- Representativeness
- Anchoring and adjustment
- Confirmation
- Overconfidence
- Escalation of commitment
Availability
tendency to estimate the probability of something occurring by how easily we can recall those events
- easily remember emotional events therefore overestimate traumatic events
-ex. 16 shark attacks per yr in US but are more likely to die from a plane crash or hit by lightning
Representatives
Judge the probability of something occurring based on how well it fits our mental model of similar situations,events, or people
Anchoring and Adjustment
influenced by an individual anchor point an do not sufficiently move away from that point as new information is provided
Ex. selling a car , adjust what we’re willing to pay based on anchor
Confirmation
Tendency to search for, interpret, favor and recall information in a way that confirms one’s pre-existing beliefs or hypotheses
Jon’s Tesla Bias
Overconfidence
Tendency to be more confident in our judgement than is objectively reasonable
Ex. People are more sure that they are correct than they should be
Ex. Leader
-overconfidence is one example of miscalibration of subjective probabilities
Escalation of Commitment
when we continue to dedicate resources, including time and money, to a failing course of action
ex. sunk costs, not wanting to give up and admit a mistake
Ex. Project in NY calculated to be $75 million built in 1973, it actually cost $6 billion and was done at 1986
Tactics to reduce Bias
- Confidence estimates
- Develop a probability of range or confidence of something occuring - Trial-and-error Calibration
- use prior data to calibrate your estimates - Healthy Skepticism
- be prepared to question yourself and others
-seek out negative or disconfirming evidence
Decision Making
process of making choices among alternatives with the intention of moving toward some desired state of affairs
Rational Critical Decision Making
rely primarily on two piece of information
- Probability that each outcomes will occur
- Valence or experienced satisfaction of each outcome
Effective Problem Solving
There is a difference between good decisions and good outcomes
- cannot fully control the outcomes of our decisions
There is no such thing as a perfect decision process
- bounded rationality
-satisficing
- people rely on logic to evaluate and choose alternatives
Prospect Theory
is a behavioral model that shows how people decide between alternatives that involve risk and uncertainty (e.g. % likelihood of gains or losses).
It tells us that people are risk averse when it comes to potential gains but risk seeking when it comes to avoiding loss.
Bounded Rationality and Prospect Theory
*Choice A: You have a 50% chance of gaining $2,500 and a 50% chance of no gain.
*Choice B: You have a 100% chance of gaining $1,000.
Risk Aversion vs Risk Seeking
Losses weigh more heavily emotionally in decision making than an equivalent gain
we are willing to engage in risk-seeking behavior where we can limit our losses
people will take more risk to avoid a loss
Framing
to whether questions are presented as gain or losses
- people are more risk averse when decisions are framed in terms of loss
People put more emphasis on gains rather than losses, make decisions that increase their gains and avoid loss
Despite our limitations, adhering to a problem-solving model has been shown to improve decision quality
The model consists of five major steps that we abbreviate into acronym PADIL: Decision Making Framework
Problem
Alternatives
Decide
Implement
Learn
Problem:
Define and structure the problem , focus on the root cause, not the outcome
Affinity Diagram
an idea generation method that allows your to sort aspects of the problem into themes or categories
Typical situations are
-after brainstorming exercise
analyzing verbal data
collecting large data sets
