Ch 11.3 Flashcards
What signals a problem?
A gap between existing and desired conditions, often noticed through customer dissatisfaction or employee feedback.
What is a common issue in problem identification?
Most people are poor at identifying problems, with 85% of executives agreeing on this.
What are the challenges in problem identification?
Perceptual defence: Avoiding unpleasant truths.
Functional specialty: Focusing on one area and missing broader issues.
Solution bias: Jumping to solutions too quickly.
Symptom focus: Misidentifying symptoms as the main problem.
How does framing affect decisions?
Framing a problem in different ways can lead to very different decisions, even if the facts are the same.
What is a good practice for decision makers?
Be aware of how problems are framed.
Try different frames to explore alternative solutions.
What happens after problem identification?
A search for information begins to clarify the problem and suggest solutions.
What can affect the information search?
Too little information: Biases like availability bias or overconfidence can limit the information gathered.
Too much information: Information overload can confuse and lead to errors or delays.
What is availability bias?
Favoring easily accessible information, even if it’s irrelevant or misleading.
What is overconfidence bias?
Being overly sure of one’s decisions, even without enough data.
What is confirmation bias?
Seeking out information that supports your existing beliefs or solutions.
What is the “not-invented-here” bias?
Disregarding external ideas or solutions, leading to inefficiency or missed innovation.
What is information overload?
Having more information than needed, leading to confusion, errors, and low-quality decisions.
How do decision makers often misuse information?
Collecting irrelevant data.
Justifying decisions with unnecessary information.
Over-relying on information without proper analysis.
How does advice-seeking affect decision making?
Seeking advice from experts or colleagues generally improves decision quality.
What is the bias with paid advice?
People tend to value paid advice more than free advice of equal quality.
What do decision makers do after identifying alternatives?
They list possible solutions, evaluate them, and choose the best one.
What happens in perfect rationality?
The ideal decision maker knows all alternatives, their values, and probabilities, choosing the one with the greatest expected value.
What happens in bounded rationality?
Decision makers may not know all alternatives, their values, or probabilities, leading to incomplete or biased choices.
What cognitive biases affect evaluation?
Ignoring base rates: Not using statistical data (e.g., failing food products have high failure rates).
Overweighting small samples: Giving too much weight to small data sets.
Overestimating probabilities: Expecting unlikely events to occur (e.g., assuming real estate prices will keep rising).
Anchoring effect: Failing to adjust estimates enough from initial numbers (e.g., real estate agents being influenced by asking prices).
How can biases be reduced?
Holding people accountable for their decisions before they make them can reduce biases.
What is satisficing?
Choosing a solution that meets an acceptable standard, rather than finding the best one.
Why do decision makers satisfice?
Bounded rationality leads to limited alternatives and too much complexity, causing decision makers to settle for good enough solutions.
Why are alternatives crucial in decision making?
Limited alternatives can lead to tunnel vision and poor decisions, making it important to explore a wide range of options.
How does framing affect decision making?
Loss framing: People take more risks when the decision is framed as a loss.
Gain framing: People make more conservative choices when the decision is framed as a gain.
