Ch 8 Flashcards
(22 cards)
The act of choosing one alternative from among a set of alternatives
Decision Making
Types of Decisions
1) Programmed Decision
2) Nonprogrammed Decision
Relatively structured decision or recurs with some frequency (or both)
Programmed Decision
Relatively unstructured decision and occurs much less often than programmed decisions
Nonprogrammed Decisions
Condition in which the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative
State of Certainty
Condition in which the availability of each alternative and its potential payoffs and costs are all associated with probability estimates. Accompanied by moderate ambiguity and the chances of a bad decision.
State of Risk
Condition in which the decision maker does not know all the alternatives, the risks associated with each, or the likely consequences of each alternative.
State of Uncertainty
A perspective approach to decision making that tells managers how they should make decisions; it assumes their decisions will be in the organizations best interest.
- Assumes decision makers have complete information
- Can effectively eliminate uncertainty
- Evaluate all aspects logically and rationally
Classical Model of Decision Making
Rational Decision Making Steps
1) Recognizing and defining the decision situation
2) Identifying alternatives
3) Evaluating alternatives
4) Selecting the best alternatives
5) Implementing the choses alternative
6) Following up and evaluating the results
A commitment to finding and using the best theory and data available at the time to make a decision.
Evidence-based Management (EBM)
Five Principles of Evidence-based Management
1) Face hard facts and build a culture in which people are encouraged to tell the truth
2) Be committed to “fact-based” decision making
3) Treat the organization as an unfinished prototype (encourage experimentation and learning by doing)
4) Look for the risk and drawbacks in what people recommend
5) Avoid basing decision on untested but strongly held beliefs
Argues that decision makers (1) use incomplete and imperfect information, (2) are constrained by bounded rationality, and (3) tend to “satisfice” when making decisions
The Administrative Model
Concept suggesting that decision makers are limited by their values and unconscious reflexes, skills, and habits.
Bounded Rationality
Tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency
Satisficing
Informal alliance of individuals or groups formed to achieve a common goal
Coalition
Innate belief about something without conscious consideration
Intuition
When a decision maker stays with a decision even when it appears to be wrong
Escalation of Commitment
Extent to which a decision maker is willing to gamble when making a decision
Risk Propensity
Forms of Group and Team Decision Making
1) Interacting Group/Team
2) Delphi Group
3) Nominal Group
Group where members openly discuss, argue, and agree on the best alternative
Interacting Group/Team
Form of group decision making in which a group arrives at a consensus of expert opinion
Delphi Group
Structure technique used to general creative and innovative alternatives or ideas
Nominal Group
