chapter 11: decision making Flashcards

1
Q

define decision making

A

the p​rocess​of developing a commitment to some course of action

can also be described as a process of problem solving

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2
Q

what does decision making involve?

A

Making a choice among several actions alternatives

Making a commitment of resources (time, money or personnel)

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3
Q

when does a problem exist?

A

exists when a gap is perceived between some existing state and some desired state

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4
Q

Well-structured problems

A

the existing state and desired states are clear

how to get from one state to the other is fairly obvious

the solutions do not create much controversy

They are repetitive & familiar

They can be programmed

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5
Q

what is the most standardized way of solving a well-structured problem

A

by programing them

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6
Q

what does programing a well-structured problem do?

A

enable the decision maker to go directly from problem identification to solution

give rules, routines, standard operating procedures, rules of thumb

provide a useful means of solving well structured problems

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7
Q

what is a bad programmed solution?

A

a bad solution to a well-structured problem

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8
Q

Ill-structured problems

A

existing and desired states are unclear

the method of getting to the desired state is unknown

often risky decisions

They are unique and unusual problems that have not been encountered before

They tend to be complex and involve a high degree of uncertainty

They frequently arouse controversy & conflict

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9
Q

can Ill-structured problems be solved with programmed decisions?

A

nah boy

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10
Q

what do you need to make a perfectly rational decision?

A

you need to have all of the relevant information:

cost effectively

low cost

no cost

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11
Q

what is perfect rationality

A

decision strategy that is:

Completely informed

perfectly logical

oriented toward economic gain

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12
Q

what is the rational decision-making model?

A
  1. identify the problem
  2. search for relevant info
  3. develop alternative solutions
  4. evaluate alternative solutions
  5. choose the best solution
  6. implement the chosen solution
  7. monitor and evaluate the chosen solution
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13
Q

what is an economic person

A

can gather information without cost and is completely informed

Is perfectly logical, and has only one criterion for decision making: ​economic gain

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14
Q

do the perfectly rational characteristics of perfect rationality exist in real decision makers?

A

nah boy

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15
Q

bounded rationality

A

since rational characteristics of Economic Person do not exist in real decision makers, administrators use bounded rationality

While they try to act rationally, they are limited in their capacity to:

Acquire and process information

Time constraints

Political considerations

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16
Q

what illustrates bounded rationality?

A

Framing & cognitive biases

the impact of emotions & mood on decisions

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17
Q

what is framing

A

huge impact of the way we interpret situations

refers to aspects of the presentation of information about a problem that are assumed by decision makers

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18
Q

true or false

How problems and decisions are framed can have a powerful impact on resulting decisions

A

true

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19
Q

Cognitive biases

A

tendencies to acquire & process information in a particular way that is prone to error

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20
Q

why is it that cognitive biases lead to error?

A

They involve assumptions & shortcuts

their goal is to improve decision making efficiency

frequently lead to error instead

basically, being on slack mode

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21
Q

what do ​framing and cognitive biases illustrate?

A

the operation of bounded reality

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22
Q

what are the difficulties in problem identification that stem from bounded rationality?

A

Perceptual defence

Problem defined in terms of functional specialty (people fix problems by using their specific knowledge)

Problem defined in terms of solution

Problem diagnosed in terms of symptoms (think on cold and sniffing)

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23
Q

what is the role of framing in problem identification?

A

When a problem is identified, it is framed in some way

the people in charge of decision making should try out alternative frames

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24
Q

how much access to information does the perfectly rational decision maker have?

A

he has free and instantaneous access to all information necessary to clarify the problem and develop alternative solutions

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25
what does sounded rationality suggest about information search and access?
it can be slow and costly
26
true or false Decision makers can have too little or too much information
true
27
what contributes to having too little information?
Several cognitive biases contribute to this ex: when you use whatever information is most readily available ex: the tendency to be overconfident which is exacerbated by confirmation bias confirmation bias
28
confirmation bias
the tendency to seek out information that conforms to one’s own definition of or solution to a problem
29
what contributes to having too much information?
Information overload​is the reception of more information than is necessary to make effective decisions People have a cognitive bias to value advice for which they have paid over free advice of equal quality
30
​maximization
he choice of the decision alternative with the greatest expected value The perfectly rational decision maker exhibits m​aximization
31
are all of the alternative solutions and the probabilities of success known when a decision maker is working under bounded rationality?
no, they are not all known
32
how are people in general at statisticians?
People are especially weak intuitive statisticians frequently violate standard statistical principles they are poor at revising estimates of probabilities & values as they acquire additional information
33
small or large samples are better?
Large samples warrant more confidence than small samples
34
do decision makers rarely believe or strongly believe that complex chain of events will occur when taking.a decision or not?
Decision makers often overestimate the odds of complex chains of events occurring
35
a decision maker working under bounded rationality usually satisfices or maximizes?
satisfices
36
satisficing
the decision maker establishes an adequate level of acceptability for a solution to a problem then screens solutions until he or she finds one that exceeds this level When this occurs, evaluation of alternatives ceases, and the solution is chosen for implementation
37
when to people tend to make risky business decisions
When people view a problem as a choice between losses
38
when do people tend to make conservative decisions
When people frame the alternatives as a choice between gains
39
what are the cons of being dependent on others when decision makers try to have their decisions implement?
it might be difficult to anticipate their ability or motivation to do so (implementors) implementors and decisions makers are not the same people
40
what type of teams can help the problems created between decision makers and the implementors?
Cross-functional teams
41
how should a rational decision maker be able to evaluate the effectiveness of a decision?
with calm and objective detachment bounded decision maker might bug big time at this stage
42
why can bounded decisions makers bugs at the stage of evaluating a solution?
People are overconfident about the adequacy of their decision Substantial dissonance can be aroused when a decision turns out to be faulty The decision maker may devote his or her energy to trying to justify a faulty decision
43
how do you prevent substantial dissonance when evaluating decisions?
decision makers avoid careful tests of the adequacy of the | decision
44
what hindsight?
the tendency to review the decision-making process that was used to find what was done right or wrong tendency of people to overestimate their ability to have predicted an outcome that could not possibly have been predicted tendency to take personal responsibility for successful decision outcomes while denying responsibility for unsuccessful outcomes
45
Escalation of commitment
the tendency to invest additional resources in an apparently failing course of action People often “throw good resources after bad,” acting as if they can recoup sunk costs
46
are groups or individuals more prone to escalation of commitment?
groups
47
Reasons for escalation of commitment
Dissonance reduction. Social norms for consistent behaviour. Motivation to not appear wasteful. The way the problem is framed. Personality, moods, and emotions.
48
Preventing escalation of commitment
Encourage continuous experimentation with reframing the problem Shift the frame to saving rather than spending Set specific goals for the project in advance that must be met if more resources are to be invested Place and emphasis in evaluating managers on h​ow​ they made decisions and less on decision outcomes. Separate initial and subsequent decision making
49
How do Emotions and moods affect decision making
Strong emotions frequently figure in the decision-making process that corrects ethical errors strong emotion has also been implicated in creative decision making & the proper use of intuition to solve problems
50
what is a con regarding strong emotions in decision making
people experiencing strong emotions are often self-focused and distracted from the actual demands of the problem at hand
51
what is a benefit of strong emotions when properly controlled
can lead to successful shot-circuiting of the steps in the rational model when speed is of the essence
52
how do moods influence decision making
Mood a​ffects w​hat​& h​ow​people think in making decisions it has the greatest impact on uncertain, ambiguous decisions of the type that are especially crucial for organizations
53
how do people with POSITIVE moods generally act in organizations
tend to remember positive information tend to evaluate objects, people, and events more positively tend to overestimate the likelihood that good events will occur and underestimate the occurrence of bad events promote more creative, intuitive decisions making
54
what can happen if excess optimism is controlled?
those in a good mood can make c​reative decisions
55
what can happen if excess pessimism is controlled?
those in a negative mood can p​rocess info carefully & | effectively
56
in the problem identification stage (1), how do individuals with perfect rationality act?
easy, accurate perception of gaps that constitute problem
57
in the problem identification stage (1), how do individuals with bounded rationality act?
perceptual defense jump to solutions attention to symptoms rather than problems mood affects memory
58
in the information research stage (2), how do individuals with perfect rationality act?
free fast right amount obtained
59
in the information research stage (2), how do individuals with bounded rationality act?
slow costly reliance on flawed memory obtain too little or too much info
60
in the development of alternative solutions stage (3), how do individuals with perfect rationality act?
can conceive all of them
61
in the development of alternative solutions stage (3), how do individuals with bounded rationality act?
not all of them are known
62
in the evaluation of alternative solutions stage (4), how do individuals with perfect rationality act?
ultimate value of each alternative solution known probability of each alternative solution knows only criterion is economic gain
63
in the evaluation of alternative solutions stage (4), how do individuals with bounded rationality act?
potential ignorance of miscalculation of values on probabilities criteria include political factors affected by mood
64
in the solution choice stage (5), how do individuals with perfect rationality act?
maximizing
65
in the solution choice stage (5), how do individuals with bounded rationality act?
satisfices
66
in the solution implementation stage (6), how do individuals with perfect rationality act?
considered the evaluation of alternatives
67
in the solution implementation stage (6), how do individuals with bounded rationality act?
may be difficult due to reliance on others
68
in the solution evaluation stage (7), how do individuals with perfect rationality act?
objectively
69
in the solution evaluation stage (7), how do individuals with bounded rationality act?
may involve justification escalation due to sunk costs faulty hindsight
70
Why use groups for organizational decisions?
decision quality decision acceptance and commitment diffusion of responsibility
71
how can groups make higher quality decisions than individuals?
Groups are more vigilant​ than individuals. Groups can generate more ideas ​than individuals Groups can evaluate ideas better​ than individuals
72
how can groups increase acceptance and commitment
A group decision will be more acceptable to those involved Acceptability is especially important in getting a decision implemented
73
how can groups help with diffusion of responsibility? How can they share burden of the negative consequences of a poor decision?
No one person will be singled out for punishment When this happens, individual group members often “abandon ship” and exhibit biased hindsight
74
what are the disadvantages of group decision making
time conflict domination groupthink
75
how can time be a problem with group decision making?
Groups rarely work quickly or efficiently compared with individuals due to process losses The time problem increases with group size
76
how can group decision making lead to conflict?
Participants in group decisions may have their own personal axes to grind or their own resources to protect Groups will make better decisions when their members feel psychologically safe
77
how can domination be a problem with group decision making?
When meetings are dominated by a single individual or a small coalition, the advantages of group decision making will not be realized Domination is not likely to lead to group acceptance and commitment. If the dominant person is misinformed, the group decision is likely to be ineffective
78
how does groupthink affect group decision making?
damages the mental efficiency, reality testing, and moral judgment of decision-making groups. Unanimous acceptance of decisions is stressed over quality of decisions
79
what are the factors that lead to groupthink?
high group cohesiveness. Strong identification with the group Concern for approval from the group Isolation of the group from other sources of information. (keep info to not disturb the others or change the course of action) The promotion of a particular decision by the group leader
80
what is the strongest factor that contributes to groupthink?
The promotion of a particular decision by the group leader
81
what are the groupthink symptoms
Illusion of invulnerability Illusion of unanimity Illusion of morality Rationalization Stereotypes of outsiders Pressure for conformity Self-censorship Mindguards
82
Illusion of invulnerability
Members are overconfident and willing to assume great risks they ignore obvious danger signals “Because everybody agree, everybody cant be wrong.
83
Illusion of unanimity
Members perceive that unanimous support exists for their chosen course of action
84
Illusion of morality
The decisions the group adopts are perceived as m​orally ​correct “We think we are the right ones.”
85
Rationalization
We try to justify somehow
86
Stereotypes of outsiders
The group constructs unfavourable stereotypes of those outside the group who are the targets of their decisions “If we are right, the others might be wrong.”
87
Pressure for conformity
Members pressure each other to fall in line and conform with the group’s view p​eople can have a different point of view, but they shut their mouth up
88
Self-censorship
Members convince themselves to avoid voicing opinions contrary to the group
89
Mindguards
Some group members may adopt the role of “protecting” the group from information that goes against its decisions
90
what are strategies to prevent groupthink?
Leaders should establish norms that encourage and even reward responsible dissent Outside experts should be brought in from time to time to challenge the group’s views
91
what is a risky shift?
tendency for groups to make riskier decisions than the average risk initially advocated by their individual members
92
what is a conservative shift?
the tendency for groups to make less risky decisions than the average risk initially advocated by their individual members
93
what are two main factors that explain the occurrence of risky and conservative shifts?
Group discussion generates ideas & arguments that individual members have not considered before Group members try to present themselves as basically similar to other members but "even better"
94
which types of groups polarize more than face to face groups?
Groups that communicate via computer