Chapter 7 Flashcards
decision making
the conscious process of
making choices among
alternatives with the intention
of moving toward some desired
state of affairs
rational choice decision making
the process of using pure logic
and all available information
about all alternatives to choose
the alternative with the highest
value
Rational choice decision relies primarily on two pieces of information:
- the probability that each outcome will occur
- the valence or expected satisfaction of each outcome
What are the steps of the rational choice decision-making process
- to identify the problem or recognize an opportunity
- Choose the best decision process
- Discover or develop possible choices
- Select the choice with the highest value
- implement the selected choice
- Evaluate the selected choice
Programmed decision
Follow standard operating procedures
Nonprogrammed decisions
Require all steps in the decision model because the problems are new, complex, or ill-defined
Problems with problem identification:
5 most widely recognized problems
- solution-focused problems
- Decisive leadership
- Stakeholder framing
- Perceptual defence
- Mental models
Solution-focused problems
Some decision makers describe the problems as a veiled solution.
They fail to fully diagnose the underlying causes that need to be addressed.
Decisive leadership
Many leaders announce problems or opportunities before having a change to logically assess
the situation. The result is often a misguided effort to solve an ill-defined problem or resources
wasted on a poorly identified opportunity.
Stakeholder framing
Stakeholders provide (or hide) information in ways that makes the decision maker see the situation as a problem, opportunity, or steady sailing.
Employees point to external factors rather than their own imperfections as the cause of production delays. Suppliers market their
new products as unique opportunities and competitor products as risky choices. Many
other stakeholders also frame the situation in ways that benefit them
Perceptual defense
People sometimes fail to become aware of problems because they block out bad news as a
coping mechanism.
Mental models
Decision makers are victims of their own problem framing due to existing mental models. Mental models are visual or relational images in our mind of the external world.
bounded rationality
the view that people are
bounded in their decisionmaking capabilities, including access to limited information, limited information processing,
and tendency toward satisficing
rather than maximizing when
making choices
Implicit favorite
A preferred alternative that the decision makes uses repeatedly as a comparison with other choices. Sometimes decision makers aren’t even aware of this favoritism.
Anchoring and adjustment heuristic
This heuristic states that we are influenced by an initial anchor point and do not sufficiently move away from that point as new information is provided. The anchor point might be an initial offer price, initial
opinion of someone, or initial estimated probability that something will occur. This bias is associated with the problem we described a few paragraphs ago,
namely that human beings tend to compare alternatives rather than assess them purely against objective criteria. Therefore, if someone requests a high initial price for a car we want to buy, we naturally compare—and thereby anchor—our alternative offer against that high initial price
Availability heuristic
The availability heuristic is the tendency to estimate the probability of something occurring by how easily we can recall that event. Unfortunately, how easily we recall something is due to several factors, not just how often it occurs (probability). For instance, we overestimate the probability or frequency of recent events as well as emotional events (such as earthquakes and shark attacks) because they are easily remembered.
Representativeness heuristic
Representativeness heuristic states that we pay more attention to whether something resembles (is representative of) something else
and less attention to more objective statistics about its probability. In other words, our decisions tend to rely more on stereotypes than on
objective statistical probabilities. Suppose that 80 percent of the students in a sociology course are sociology majors, but the remaining 20 percent are computer science students taking the course as an interdepartmental elective. we tend to believe a student is from computer science if they look and act like a stereotype of a computer science student
satisficing
selecting an alternative that is
satisfactory or “good enough,”
rather than the alternative with
the highest value
(maximization)
What do people do when they are presented with a large number of alternatives/choices
They don’t choose at all. Because it is less cognitively challenging
Decisionmakers often have/don’t have emotional attachment to the decision
They often have
intuition
the ability to know when a problem or opportunity exists and to select the best course of action without conscious reasoning
How are emotional markers influencing decision making
Our brain very quickly attaches specific emotions to information about each alternative, and our preferred alternative is strongly influences by those initial emotional markers
How does mood influence decision evaluation?
In a negative mood, we pay more attention to details. In a positive mood, we rely more on programmed decision routines
How do emotions shape decision evaluation?
Emotions shape how we evaluate information, not just which choice we select.
