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31 Cards in this Set
- Front
- Back
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Decision making |
the process of identifying issues and making choices from alternative courses of action -heart of all activity |
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Theory of rational choice |
the theory that individuals make decisions based on a rational thought process that optimizes self-interest |
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Expected utility |
when confronted witha choice, peopletry to make thebest possibledecision -maximizes expected utility -assigna numerical value to each alternative and select the one that offers the highest payoffor profit |
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Decision making process |
-a problem or opportunity is defined -objectives and goals are identified -objectives are weighted according to the importance of each -possible courses of action or alternatives are considered -each objective is rated according to how well it will achieve the desired course of action -the optimal decision is chosen |
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Factors that impact decision making |
-incomplete, imperfect, or misleading info -limited ability or background to process info -limited time -conflicting preferences |
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Bounded rationality |
decisions are made with a set of boundaries or constraints that further complicate the process |
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Satisficing |
the act of choosing a solution that is good enough |
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Conditions of certainty |
individuals have all of the information they need to make the best possible decision |
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Ambiguity |
situations that are uncertain and risky and the optimal decision is not clear or obvious |
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Conditions of risk |
individuals have information about an organizations goals, objectives, priorities, and potential courses of action, but they do not have complete information about the possible outcomes for each course of action |
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Conditions of uncertainty |
individuals have information related to an organizations objectives and priorities, but they do not have complete information about alternative courses of action or about the possible outcomes for each one. |
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Intuitive decision making |
insights that are tapped through intuition and are not always fully understood by the decision maker -could be from connections to past experiences |
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Heuristics |
rules of thumb or short-cuts that individuals use to save time when making complex decisions |
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Availability heuristics |
individuals assess the frequency, probability, or likely cause of an event by the degree to which instances or occurrences of that event are readily “available” in memory -the more emotional and vivid the event the more available it is |
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Representativeness heuristics |
individuals tend to look for traits in another person or situation that correspond with previously formed stereotypes -good when insufficient information or time is available -bad for biased judgements |
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Adjustment heuristics |
individuals make estimates or choices based on a certain starting point -sticks to initial impression |
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Confirmation bias |
people tend to seek information that confirms a decision before seeking information that disconfirms a decision, even if the disconfirming information is more powerful and important |
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Status quo bias |
the tendency to favor the “here and now” and to reject potential change |
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Framing |
alternative presentations of the same information that can significantly alter a decision |
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Escalation of commitment |
when decision makers commit themselves to a particular course of action beyond the level suggested by rationality as a means of justifying previous commitments |
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Appropriateness framework |
process of making decisions based on societal norms or expectations |
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Solomon Asch experiement |
*group decides which two lines have the same length* - individuals tend to conform to majoritywhen they rely lesson their experience and insight -dominance of conformity can causepeople tomake decisions that go against their values |
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Programmed decisions |
decisions that are made in response to recurring organizational problems that require individuals to follow established rules and procedures |
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Nonprogrammed decisions |
decisions that are made in response to novel, poorly defined, or unstructured situations that require managers to use their best judgments |
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Classical model |
seeks to maximize economic or other outcomes using a rational choice process -aims to accomplish goals -conditions of certainty -uses logic |
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Administrative model |
acknowledges that managers may be unable to make economically rational decisions even if they want to because they lack sufficient information on which to base their decisions -will pick first option due to time constraints |
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Political model |
acknowledges that most organizational decisions involve many managers who have different goals and who have to share information to reach an agreement -bargain and build coalition |
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Garbage can model |
making problems, solutions, participants, and choices flow throughout an organization. A decision process is not viewed as a sequence of steps that begins with a problem and ends with a solution |
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Playfullness |
the deliberate temporary relaxation of rules to explore many possible alternatives -garbage can model |
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Managing biases |
-acquire experience and expertise -reduce bias in your judgment -engage in analogical reasoning -take and outsiders view -implement statistical models -understand biases in others |
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SCRIPTS |
helps managers with tough calls -search for signals of threats and opportunities -find the causes -evaluate the risks -apply intuition and emotion -take different perspectives -consider the time frame -solve the problem |
