Topic 6

Decision Making

Learning Objectives
Explain the rational decision making process
What aspects of the environment impact
decision making?
Explore different types of problems
Explore decision making styles
Identify and explain common decision
making errors and biases
Explore and identify ways to make effective
decisions

How many decisions

Food choices?
Boolean choices ( where we use and or)
Conscious or unconscious,

Information sources
What makes good information?- primary,
secondary, tertiary?

Sources you might use relevance is

important too

Managers make decisions daily

They make choices between alternative
courses of action
All decisions rely upon information
Therefore quality information is critical
Programmed decisions
Non programmed decisions

Overview of managerial decision making

Rational?

Figure 3.5. From Robbins et al. 2015 Managing organisation and people p. 93.

What type of environment are we in?

Certain
Risk
UncertainHave to learn to function on probabilities

Lets explore rational decision making

first
1. Find and define the problem
2. Generate and evaluate alternative
solutions
3. Select preferred solution ( conduct an
ethical check here)
4. Implement the solution
5. Evaluate results
Now repeat!

But
While rational decisions are good,
complexity can be confusing

How do you generate possible

solutions?

Are decision really rational?

What about intuition?
What about patterned behaviour?

But how do you choose the

alternative?

Classical
Behavioural
Judgemental ( Heuristic approach)

Today is exploring how you make decisions ( and how

organisations do this also)

There are many types of decision making

Errors and Biases

How did I miss this?

Perceptual errors
Serial position: Primacy, recency
Halo effect
Projection
Stereotypes

A"ribu'on theory
How the ac*ons of individuals are perceived by others depends
on what meaning (causa*on) we a;ribute to a given behaviour.
v Internally caused behaviour: under the individuals control
vExternally caused behaviour: due to outside factors
This is Fundamental a;ribu*on error
we do this because of self-serving bias
Protect self-esteem

Self fulfilling prophecy

Think, feel, behave

Satisficing
Optimal vs good enough

Heuristics

Decision making biases increase when

Optimism and over confidence

Escalation of commitment
When our investment of time and emotion
keeps us involved even when there is
evidence to stop

Unintended consequences
All actions have outcomes that we may not
first see

Tools to use for decision making

Problem identification:
Solution generation:
Solution evaluation:
Implementation and planning:
Use scenario planning

Design thinking

To finish up
Critical analysis?
Be aware, about satisficing
Unintended consequences