1. The document outlines the steps in decision making including defining the problem, identifying criteria, weighing criteria, generating alternatives, and evaluating options.
2. It also discusses factors that influence decision making such as bounded rationality, risk, and common biases.
3. Group decision making techniques are presented including advantages like considering multiple perspectives but also pitfalls like groupthink, with suggestions for structured techniques to improve group processes.
1. The document outlines the steps in decision making including defining the problem, identifying criteria, weighing criteria, generating alternatives, and evaluating options.
2. It also discusses factors that influence decision making such as bounded rationality, risk, and common biases.
3. Group decision making techniques are presented including advantages like considering multiple perspectives but also pitfalls like groupthink, with suggestions for structured techniques to improve group processes.
1. The document outlines the steps in decision making including defining the problem, identifying criteria, weighing criteria, generating alternatives, and evaluating options.
2. It also discusses factors that influence decision making such as bounded rationality, risk, and common biases.
3. Group decision making techniques are presented including advantages like considering multiple perspectives but also pitfalls like groupthink, with suggestions for structured techniques to improve group processes.
Problem – gap between a desired state and an existing state. To create a decision on a problem, managers must: a. be aware of the gap b. be motivated to reduce the gap c. have the knowledge, skills, abilities and resources to fix the problem 2. Identify decision criteria Decision criteria – set of standards used to guide judgements and decisions Generally, the more criteria a solution meets, the better that solution will be 3. Weigh the criteria: “ Which criteria are more or less important” Absolute comparisons – each criteria is compared to a standard or ranked on its own merits Relative comparisons – each criterion is compared directly to every criterion 4. Generate alternative courses of action 5. Evaluate each alternative courses of action 6. Compute the optimal decision - maximizing decisions - satisficing decisions 1. Bounded rationality – managers try to take a rational approach to decision making. This is constrained by: a. limited resources b. attention problems c. memory problems d. expertise problems 2. Risk and decision making under risky conditions a. Rationality assumes decision making under a certainty, equipped with complete information and knowledge of all possible outcomes b. Most conditions are made under a condition of RISK. C. Effects of Framing on decision making - positive frame: a problem presented as gain, becomes more risk averse - negative frame: a problem presented as a loss, becomes more risk seeking 3. Common decision making mistakes a. Over reliance on Intuition – can cause people to become over-confident, careless, and inconsistent b. Availability bias – tendency of decision makers to give preference to recent information, vivid images that evoke emotions, and specific acts and behaviors that they personally observe c. Representative bias – unrecognized tendency of decision makers to judge the likelihood of an event’s occurrence based on its similarity of previous events. d. Anchoring and adjustment bias – judgement is “anchored “ by an initial value; all subsequent experiences are judged by their similarity to the anchor 1. Decision rules – a set of criteria that alternative solutions must meet to be acceptable to the decision maker. 2. Multivariable testing – a systematic approach of experimentation used to analyze and evaluate potential solutions. 3. Decision software – decisions from satisficing 4. Escalation of commitment – the tendency to stick with a “wrong” decision. It usually involves an increased commitment of resources. To avoid escalation: - require progress reports - use outside auditors - change managers - label decisions as experimental projects ADVANTAGES: - Groups view problems from several perspectives, improved problem definition - groups can find and access more information and knowledge, allows for more information - greater information and knowledge allows more alternative solutions to be generated PITFALLS - groupthink: pressure within the group for members to agree with each other, occurs when a. group is insulated from different perspective b. leader expresses a strong preference for one solution c. no established procedure for defining and exploring alternatives d. group members are similar in background - it takes a considerable time - one or two people dominate discussions STRUCTURED CONFLICTS a. C-type conflict – cognitive conflict, focuses on problem and issue related differences of opinion b. A-type conflict – affective conflict, emotional reactions to disagreements a. Nominal Group Technique - group members independently write down as many definitions and alternative solutions as possible - ideas are then shared at a time - advantages and disadvantages are discussed -ideas independently ranked b. Delphi Technique - assemble a panel of experts - create a questionnaire of open-ended questions - analyze, summarize and feedback members’ responses in a report - experts list reasons for agreeing or disagreeing with the report c. Stepladder Technique - group members are added to a group discussion one at a time, existing group members listen to each new member’s ideas, and then the group shares ideas it had already discussed, discusses the old and new ideas and then makes a decision d. Electronic Brainstorming - Four rules: a. the more ideas, the better b. all ideas are acceptable c. use others’ ideas to create more ideas d. criticism or evaluation of ideas is not allowed d. Brainstorming - Advantages: a. technology allows everyone to record their ideas as their ideas are created b. anonymous process creates free expression e. Brainstorming -Disadvantages: a. greater expense b. anonymity may bother people who are used to having ideas by virtue of their position c. some find it difficult to express themselves in writing