Professional Documents
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Decisionmaking
Decisionmaking
Decisionmaking
How individuals make decisions & the quality of final choices are largely influenced by their perceptions. Requires interpretation and evaluation of information Most importantly, it requires a focus on the right problem.
the problem identify the decision criteria weight the identified decision making criteria generate possible alternatives rate each alternative against the dm criteria compute the optimal decision
Assumptions
Assumes the decision maker is rational Assumes the problem is clear and unambiguous assumes the dm has complete information no time or cost constraints choice will be one with the maximum payoff
rationality
problem
Bounded Rationality
limited capability of information processing simplify complex problems choose first solution that is good enough (I.e. satisfactory and sufficient).
Making Choices
Sources of bias:
heuristics
Organizational Constraints
evaluation system reward system programmed routines time constraints historical precedent
Cultural Differences
Americans
time
Explain how two people can see the same thing and interpret it differently. List the three determinants of attribution. Describe how shortcuts can assist in or distort our judgment of others. Explain how perception affects the decision-making process. Outline the six steps in the rational decision-making model. Describe the actions of the boundedly rational decision maker. Identify the conditions in which individuals are most likely to use intuition in decision making. Describe four styles of decision making. Define heuristics and explain how they bias decisions. Explain the factors that influence ethical decision-making behavior.
Attribution Theory When individuals observe behavior, they attempt to determine whether it is internally or externally caused. Fundamental Attribution Error The tendency to underestimate the influence of external factors and overestimate the influence of internal factors when making judgments about the behavior of others. Self-Serving Bias The tendency for individuals to attribute their own successes to internal factors while putting the blame for failures on external factors.
Perception
Factors in the target Novelty Motion Sounds Size Background Proximity
The Perceiver
The Target The Situation
Perception
What is Perception? A process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.
Why Is it Important? Because peoples behavior is based on their perception of what reality is, not on reality itself. The world that is perceived is the world that is behaviorally important.
Selective Perception People selectively interpret what they see on the basis of their interest, background, experience, and attitudes. Halo Effect Drawing a general impression about an individual on the basis of a single characteristic. Contrast Effects Evaluations of a persons characteristics that are affected by comparisons with other people recently encountered who rank higher or lower on the same characteristics. Projection Attributing ones own characteristics to other people Stereotyping Judging someone on the basis of ones perception of the group to which that person belongs.
Problem Clarity The problem is clear and unambiguous. Known Options The decision-maker can identify all relevant criteria and viable alternatives. Clear Preferences Rationality assumes that the criteria and alternatives can be ranked and weighted. Constant Preferences Specific decision criteria are constant and that the weights assigned to them are stable over time. No Time or Cost Constraints Full information is available because there are no time or cost constraints. Maximum Payoff The choice alternative will yield the highest perceived value.
Define the Problem. Identify the Decision Criteria. Allocate Weights to the Criteria. Develop the Alternatives. Evaluate the Alternatives. Select the Best Alternative.
Problems that are visible tend to have a higher probability of being selected than ones that are important. Why? It is easier to recognize visible problems. Decision-Makers want to appear competent and on-top of problems. Decision-Makers self-interest affects problem selection because it is usually in the Decision-Makers best interest to address problems of high visibility and high payoff. This demonstrates an ability to perceive and attack problems.
Bounded Rationality individuals make decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity. Intuitive Decision Making An unconscious process created out of detailed experience.
Alternative Development
Making Choices
Many decision makers rely on heuristics or judgmental shortcuts in decision making. There are two common categories of heuristics -Availability Heuristic --or the tendency of people to base their judgments on information readily available to them. Representative Heuristic -- The tendency to assess the likelihood of an occurrence by trying to match it with a preexisting category. Escalation of Commitment --an increased commitment to a previous decision in spite of negative information, all too often creeps into decision making.
Decision-Making Styles
Research on decision styles has identified four different individual approaches to making decisions.
Directive Style -- people using this style have a low tolerance for ambiguity and seek rationality. Analytic Style -- people using this style have a much greater tolerance for ambiguity than do directive decision makers. Conceptual Style -- people tend to be very broad in their outlook and consider many alternatives Behavioral Style -- people who tend to work well with others.
Analytical
Conceptual
Directive
Low
Rational
Behavioral
Intuitive
Way of Thinking
Organizational Constraints
Performance Evaluations Reward Systems Programmed Routines System-Imposed Time Constraints Historical Precedents
An individual can use three different criteria in framing or making ethical choices.
Utilitarian criterion -- Decisions are made solely on the basis of their outcomes or consequences. Rights criterion -- Decisions consistent with fundamental liberties and privileges as set forth in documents like the Bill of Rights. Justice criterion -- Decisions that impose and enforce rules fairly and impartially so there is an equitable distribution of benefits and costs.
Organizational environment
Locus of control
Perception Individuals behave based not on the way their external environment actually is but, rather, on what they see or believe it to be. Evidence suggests that what individuals perceive from their work situation will influence their productivity more than will the situation itself. Absenteeism, turnover, and job satisfaction are also reactions to the individuals perceptions. Individual Decision Making Individuals think and reason before they act. Under some decision situations, people follow the rational decision-making model. What can managers do to improve their decision making? Analyze the situation. Be aware of biases. Combine rational analysis with intuition. Dont assume that your specific decision style is appropriate for every job. Use creativity-stimulation techniques.