2400 chp 11
well structured problems
recognizable, has been done before, and is pre-programmed
ill-structured problems
has not been done before, nor programmed, and no specific steps
rational decision making model
1. Identify problem
2. Search for relevant information
3. Develop alternative solutions
4. Evaluate alternative solutions
5. Choose the best solution
6. Implement chosen solution
7. Monitor and evaluate decision
perfect rationality
decision strategy that is completely informed, perfectly logical and oriented toward economic gain
bounded rationality
decision strategy that relies on limited information and that reflects time constraints and political considerations that act as bounds to rationality
cognitive biases
tendencies to acquire information in a way that is prone to error
availibility bias
favour information that can be accessed quickly and easily, and remember vivid events
conformation bias
tendency for people to seek information that conforms one's own perspective
anchoring bias
overestimate the likelihood of chain of events happening
framing effect
how we frame problems and alternatives can have a impact on decisions
information overload
too much information causes difficulty to understand
satisficing
decision maker establishes an adequate level of acceptability for a solution and screens alternatives until one is found that exceeds this level
justification
the action of showing something to be reasonable
escalation of commitment
tendency to invest additional resources in failing course of action
- not appear wasteful
- personality
- sunk costs
hindsight
tendency to review decision making process that was used AFTER
Groups perform better than individuals when:
○ Diversity of member skills
○ Weigh combined individual judgements
○ Groups can be wiser when individual thinking is encouraged
Group effects on decision making:
○ Decision quality
○ Decision acceptance and commitment
○ Diffusion of responsibility: ability of members to share burden on consequences
Disadvantages of group decision making:
○ Time
§ Takes more effort and time than an individual
○ Conflict
§ Participants may have different opinions
○ Domination
§ There might be louder group participants
○ Groupthink
§ Discourages creativity and individual responsibility
Factors influencing groupthink:
□ High cohesiveness
□ Strong identification with group
□ Concern for approval from group
□ Isolation of other sources of information
Promotion of decision by group leader
Symptoms of groupthink:
- Illusion of invulnerability
- Illusion of morality
- Rationalization
- Self-censorship
- Illusion of unanimity
- mind guards
How to prevent groupthink:
□ Leaders should avoid undue pressure
□ Encourage people to disagree
□ Outside experts can be used to challenge group views
□ Controversy stimulation
Devils advocate
Risky shift
tendency to make riskier decisions than average risk advocated by individual members
Conservative
tendency to make less risky decisions than average risk advocated by individual members
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