Chapter 9 Terms

Steps in rational decision making

(1) recognize and define the decision situation, (2) identify appropriate alternatives, (3) evaluate each alternative in terms of its feasibility, satisfactoriness, and consequences; (4) select the best alternative, (5) implement the chosen alternative, and (6) follow up and evaluate the results of the chosen alternative.

Bounded rationality

a concept suggesting that decision makers are limited by their values and unconscious reflexes, skills, and habits.

State of risk

a condition in which the availability of each alternative and its potential payoffs and costs are all associated with probability estimates.

State of uncertainty

a condition in which the decision maker does not know all the alternatives , the risks associated with each, or the consequences each alternative is likely to have.

State of certainty

a condition in which the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative.

Escalation of Commitment

a decision maker's staying with a decision even when it appears to be wrong.

Programmed Decision

a decision that is fairly structured or recurs with some frequency (or both).

Nonprogrammed Decision

a decision that is relatively unstructured and occurs much less often then a programmed decision.

Group and team decision making

a decision-making group or team in which members openly discuss, argue about, and agree on the best alternative.

The Administrative Model of decision making

a decision-making model that argues that decision makers (1) use incomplete and imperfect information, (2) are constrained by bounded rationality, and (3) tend to "satisfice" when making decisions.

Classical decision model

a perspective approach to decision making that tells managers how they should make decisions; assumes that the managers are logical and rational and that their decisions will be in the best interests of the organization.

Groupthink

a situation that occurs when a group or team's desire for consensus and cohesiveness overwhelms its desire to reach the best possible decision.

Coalition

an informal alliance of individuals or groups formed to achieve a common goal.

Intuition

an innate belief about something, without conscious consideration.

Risk propensity

the extent to which a decision maker is willing to gamble when making a decision.

Satisficing

the tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency.