Man 3025 Chapter 7 set

Nine common decision-making biases

1. availability 2.representativness 3. confirmation 4. sunk cost 5. anchoring and adjustment 6. overconfidence 7. hindsight 8. framing 9. escalation of commitment

Decision

A choice made from among available alternatives

Groupthink

A cohesive group's blind unwillingness to consider alternatives. This occurs when group members strive for agreement among themselves for the sake of unanimity and avoid accurately assessing the decision situation.

Advantages & Disadvantages of group decision making

Advantages: Greater pool of knowledge, Different Perspectives, Intellectual stimulation, Better understanding of decision rationale, Deeper commitment to the decision. Disadvantages: A few people dominate or intimidate, Groupthink, Satisficing, Goal displacement

Stage 2: Think Up Alternative Solutions

After you've identified the problem or opportunity and diagnosed its causes, you need to come up with alternative solutions.

Administrative Decision Making

An approach to decision making that explains why decision making is inherently uncertain and risky and why managers usually make satisfactory rather than optimum decisions.

Hindrances to rational decision-making

Complexity, Time and Money constraints, Different cognitive capacity, values, skills, habits, and unconscious reflexes, Imperfect information, Information overload, Different priorities, Conflicting goals

predictive modeling

Data-mining technique used to predict future behavior and anticipate the consequences of change.

decision tree

Graph of decisions and their possible consequences, used to create a plan to reach a goal.

The conceptual style

High tolerance for ambiguity and tend to focus on the people or social aspects of a work situation.

Stage 4: Implement & Evaluate the Solution Chosen

Implementation is usually straightforward, With other decisions, implementation can be quite difficult; Successful Implementation revolves around planning carefully, and being sensitive to those affected.

intuition

Making a choice without the use of conscious thought or logical inference.

Nonrational Decision Making

Models of decision-making style that explain how managers make decisions; they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimum decisions.

bounded rationality

One type of nonrational decision making; the ability of decision makers to be rational is limited by numerous constraints.

Satisficing

One type of nonrational decision-making model; managers seek alternatives until they find one that is satisfactory, not optimal.

Stage 1: Identify the Problem or Opportunity

Problems or difficulties that inhibit the achievement of goals, Opportunities- situations that present possibilities for exceeding existing goals.

Big Data

Stores of data so vast that conventional database management systems cannot handle them.

Decision-making style

Styles that reflect the combination of how an individual perceives and responds to information.

Devil's Advocacy

Taking the side of an unpopular point of view for the sake of argument.

Brainstorming

Technique used to help groups generate multiple ideas and alternatives for solving problems; individuals in a group meet and review a problem to be solved, then silently generate ideas, which are collected and later analyzed.

Decision making

The process of identifying and choosing alternative courses of action.

Ethical Decision Making

When confronted with any proposed action for which a decision is required, a manager works through the decision tree by asking the questions, 1.) Is the proposed Action Legal 2.) If "yes", Does the proposed action maximize shareholder value 3.) If "Yes", is the proposed action ethical 4.) If "no", would it be ethical not to take the proposed action.

Stage 3: Evaluation of Alternative solutions

You need to evaluate each alternative not only according to cost and quality but also according to the following questions: (1) Is it ethical (2) Is it feasible (3) Is it ultimately effective?

rational decision making

also called the classical model; the style of decision making that explains how managers should make decisions; it assumes that managers will make logical decisions that will be the optimum in furthering the organization's best interests.

Dialectic Method

calls for managers to foster a structured dialogue or debate of opposing viewpoints prior to making a decision.

classical decision making

explains how managers should make decisions

The Analytical style

higher tolerance for ambiguity and respond well to new or uncertain situations.

Tolerance for Ambiguity

individual difference indicates the extent to which a person has a high need for structure or control in his or her life

The Directive Style

low tolerance for ambiguity and are oriented toward task and technical concerns in making decisions

value orientation

reflects the extent to which a person focuses on either task and technical concerns or people and social concerns when making decisions.

Analytics

term used for sophisticated forms of business data analytics, such as portfolio analysis or time-series forecast.

The Behavioral style

the most people-oriented of the four styles, people with this style work well with others and enjoy social interactions in which opinions

Evidence-Based decision making

translating principles based on best evidence into organizational practice, bringing rationality to the decision-making process.