Management Chapter 7 Individual & Group Decision Making

1. The Availability Bias 2. The Representativeness Bias 3. The Confirmation Bias 4. The Sunk-Cost Bias 5. The Anchoring and Adjustment Bias 6. The Overconfidence Bias 7. The Hindsight Bias 8. The Framing Bias 9. The Escalation of Commitment Bias 10. The Categorical Thinking Bias

10 Common Decision-Making Biases (Rule of Thumb or Heuristics)

The Directive Style The Analytical Style The Conceptual Style The Behavioral Style

4 General Decision-Making Styles

AI will transform the world as we know it Humans could be relieved of some of the drudgery of work Organizations continue to use AI to develop competitive advantage Enhanced decision making is a thematic benefit of AI

AI's (Artificial Intelligence) Benefits

AI Implementation Data issues Cost

AI's Drawbacks

Greater pool of knowledge Different perspectives Intellectual stimulation Better understanding of decision rationale Deeper commitment to the decision

Advantages of Group Decision Making

The need for structure or control of one's life

Ambiguity

_________ __________ is stores of data so vast that conventional database management systems cannot handle them

Big Data

They are less efficient Their size affects decision quality They may be too confident Knowledge Counts

Characteristics of Group Decision Making

_____ Analytics is increasingly done with specialized systems and software

Data Analytics

Step 1: Is the proposed action legal? Step 2: If yes does the proposed action maximize shareholder value? Step 3: If yes is the proposed action ethical? Step 4: If no would it be ethical not to take the proposed action?

Decision Tree

A few people dominate or intimidate Groupthink Satisficing Goal Displacement

Disadvantages of Group Decision Making

Use active listening skills Involve as many members as possible Seek out the reasons behind arguments and dig for the facts

Do's for achieving consensus

Avoid horse trading and making an agreement simply to not rock the boat Don't try to achieve consensus by putting questions to a vote

Don't for achieving consensus

Translating principles based on best evidence into organizational practice

Evidence-Based Management

Brainstorming: For increasing creativity Devil's advocacy The dialectic method Project Post-Mortems

Group Problem-Solving Tehcniques

Meeting customer needs Improving human resource management practices Enhancing production efficiency Advancing health and medicine Aiding public policy Using big data up and down the hierarchy

How Big Data is being used

The involuntary emotional response to those same matters; is known as automated experience

Intuition based on feelings

A person's explicit and tacit knowledge about a person, a situation, an object, or a decision opportunity

Intuition that stems from expertise

Managers find it difficult to make optimal decisions Nonrational Decision Making

Nonrational Decision Making

Managers should make logical and optimal decisions

Rational Decision Making

Stage 1: IDENTIFY THE PROBLEM OR OPPORTUNITY-- determining the actual versus the desirable Stage 2: THINK UP ALTERNATIVE SOLUTIONS-- both the obvious and the creative Stage 3: EVALUATE ALTERNATIVES AND SELECT A SOLUTION- ethics, feasibility, and effectiveness Stage 4: IMPLEMENT AND EVALUATE THE SOLUTION CHOSEN

Stages of RATIONAL DECISION MAKING

Operates automatically and quickly; it is our fast, automatic, intuitive, and largely unconscious mode

System 1

Is our slow, deliberate, analytical, and consciously effortful mode of reasoning

System 2

_________Style: Careful decision makers who like lots of information and alternative choices

The Analytical Style

Being influenced by an initial figure

The Anchoring and Adjustment Bias

Using only the information available

The Availability Bias

_________ Style: The most people-oriented decision makers

The Behavioral Style

Sorting Information into buckets

The Categorical Thinking Bias

___________ Style: Decision makers who rely on intuition and have a long-term perspective

The Conceptual Style

Seeking information to support your point of view

The Confirmation Bias

__________ Style: Action-Oriented decision makers who focus on facts

The Directive Style

Feeling overly invested in a decision

The Escalation of Commitment Bias

Shaping the way a problem is presented

The Framing Bias

Blind to our own Blindness

The Overconfidence Bias

Faulty generalizing from a small sample or a single event

The Representativeness Bias

Money already spent seems to justify continuing

The Sunk-Cost Bias

Automated business processes Data analysis Engaging customers and employees

Types of AI (Artificial Intelligence)

Some people are very task-focused at work and do not pay much attention to people issues, whereas others are just the opposite

Value Orientation