Org Behavior Ch. 7

Two main elements of rational choice

- Calculating the best alternative​ - Decision-making process

Why people satisfice​

- Cognitive limitations​ - Alternatives appear sequentially, not all at once

Rational Choice Assumptions ​Versus Organization Behavior Evidence

- Goals are clear, compatible, and agreed upon vs. Goals are ambiguous, are in conflict, and lack full support - Decision makers can calculate all alternatives and their outcomes vs. Decision makers have limited information-processing abilities. - Decision makers evaluate all alternatives simultaneously vs. Decision makers evaluate alternatives sequentially. - Decision makers use absolute standards to evaluate alternatives vs. Decision makers evaluate alternatives against an implicit favorite. - Decision makers use factual information to choose alternatives vs. Decision makers process perceptually distorted information. - Decision makers choose the alternative with the highest payoff vs. Decision makers choose the alternative that is good enough.

Intuition as emotional experience​

- Gut feelings are emotional signals.​ - Not all emotional signals are intuition.

Levels of Employee Involvement​

- High: Employees responsible for entire decision-making process​ - Medium-High: Employees collectively recommend solution to problem​ - Medium-Low: Employees hear problem individually or collectively, then asked for information relating to that problem​ - Low: Employees individually asked for specific information; problem is not described to them

Characteristics of Creative People

- Independent imagination - Knowledge and experience - Cognitive and practical intelligence - Persistence

creative work environments

- Learning orientated​ - Intrinsically motivating work​ - Open communication​ - Creative work setting with sufficient resources​ - Leaders and coworker support (usually)

Creativity Activities​

- Redefine the problem—revisit abandoned projects​ - Associative play—playful activities, morphological analysis, creative challenges​ - Cross-pollination—exchange ideas across the firm​ - Design thinking—solution-focused creative process

Emotions and Making Choices

1. Emotions form preferences before we consciously evaluate those choices 2. Moods and emotions influence how well we follow the decision process 3. We 'listen in' on our emotions and use that information to make choices

Rational Choice Decision-Making Process

1. Identify problem or opportunity 2. Choose the best decision process 3. Discover or develop possible choices 4. Select the choice with the highest value 5. Implement the selected choice 6. Evaluate the selected choice

Rational Choice Best Alternative Calculation​

1. Probability ("expectancy") the outcome will occur with that supplier 2. Important outcomes (selection criteria) 3. Outcome valences ("utility")

Intuitive Decision Making​

Ability to know when a problem or opportunity exists and to select the best course of action without conscious reasoning

Anchoring and adjustment​ Heuristic

Adjusting expectations and standards around an initial anchor point (e.g. opening bid)

Rational choice

Effective decision makers identify, select, and apply the best possible alternative

Availability heuristic

Estimating probabilities by how easy an event is recalled; however, even ease of recall is due to other factors in addition to frequency

Representativeness heuristic​

Estimating the probability of something by its similarity to known others rather than by more precise statistics​

Escalation of commitment

Repeating or further investing in an apparently bad decision

Decision Making

The conscious process of making choices among alternatives with the intention of moving toward some desired state of affairs

subjective expected utility

The probability (expectation) of satisfaction (utility) resulting from choosing a specific alternative in a decision.

prospect theory effect

a natural tendency to feel more dissatisfaction from losing a particular amount than satisfaction from gaining an equal amount

Creative Process Model

preparation -> incubation -> illumination -> verification

Action Scripts

programmed decision routines that speed up our response to pattern matches or mismatches

divergent thinking

reframing a problem in a unique way and generating different approaches to the issue

Satisficing

selecting an alternative that is satisfactory or "good enough," rather than the alternative with the highest value (maximization)

causes of escalation of commitment

self-justification effect self-enhancement effect prospect theory effect sunk costs effect

bounded rationality

the view that people are bounded in their decision-making capabilities, including access to limited information, limited information processing, and tendency toward satisficing rather than maximizing when making choices