Chapter 7 Individual and Group Decision making

Non Rational Models (Bounded rationality & Satisficing)

Nonrational models of decision making explain how managers make decisions; they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions. The nonrational models are descriptive rather than prescriptive: They describe how managers actually make decisions rather than how they should. 1. Bounded Rationality & the Satisficing Model: "Satisfactory Is Good Enough" --Called bounded rationality, the concept suggests that the ability of decision makers to be rational is limited by numerous constraints, such as complexity, time and money, and their cognitive capacity, values, skills, habits, and unconscious reflexes. --Because of such constraints, managers don't make an exhaustive search for the best alternative. Instead, they follow what Simon calls the satisficing model—that is, managers seek alternatives until they find one that is satisfactory, not optimal 2. The Intuition Model: "It Just Feels Right"

Rational Decision Making Model

The rational model of decision making, also called the classical model, explains how managers should make decisions; it assumes managers will make logical decisions that will be the optimum in furthering the organization's best interests Stage 1: Identify the Problem or Opportunity—Determining the Actual versus the Desirable Stage 2: Think Up Alternative Solutions—Both the Obvious & the Creative Stage 3: Evaluate Alternatives & Select a Solution—Ethics, Feasibility, & Effectiveness --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? Stage 4: Implement & Evaluate the Solution Chosen --for successful implementation, you need to Plan Carefully and Be Sensitive To those Affected Assumptions of the Rational Model: Complete Information (no uncertainty) Logical, Unemotional Analysis Brest Decision for the organization

Evidence Based Decision Making & Analytics o Big main points/concepts here

evidence-based management—the translation of principles based on best evidence into organizational practice, bringing rationality to the decision-making process