UF MAN 3025 Chapter 7 Exam 2 Review

The Intuition Model:

"It Just Feels Right"

Bounded Rationality & the Satisficing Model:

"Satisfactory Is Good Enough"

opportunities

situations that present possibilities for exceeding existing goals

Relaxed Avoidance

"There's No Point in Doing Anything; Nothing Bad's Going to Happen." a manager decides to take no action in the belief that there will be no great negative consequences form of complacency: You either don't see or you disregard the signs of danger (or of opportunity)

Defensive Avoidance

"There's No Reason for Me to Explore Other Solution Alternatives." a manager can't find a good solution and follows by (a) procrastinating (b) passing the buck (c) denying the risk of any negative consequences. In passing the buck, you let someone else take the consequences of making the decision. In denying the risk that there will be any negative consequences, you are engaging in rationalizing.

Panic

"This Is So Stressful, I've Got to Do Something—Anything—to Get Rid of the Problem!" a manager is so frantic to get rid of the problem that he or she can't deal with the situation realistically. manager has completely forgotten the idea of behaving with "grace under pressure," of staying cool and calm.

Jeffrey Pfeffer and Robert Sutton

"Too many companies and too many leaders are more interested in just copying others, doing what they've always done, and making decisions based on beliefs in what ought to work rather than what actually works,"

Relaxed Change

"Why Not Just Take the Easiest Way Out?" a manager realizes that complete inaction will have negative consequences but opts for the first available alternative that involves low risk.

How do you evaluate Each Alternative

(1) Is it ethical? (2) Is it feasible? (3) Is it ultimately effective?

intuition has at least two benefits.

(1) It can speed up decision making, useful when deadlines are tight. (2) It can be helpful to managers when resources are limited.

What Makes It Hard to Be Evidence Based

(1) There's too much evidence. (2) There's not enough good evidence. (3) The evidence doesn't quite apply. (4) People are trying to mislead you. (5) You are trying to mislead you. (6) The side effects outweigh the cure. (7) Stories are more persuasive, anyway.

Group Problem-Solving Techniques

(1) brainstorming (2) the Delphi technique (3) computer-aided decision making.

Four steps in Rational Decision

(1) identify the problem or opportunity (2) think up alternative solutions (3) evaluate alternatives and select a solution (4) implement and evaluate the solution chosen

Two nonrational models are

(1) satisfying (2) intuition

Three effective reactions when you're confronted with a challenge

-Importance -Credibility -Urgency

Four ineffective reactions when you're confronted with a challenge

-Relaxed Avoidance -Relaxed Change -Defensive Avoidance -Panic

Four characteristics of groups to be aware of:

-They Are Less Efficient -Their Size Affects Decision Quality ( the smaller the better, 5 is good) -They May Be Too Confident -Knowledge Counts ( if they know about the subject its better)

Seven Implementation Principles (Jeffrey Pfeffer and Robert Sutton)

-Treat your organization as an unfinished prototype -No brag, just facts -See yourself and your organization as outsiders do -Evidence-based management is not just for senior executives -Like everything else, you still need to sell it. -If all else fails, slow the spread of bad practice -The best diagnostic question: What happens when people fail?

Disadvantages of Group Decision Making

A few people dominate or intimidate Groupthink. Satisficing Goal displacement

A decision tree

A graph of decisions and their possible consequences; it is used to create a plan to reach a goal

The Directive Style

Action-Oriented Decision Makers Who Focus on Facts -Have a low tolerance for ambiguity and are oriented toward task and technical concerns in making decisions -They are efficient, logical, practical, and systematic in their approach to solving problems -Action oriented and decisive and like to focus on facts

The Anchoring & Adjustment Bias:

Being Influenced by an Initial Figure the tendency to make decisions based on an initial figure.

The Overconfidence Bias:

Blind to One's Own Blindness people's subjective confidence in their decision making is greater than their objective accuracy.

The Analytical Style

Careful Decision Makers Who Like Lots of Information & Alternative Choices -much higher tolerance for ambiguity -tendency to over analyze a situation. -consider more information and alternatives than those following the directive style. - careful decision makers who take longer to make decisions but who also respond well to new or uncertain situations.

Three Effective Reactions

Deciding to Decide

The Conceptual Style

Decision Makers Who Rely on Intuition & Have a Long-Term Perspective -a high tolerance for ambiguity and tend to focus on the people or social aspects of a work situation. -take a broad perspective to problem solving and like to consider many options and future possibilities. - long-term perspective and rely on intuition and discussions with others to acquire information. - willing to take risks and are good at finding creative solutions to problems. -can foster an indecisive approach to decision making.

The Representativeness Bias:

Faulty Generalizing from a Small Sample or a Single Event the tendency to generalize from a small sample or a single event

The Escalation of Commitment Bias:

Feeling Overly Invested in a Decision whereby decision makers increase their commitment to a project despite negative information about it. decision may continue to be supported for irrational reasons—pride, ego, the spending of enormous sums of money, and being "loss averse.

The Delphi Technique:

For Consensus of Experts a group process that uses physically dispersed experts who fill out questionnaires to anonymously generate ideas; the judgments are combined and in effect averaged to achieve a consensus of expert opinion

What should you do if the action is not working

Give it more time Change it slightly Try another alternative Start over

5 Advantages of Group Decision Making

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

Three ways to help you decide whether to decide are to evaluate the following

Importance—"How High Priority Is This Situation?" Credibility—"How Believable Is the Information about the Situation?" Urgency—"How Quickly Must I Act on the Information about the Situation?"

holistic hunch

Intuition that stems from expertise

The Sunk-Cost Bias( Sunk Cost Fallacy):

Money Already Spent Seems to Justify Continuing when managers add up all the money already spent on a project and conclude it is too costly to simply abandon it.

For implementation to be successful you need to do two things

Plan carefully Be sensitive to those affected

Two Kinds of Decision Making

Rational & Nonrational

The Confirmation Bias:

Seeking Information to Support One's Point of View when people seek information to support their point of view and discount data that do not. Though this bias would seem obvious, people practice it all the time

The Framing Bias:

Shaping How a Problem Is Presented the tendency of decision makers to be influenced by the way a situation or problem is presented to them.

Ethics officer

Someone trained about matters of ethics in the workplace, particularly about resolving ethical dilemmas

Rational Decision Making Process

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 Stage 4: Implement & Evaluate the Solution Chosen

Two Systems of Decision Making

System 1—intuitive and largely unconscious System 2—analytical and conscious

The Hindsight Bias:

The I-Knew-It-All-Along Effect the tendency of people to view events as being more predictable than they really are

The Behavioral Style

The Most People-Oriented Decision Makers -work well with others and enjoy social interactions in which opinions are openly exchanged. -Behavioral types are supportive, receptive to suggestions, show warmth, and prefer verbal to written information. - they like to hold meetings - avoid conflict and to be concerned about others. -wishy-washy approach to decision making and to have a hard time saying no.

Decision making

The process of identifying and choosing alternative courses of action

analytics(business analytics)

The term used for sophisticated forms of business data analysis.

tolerance for ambiguity

This individual difference indicates the extent to which a person has a high need for structure or control in his or her life. Ambiguous situations can energize people with a high tolerance for ambiguity.

The Availability Bias

Using Only the Information Available managers use information readily available from memory to make judgments. stoked by the news media, which tends to favor news that is unusual or dramatic.

decision support system

a computer-based information system that provides a flexible tool for analysis and helps managers focus on the future.

Predictive modeling

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

Deciding to Decide

a manager agrees that he or she must decide what to do about a problem or opportunity and take effective decision-making steps.

Brainstorming

a technique used to help groups generate multiple ideas and alternatives for solving problems

diagnosis

analyzing the underlying causes

Computer-Aided Decision Making

collecting information more quickly reducing roadblocks to group consensus.

Problems

difficulties that inhibit the achievement of goals.

What are the four styles of decision making

directive, analytical, conceptual, and behavioral

minority dissent

dissent that occurs when a minority in a group publicly opposes the beliefs, attitudes, ideas, procedures, or policies assumed by the majority of the group

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.

Rational model of decision making (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.

business intelligence

gathering data from a wide range of sources in a way that can be interpreted by humans and used to support better business decision making.

Big Data

includes not only data in corporate databases but also web-browsing data trails, social network communications, sensor data, and surveillance data.

System 2—analytical and conscious

is our slow, deliberate, analytical, and consciously effortful mode of reasoning, which swings into action when we have to fill out a tax form or park a car in a narrow space. draws on to arrive at explicit beliefs and reasoned choices

Big Data analytics

is the process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations, and other useful information.

Intuition

making a choice without the use of conscious thought or logical inference

satisficing model—that is,

managers seek alternatives until they find one that is satisfactory, not optimal.

electronic brainstorming (brainwriting)

members of a group come together over a computer network to generate ideas and alternatives.

Groupthink

occurs when group members strive to agree for the sake of unanimity and thus avoid accurately assessing the decision situation

consensus

occurs when members are able to express their opinions and reach agreement to support the final decision.

Goal displacement

occurs when the primary goal is subsumed by a secondary goal

System 1—intuitive and largely unconscious

operates automatically and quickly; it is our fast, automatic, intuitive, and largely unconscious mode, as when we detect hostility in a voice or detect that one object is more distant than another uses association and metaphor to produce a quick and dirty draft of reality,"

What's Wrong with the Rational Model

prescriptive, describing how managers ought to make decisions. It doesn't describe how managers actually make decisions.

A decision-making style

reflects the combination of how an individual perceives and responds to information.

Value orientation

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

heuristics ( Rule of Thumbs) There are 9 of them

strategies that simplify the process of making decisions.

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.

automated experience

the involuntary emotional response to those same matters

evidence-based management

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

Law of Unintended Consequences

things happen that weren't foreseen.

Thomas H. Davenport found three key attributes among analytics competitors

use of modeling having multiple applications support from top management

decision-making styles vary along two different dimensions:

value orientation and tolerance for ambiguity

prospect theory

which suggests that decision makers find the notion of an actual loss more painful than giving up the possibility of a gain.