Chapter 7 Individual and Group Decision Making: How Managers Make Things Happen

Moment-to-moment thinking

Automatic and highly susceptible to biases - Differs from critical thinking which requires more deliberate mental processes

Intuition Model

Small entrepreneurs often can't afford in-depth marketing research so they made decision based on hunches Based on "gut" feeling

5. Anchoring and adjustment bias

Tendency to make decisions based on an initial figure ***Bias = the initial figure may be irrelevant to market realities

Analytics (business analytics) -- evidence based management

Term used for sophisticated forms of business data analysis Purest application of evidence-based management

6. If all else fails, slow the spread of bad practice

"Evidence-based misbehavior" -- ignore orders you know to be wrong or delay their implementation

"Curse of Knowledge"

"People who design products are experts cursed by their knowledge, and they can't imagine what it's like to be as ignorant as the result of us" - Specialization improves efficiency but it also leads to tunnel vision and blind spots - As knowledge and expertise grow, we may be less and less able to see things from an outsider's perspective (more likely to then make irrational decisions) - Better informed people find it harder to think about problems from the perspective of lesser-informed people

1. Treat your organization as an unfinished prototype

- Act like organization is unfinished prototype that won't be ruined by dangerous new ideas - Not impossible to change because of employee/management resistance

Harvard Business Review stance on AI

- Advances in AI's decision-making capabilities will not reduce our reliance on human decision making but rather will enhance it **AI will substantially raise the value of human judgement - While AI is helpful in rapid analysis of vast scores of data to make predictions BUT it does not have capabilities to assess costs and benefits of decisions and weigh trade offs

Drawback of intuition

- Can be difficult to convince others that your hunch makes sense - Intuition subject to same biases as those that affect rational decision making - Fine for start-ups but often deceives CEOs as their businesses coming more complex

Two benefits of intuition

- Can speed up decision making (useful when deadlines are tight) - Helps managers when resources are limited

4. Knowledge counts

- Decision making accuracy higher when group members know good deal about the relevant issues ***Also higher when group leader has ability to weight members' opinions

Directive style (characteristics)

- Efficient, logical, practical, and systematic in approach to solving problems - Action oriented and decisions - Like to focus on facts - In pursuit of speed and results, these individuals can tend to be autocratic, exercise power and control, and focus on the short run - Prefer simple, clear solutions - Make decisions rapidly (do not consider many alternatives) - Rely on existing rules

Stage 2: Think up alternative solutions

- Employer's greatest competitive resource = employees burning with bright ideas - Creativity precedes innovation (its physical expression) - Need to come up with (both obvious and creative) alternative solutions after and identifying problem/opportunity and diagnosing its causes

3. May be too confident

- Groups more confident about their judgment and choices than individuals are - Can be liability (can lead to groupthink)

Ways to improve intuition

- Immerse yourself in data and facts - Practice "first principles thinking" - Be mindful and open to insights - Test your intuition - Rewards your intuitions

2. Size affects decision quality

- Larger the group = lower the quality of the decision - Optimal size = 7 people (based on research) ***Odd number best when group used majority rules

Analytical style (characteristics)

- Like to consider more information and alternatives than those adopting the directive style - Prefer complex problems - Carefully analyze alternatives - Enjoy solving problems - Willing to use innovative methods

3. See yourself and your organization as outsiders do

- Most managers afflicted with "rampant optimist" with inflated views of themselves and their organization - Causes downplay of risks and continuance on path despite evidence that things are not working

Assumptions of rational decision making (from lecture notes)

- Single, well-defined goal is to be achieved - Problem is clear and unambiguous - Final choice will maximize payoff - No time/cost constraints exist - Preferences are constant and stable - Preferences are clear - All alternatives and consequences are known

Conceptual style (characteristics)

- Take broad perspective to problem solving - Like to consider many options and future possibilities - Adopt long-term perspective - Rely on intuition and discussions with others to acquire information - Willing to take risks and good and finding creative solutions to problems - Can foster indecisive approach to decision making - Socially oriented - Humanistic and artistic approach - Solve problems creatively - Enjoy new ideas

1. Less efficient

- Take longer to make decisions - Groups use less information and fewer communication channels when faced with time pressures/serious effect of a decision → increases probability of bad decision

Behavioral style (characteristics)

- Work well with others and enjoy social interactions in which opinions are openly exchanges - Supportive, receptive to suggestions, show warmth, prefer verbal to written information - Some have tendency to avoid conflict - Concerned about others - Can lead to adopting of wishy-washy approach to decision making (hard time saying no) - Concern for their organization - Interest in helping others - Rely on meetings

How to preventing groupthink

1. Allow criticism - Each member of group should be critically evaluate (able to actively voice objections and doubts) - Once consensus has been reached, everyone should be encouraged to rethink their position to check for flaws 2. Allow other perspectives - Use of outside experts to introduce fresh perspectives

Establishing a decision methodology

1. Analyze situation 2. Consider what others would think about the solutions under consideration 3. Seek advice/feedback from others before making a decision 4. Conduct cost-benefit analysis of different solutions 5. Is decision consistent with your values and principles? 6. Make decision and observe consequences, then do post-mortem

Three distinct areas in which AI can be applied to decision making

1. Assisted intelligence (most basic) 2. Augmented intelligence 3. Autonomous intelligence

Nine common decision making biases (rules of thumb/heuristics)

1. Availability (using only the information available) 2. Representativeness (faulty generalizing from small sample or single event) 3. Confirmation (seeking information to support your point of view) 4. Sunk cost (money already spent seems to justify continuing) 5. Anchoring and adjustment (being influenced by an initial figure) 6. Overconfidence (blind to our own blindness) 7. Hindsight (the i-knew-it-all-along effect) 8. Framing (shaping the way a problem is presented) 9. Escalation of commitment (feeling overly invested in a decision)

Google's 10 rules for being a better manager

1. Be a good coach 2. Empower your team, don't micromanage 3. Express interest in team members' success and personal well being 4. Be productive and results oriented 5. Be a good communicator and listen to your team 6. Help your employees with career development 7. Have clear vision and strategy for the team 8. Have key technical skills so you can help advise them 9. Collaborate across the company 10. Be strong decision maker

Two non rational models (of decision making)

1. Bounded Rationality and the Satisficing Model -- Herber Simon 2. Intuition Model

Group problem-solving techniques

1. Brainstorming 2. Devil's advocacy 3. Dialectic method 4. Post-mortems

Contrasints (to perfectly rational decision making) (7)

1. Complexity - Problems that need solving often exceedingly complex, beyond understanding 2. Time and money - Not enough time/money to gather all relevant information 3. Different cognitive capacity, values, habits, and unconscious reflexes - Managers have personal limitations and biases that affect their judgement 4. Imperfect information - Imperfect, fragmentary information about alternatives and their consequences 5. Information overload - Too much information for one person to process 6. Different priorities - Some data considered more important, so certain facts are ignored 7. Conflicting goals

6 rules for brainstorming (suggested by IDEO)

1. Defer judgement (don't criticize during initial stage of idea generations) 2. Build on the ideas of others (avoid "buts" and use "ands" 3. Encourage wild ideas (out of the box thinking) 4. Go for quantity over quality (as many ideas as possible -- think beyond favorite ideas 5. Be visual 6. One conversation at a time

Four styles of decision making according to matrix

1. Directive (low value and ambiguity) 2. Analytical (low value and high ambiguity) 3. Conceptual (high value and ambiguity) 4. Behavioral (high value and low ambiguity)

Disadvantages of group decision making

1. Few people dominate or intimidate 2. Groupthink 3. Satisficing - See decision "good enough" rather than push on pursuit of other possible solutions - Occurs when groups have limited time, lack right kind of information, or are unable to handle large amounts of information 4. Goal displacement 5. Time 6. Conflict 7. Social pressure

Advantages of group decision making

1. Greater pool of knowledge 2. Different perspectives 3. Intellectual stimulation - Bring greater intellectual simulation and creativity to the decision-making process than is usually possible with one person acting alone 4. Better understanding (comprehension) of decision rationale 5. Deeper commitment to the decision (increased acceptance) 6. Training ground

Three effective reactions to overcoming barriers to decision making

1. Importance ("How high priority is this situation") 2. Credibility ("How believable is the information about the situation?") 3. Urgency ("How quickly must I act on the information about the situation?")

Questions managers should ask themselves (based on decision tree)

1. Is the proposed action legal? - Do not take action if it is illegal 2. If "yes", does the proposed action maximize shareholder value? 3. If "yes" to second, is the proposed action ethical? - Though directors and top managers believe they are bound by corporate law to always maximize shareholder volume, the courts and many state legislatures have held they are not - Main obligation = manage for "best interests of the corporation" which includes interests of the larger community 4. If "no" to second question, would it be ethical NOT to take the proposed action? - Disclose effects of decision to shareholders

Characteristics of group decision making

1. Less efficient 2. Size affects decision quality 3. May be too confident 4. Knowledge counts

Technique for stimulating functional conflict (steps 3 & 4) (dialectic method)

1. Proposed course of action generated 2. Assumptions underlying proposal identified 3. Conflicting counter proposal generated based on different assumptions 4. Advocates of each position present/debate merits of their proposals before key decision makers 5. Decision to adopt, modify, or discontinue proposed course of action is taken 6. Decision is monitored

Technique for stimulating functional conflict (steps 2 & 3) (devil's advocacy)

1. Proposed course of action generated 2. Devil's advocate assigned to criticize proposal 3. Crique presented to key decision makers 4. Any additional information relevant to issues gathered 5. Decision to adopt, modify, or discontinue proposed course of action is taken 6. Decision is monitored

Harvard Business Review's five suggested reasons for trend of dismal record of business ethics

1. Public less forgiving of poor behaviors by executives 2. Regulations more stringent 3. Companies expanding operations into developing countries where ethical risks may be higher and laws less protective 4. Digital communications increase exposure to risk from hackers and whistle-blowers 5. "24/7 news cycle and proliferation of media in the 21st century public sizes and amplifies negative information in real time"

Four ineffective reactions to overcoming barriers to decision making

1. Relaxed avoidance - Taking no action in the belief that there will be no great negative consequences 2. Relaxed change - Realizing complete inaction will have negative consequences but opts for the first available alternative 3. Defensive avoidance - Can't find a good solution and follows by (a) procrastinating, (b) passing the buck, (c) denying the risk 4. Panic - So frantic to get rid of problem that one can't deal with the situation realistically

Steps for post-mortems

1. Should begin with look at how reality of project differed from plans and expectations (Identify ways in which recent experiences can help make future projects go more smoothly) 2. Prepare written report to document post-mortem process and encourage application of any lessons learned

Difficulty of being evidence-based

1. There's too much evidence 2. Not enough good evidence 3. Evidence doesn't quite apply 4. People are trying to mislead you 5. YOU are trying to mislead yourself 6. Side effects outweigh the cure 7. Stories are more persuasive, anyway

Seven implementation principles of evidence based management/decision making (identified by Pfeffer and Sutton)

1. Treat your organization as an unfinished prototype 2. No brag, just facts 3. See yourself and your organization as outsiders do 4. Evidence based management is not just for senior executives 5. Like everything else, you still need to sell it 6. If all else fails, slow the spread of bad practice 7. The best diagnostic question: What happens when people fail?

Three practical guidelines (when group can help in decision making)

1. When it increases quality 2. When it can increase acceptance 3. When it can increase development

Uses of Big Data analytics

Analyzing consumer behavior and spurring sales Improving hiring and HR management Tracking movie, music, TV, and reading data Advancing health and medicine Aiding public policy

2. No brag, just facts

Antidote for over-the-top assertions about forthcoming products

Assumption 3 of rational model

Best decision for the organization - Assumes managers make the best decision for the organization - Confidence in best future course of action

Ready-made solutions

Best practices that have been captured/turned into standard operating procedures so that employees are better prepared to address regularly recurring problems

6. Overconfidence bias

Bias in which people's subjective confidence in their decision making is greater than their objective accuracy - Daniel Kahneman = overconfidence arises because people are often blind to their own blindness - Overestimation of your own ability

3. Confirmation bias

Biased way of thinking in which people seek information that supports their point of view, and discount data that does not (Ask people that will confirm that you are correct) - Need to acknowledge our tendency to incorrectly process challenging news and actively push ourselves to hear the bad as well as the good

Dialectic method

Calls for managers to foster structured dialogue/debate of opposition viewpoints prior to making a decision - Time-honored practice going all the way back to ancient Greece - Plato and his followers attempted to identify a truth (thesis) by exploring opposite sides (antithesis)

Decision

Choice made from among available alternatives

Groupthink

Cohesive group's blind unwillingness to consider alternatives - Occurs when group members strive for agreement among themselves for the sale of unanimity and avoid accurately assessing the decision situation - Positive team spirit of group works against sound judgment - Friendly and tight-knit group members who are unable to think "outside the box" - Strivings for unanimity override their motivation to realistically appraise alternative courses of action "Herd mentality"

Assumption 1 of rational model

Complete information, no uncertainty - Assumes managers have complete information - Should obtain complete, error-free information about all alternative courses of action and consequences that would follow from each choice

Predictive modeling

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

Decision making potential of artificial intelligence

Devices that make their own decisions and act independently of human oversight and directions AI = devoid of common sense - Efforts being made to close the gap between humans' and machines' understanding of the world

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

Dos and don'ts for achieving convenus

Do - Use active listening skills - Involve as many members as possible - Seek out reasons behind arguments - Dig for facts Dont - Avoid log rolling and horse trading - Avoid making agreement simply to keep relations amicable - Do not try to achieve consensus by putting questions to a vote (inly splits group into winners and losers)

A few strategies for any successful post-mortem

Don't wait too long to schedule one Prepare an agenda Encourage honest feedback from all participants (including customers)

Herbert Simon

Economist who in the 1950s began studying how managers actually make decisions Proposed managers could not act truly logically because their rationality was bounded by so many restrictions → bounded rationality People don't optimize, they satisfice

Critical thinking/problem solving entails and requires skills at...

Entails: - Ability to use sound reasoning to analyze situations - Make decisions - Solve problems Requires skills at: - Obtaining data - Interpreting data - Analyzing data

Stage 3: Evaluate alternatives & select a solution (based on ethics, feasibility, and effectiveness)

Evaluate each alternative according to the following questions - Ethics → Is it ethical? - Feasibility → Is it feasible? (time, costs, technology, customer demand, etc.) - Effectiveness → Is it ultimately effective? (optimal in the long run? Better than "good enough")

Value orientation

Extent to which a person focuses on either a task/technical concerts OR people/social corners when making decision - Low value orientation = task & technical concerns - High value orientation = people & social concerns

Tolerance for ambiguity

Extent to which person has high need for structure or control in their life - Low tolerance **Desire a lot of structure in their lives **Find ambiguous situations stressful and psychologically uncomfortable - High tolerance **Do not have high need for structure **Thrive in uncertain situations **Energized by ambiguous situations

Consensus

General agreement; group solidarity - Everyone agrees to support the outcome (does not mean that all group members agree with the decision, only that they are willing to work toward its success)

Decision tree

Graph of decisions and their possible consequences, used to create a plan to reach a goal ***Suggested by Constance Bagley

Analytical style (definiton)

High tolerance for ambiguity and respond well to new/uncertain situations; low value orientation as well (task/technical concerns) - Careful decision makers who like lots of information and alternative choices

Conceptual style (definiton)

High tolerance for ambiguity and tend to focus on people/social aspects of a work situation (high value orientation) - Rely on intuition and have long-term perspective

3. Autonomous intelligence

Humans given operational control to the machine

4. Evidence based management is not just for senior executives

Important for everyone in organization to be guided by the responsibility to gather and act on quantitative and qualitative data and share results with others

Ethics officer

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

Epiphany

Instant when something clicks in the brain, a mental light bulb goes on, and the road ahead becomes crystal clear

Automated experience

Intuition based on feelings (involuntary emotional response to those same matters) - Involuntary emotional response to those same matters

System 1 (of decision making)

Intuitive and largely unconscious Characteristics: - Operates automatically and quickly - Fast, automatic, intuitive, and largely unconscious mode - "System 1 uses association and metaphor to produce a quick and dirty draft of reality"

Portfolio analysis

Investment adviser who evaluates the risk of various stocks

Assumption 2 of rational model

Logical, unemotional analysis - Assumes managers are able to make unemotional analysis - No prejudice or emotional blind spots allows managers to logically evaluate alternatives, ranking them from best to wrose according to your personal preference

Directive style (definiton)

Low tolerance for ambiguity and oriented toward task and technical concerns in decision making (low value orientation)

Intuition

Making a choice without the use of conscious thought or logical inference **Subconscious process of making decisions on basis of experience, values, and emotions - Stems from expertise (person's explicit and tacit knowledge about a person, situation, object, or decision opportunity) - "Holistic hunch" - DOES NOT rely on systematic/thorough analysis of the problem - Generally complements rational analysis

What is the greatest pressure on top execs?

Maximize shareholder value (deliver greatest ROI to owners of their company) BUT just because it maximizes shareholder value does not mean you should do it, must see if it is ethical

Nonrational models of decision making

Models of decision making style that explain how managers make decisions ***Assume decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions - Descriptive (rather than prescriptive) ***Describe how managers ACTUALLY make decision, rather than how they should - Removes/relaxes assumption of certainty (full knowledge) ***So risk is also part of the equation (future outcomes associated with alternative are subject to chance)

Behavioral style (definiton)

Most people oriented of the four styles (high value orientation) and have low tolerance for ambiguity

7. The best diagnostic question: What happens when people fail?

No learning without failure

"I-knew-it-all-along effect"

Occurs when we look back on a decision and try to reconstruct why we decided to do something

Stage 1: Identify the problem or opportunity

PROBLEM - Difficulties that inhibit the achievement of goals OPPORTUNITIES - Situations that present possibilities for exceeding existing goals - Farsighted manager can look past steady stream of daily problems and seize moment to actually do better than the goals they are expected to achieve - Managers called on to make improvements when confronted with a problem or opportunity DIAGNOSIS - Analyzing the underlying cas

Pros and Cons of AI

PROS - Possibility to enable people to make more efficient use of their time - Humans could be relieved of some of the drudgery of work (and even some of the time commitment) - AI systems could better protect consumer privacy and personal data from the activities of hackers - Possibility to build more personal approaches to customers - Business and personal tasks could become cheaper (allowing money to be put in other uses) - Could assist in identifying biases CONS - Risk of errors - Practical challenges in making AI reliable and practical - Could be put to malicious uses - Could develop autonomous weapons - Elon Musk → "fundamental risk to the existence of human civilization"

Expertise (holistic hunch)

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

Decisions in management functions

Planning Organizing Leading Controlling

Limitation of AI

Possibility to make mistakes - Difficult to program machine learning systems to act in ways that are desired and predicate

Artificial intelligence

Potential of devices to make their own decisions and act independently of human oversight and direction - Could aid in reducing decision-making biases

Drawbacks of satisficing model

Potentially less optimal solutions - Not always in company's best interest Inconsistency in decision making

Time-series forecast

Predicts future data based on patterns of historical data

Goal displacement

Primary goal subsumed to a secondary goal

Big Data analytics

Process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations, and other useful information

Decision making

Process of identifying and choosing alternative course of action Importance → every organization grows, prospers, or fails as result of decision made by managers

Flaws with the Rational Model (+ Assumptions)

Rational model = descriptive rather than prescriptive; (describes how managers SHOULD make decision) ***DOESN'T describe how managers ACTUALLY make decisions Assumptions of rational model 1. Complete information, no uncertainty 2. Logical, unemotional analysis 3. Best decision for the organization

"Concorde" effect

Refers to the fact that the French and British governments continued to invest in the Concorde supersonic jetliner even when it was evident there was no economic justification for the aircraft

Project post-mortems

Review of recent decisions in order to identify possible future improvements - Said to have originated as debriefing strategy used by military - Idea = carefully evaluate project results after the fact nothing what could have been done differently and better, then record those insights to inform future decisions

Symptoms of Groupthink

Sense of invulnerability - Illusion that nothing can go wrong, breeding excessive optimism and risk taking Rationalization - Rationalizing protects the assumptions underlying group's decisions from critical questions Illusion of unanimity and peer pressure - Members silence interpreted as consent - If people do disagree, peer pressure leads others to questions the dissenters' loyalty "The wisdom of crowds" - Pressure to conform often leads members with different ideas to censor themselves (opposite of collective wisdom)

1. Assisted intelligence (most basic)

Simply automates basic tasks (makes tasks faster/cheaper for humans to accomplish)

Four stages in rational decision making (steps in standard model of problem solving)

Stage 1: Identify the problem or opportunity Stage 2: Think up alternative solutions Stage 3: Evaluate alternatives & select a solution Stage 4: Implement & evaluate the solution chosen

Big Data

Stores of data so vast that conventional database management systems cannot handle them; requires very sophisticated analysis software and supercomputing-level hardware Includes: - Data in corporate databases - Web-browsing data trails - Social network communications - Sensor data - Surveillance data

Heuristics

Strategies that simplify the process of making decisions Some rules of thumb are real barriers to high-quality decision making - Not always reliable regardless that fact that people use rules of thumb all the time when making decisions

Thomas H. Davenport (3 key attributes among analytics competitors)

Studied 32 organizations that made commitment to quantitative, fact-based analysis 1. Use of modeling (goes beyond simple descriptive statistics) 2. Multiple applications (gain advantage from multiple applications supporting many parts of the business) 3. Support from top management (companywide embrace of analytics impels changes in culture, process, behavior, and skills for many employees)

Rational model of decision making (classical model)

Style of decision making that explains how managers should make decisions - Assumes managers will make logical decisions that will be the optimum in furthering the organization's best interests

Decision-making style

Styles that reflect the combination of how an individual perceives and responds to information - Based on idea that styles vary among two different dimensions: value orientation and tolerance for ambiguity

Hunches

Subconscious, visceral feelings

Stage 4: Implement & evaluate the solution chosen

Successful implementation requires: - Planing carefully - Being sensitive to those affected Evaluation (possible reactions if the action is not working) - Give it more time - Change it slightly - Try another alternative - Start over (go back to drawing board -- stage 1 of the decision making process)

Evidence-based decision making (Jeffrey Pfeffer and Robert Sutton)

Suggest companies that use evidence-based management routinely trump the competition Reinforces continuous learning Acquiring reliable evidence to make decisions

Daniel Kahmeman -- Two systems of decision making

System 1 -- Intuitive and largely unconscious System 2 -- Analytical and conscious

System 2 (of decision making)

System 2 -- Analytical and conscious Characteristics: - Slow, deliberate, analytical and consciously effortful mode of reasoning - "System 2 draws on to arrive at explicit beliefs and reasoned choices"

2. Augmented intelligence

System learns from human inputs in order to assist humans in making better decisions

Devil's advocacy

Taking side of unpopular point of view for the sake of argument - Assigns someone the role of critic - Gets name from traditional practice of Roman Catholic Church

Electronic brainstorming (brain writing):

Technique in which members of group come together over computer network to generate ideas and alternatives

Brainstorming

Technique used to help group generate multiple ideas and alternatives for solving problems Developed by advertising executive A.F. Osborn - Individuals in group meet and review problem to be solved - Then silently generate ideas/solution (which are collected, written on board/chart) - Second session used to critique and evaluate alternatives

8. Framing bias

Tendency of decision makers to be influenced by the way a situation or problem is presented to them - Trying framing your decision questions in alternative ways to avoid this bias - In general, people view choices more favorably when they are framed in terms of gains rather than losses ***Ex. 60% chance of success rather than 40% chance of failure

1. Availability bias

Tendency of managers to use information readily available from memory to make judgements - Tend to give more weight to recent events - Use of immediate examples that come to mind to make a decision ***Bias = readily available information may not present complete picture of a situation

7. Hindsight bias (the i-knew-it-all-along effect)

Tendency of people to view events as more predictable than they really are

2. Representativeness bias

Tendency to generalize from a small sample or single event - Sampling issue - Likelihood of event based on your own experience ***Bias = just because something happens once, doesn't mean that is representative

Law of Unintended Consequences

Things happen that were not foreseen

Evidence-based management

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

Bounded rationality

Type of nonrational decision making; ability of decision makers to be rational is limited by numerous constraints - Due to constraints, managers don't make exhaustive search for best alternative

Satisficing model

Type of nonrational decision making; managers seek alternatives until they find one that is satisfactory, not optimal - Might seem to be a weakness BUT may outweigh any advantages gained from delaying making a decision until all information is in and all alternatives weighed - Making snap decisions can also backfire

Research on unethical behavior

Unethical behavior more apt to be to tolerated when it comes from higher rather than low performance (some organizations prefer performance over ethics) Prosocial lying (to prevent others from feeling hurt or embarrassed)

Drawbacks of rational model

Unrealistic view of the world - Condition of Certainty - Full information - Rational Choice for ranking/choosing alternatives

Main assumptions of satisficing model

Use incomplete/imperfect information Are constrained by bounded rationality Tend to SATISFICE not optimize

Two dimensions of decision making style

Value orientation Tolerance for ambiguity

5. Like everything else, you still need to sell it

Vivid, juice stories and case studies sell better than detailed, rigorous, and admittedly dull data

4. Sunk cost bias

Way of thinking in which managers add up all the money already spend on a project and conclude it is too costly to simply abandon it - Most people have "aversion" to wasting money (especially if large sums have already been spent) - Justify spending more money on a project because you have already sunk/spent a significant amount - Throw good money after bad money

9. Escalation of commitment bias

When decision makers increase their commitment to a project despite negative information about it - To reduce this bias, researchers recommend that decision makers set minimum targets for performance and then compare their performance results with their targets - More committed even in the face of negative information - You know something is wrong, but you continue forward - Notion of loss is more painful than the actual gain