Chapter 9 Terms
Steps in rational decision making
(1) recognize and define the decision situation, (2) identify appropriate alternatives, (3) evaluate each alternative in terms of its feasibility, satisfactoriness, and consequences; (4) select the best alternative, (5) implement the chosen alternative, and (6) follow up and evaluate the results of the chosen alternative.
Bounded rationality
a concept suggesting that decision makers are limited by their values and unconscious reflexes, skills, and habits.
State of risk
a condition in which the availability of each alternative and its potential payoffs and costs are all associated with probability estimates.
State of uncertainty
a condition in which the decision maker does not know all the alternatives , the risks associated with each, or the consequences each alternative is likely to have.
State of certainty
a condition in which the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative.
Escalation of Commitment
a decision maker's staying with a decision even when it appears to be wrong.
Programmed Decision
a decision that is fairly structured or recurs with some frequency (or both).
Nonprogrammed Decision
a decision that is relatively unstructured and occurs much less often then a programmed decision.
Group and team decision making
a decision-making group or team in which members openly discuss, argue about, and agree on the best alternative.
The Administrative Model of decision making
a decision-making model that argues that decision makers (1) use incomplete and imperfect information, (2) are constrained by bounded rationality, and (3) tend to "satisfice" when making decisions.
Classical decision model
a perspective approach to decision making that tells managers how they should make decisions; assumes that the managers are logical and rational and that their decisions will be in the best interests of the organization.
Groupthink
a situation that occurs when a group or team's desire for consensus and cohesiveness overwhelms its desire to reach the best possible decision.
Coalition
an informal alliance of individuals or groups formed to achieve a common goal.
Intuition
an innate belief about something, without conscious consideration.
Risk propensity
the extent to which a decision maker is willing to gamble when making a decision.
Satisficing
the tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency.