MGMT 309 Ch 9
Decisoin Making Under Certainty
A condition in which the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative
Decision Making Under Uncertainty
A condition in which the decision makes does not know all the alternatives the risks associated with each, or the consequences of each alternative
Escalation of Commitment
A decision maker is staying with a decision even when it appears to be wrong
Programmed Decisions
A decision that is fairly structured decision or recurs with some frequency or both
Nonprogramed Decisions
A decision that is relatively unstructured and occurs much less often a programmed decision
Coalition
A political force in decision making which consists of an informal alliance of individuals or groups formed to achieve a goal Can be positive or negative
Managers Can Promote the Effectiveness of Group/Team Decision Making
Being aware of the pros and cons of having a group or team make a decision Setting deadlines for when decisions must be made Avoid problems with dominance by managing group membership Have each group member individually critically evaluate all alternatives Do not make your position known too early Appoint a group member to be a devil's advocate Hold a follow up meeting to recheck decision
Groupthink
Compliance or choice shift may occur; the group's desire for consensus and cohesiveness overwhelms its desire to reach the best possible decision
Brainstorming
Criticism is not allowed Freewheeling is welcome Quantity is encouraged
Ethics and Decision Making
Individual ethics combine with the organization's ethics to create managerial ethics
Intuition
Innate belief about something without conscious consideration
Forms of Group Decision Making
Interacting Groups or Teams Delphi Groups Nominal Groups
Unclear Means-end Relations
It is impossible to generate an exhaustive list of alternatives then select the most promision
Factors that Prevent Rationality
Lack of Consensus Unclear Means-end Relations Noisy Environment
Noisy Environment
Link between outcome and actions is hard to preduct
Advantages of Group/Team Decision Making
More information and knowledge is available More alternatives are likely to be generated More acceptance of the final decision is likely Enhanced communication of the decision may result Better decisions generally emerge
Interacting Groups or Teams
Most common form of decision making groups Consist of an existing group or newly formed team interacting and making a decision
Compliance
People conform to other's expectations or behaviors in the hope of acquiring rewards or avoiding punishment
Components of Managerial Ethics
Relationships of the firm to employees Employees to the firm The firm to other economic agents
Delphi Groups (Doesn't Meet in Person)
Sometimes used for developing a consensus of expert opinion from a panel of experts who individually contribute through a moderator
Nominal Groups
Structured technique designed to generate creative and innovative ideas through the individual contributions of alternatives that are winnowed down through a series ofrank ordering of the alternatives
Choice Shift
Tendency for groups to make decisions that appear more extreme than the decisions that group members would have made on their own
Decision Making
The act of choosing one alternative from among a set of alternatives
Decision Making Under Risk
The availability of each alternative and its potential payoffs and costs are all associated with risks
Bound Rationality
The concept that decision makers are limited by their values and unconscious reflexes, skills, and habits
Risk Propensity
The extent to which a decision maker is willing to gamble when making a decision
Base Rate Bias
The initial probability given no other information Bias occurs when people put too much weight on the evidence provided, or additional information, and not enough weight on the information provided by the base rate
Decision Making Process
The process of recognizing and defining the nature of a decision situation, identifying alternatives, choosing the 'best' alternative and putting it into practice Effective decision is one that optimizes some factors such as profits, sales, employee welfare and market share Managers make decisions about problems and oportunities
Disadvantages of Group/Team Decision Making
The process takes longer than individual decision making compromise decisions resulting from indecisiveness may emerge Groupthink may occur
Staisficing
The tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency to reslove the problem
Lack of Consensus
There must be a general agreement of the definition of problems, decisions, and decision making goals at the beginning