Descriptive Descriptive Approaches to Approaches to

Decision MakingDecision MakingChapter 12Chapter 12

OverviewOverview Two Approaches to Decision TheoriesTwo Approaches to Decision Theories

Optimizing—choose best option after thorough Optimizing—choose best option after thorough examination of all feasible options.examination of all feasible options.

Satisficing—choose first satisfactory option.Satisficing—choose first satisfactory option. Decision Heuristic EffectsDecision Heuristic Effects

Representativeness HeuristicRepresentativeness Heuristic Availability HeuristicAvailability Heuristic Anchoring HeuristicAnchoring Heuristic Framing EffectsFraming Effects

Information UtilizationInformation Utilization ““GROUPTHINK”GROUPTHINK”

Theoretical ApproachesTheoretical Approachesto Individual Decision to Individual Decision

MakingMaking Optimizing Decision TheoryOptimizing Decision Theory

Choose the best option after a Choose the best option after a thorough examination of all feasible thorough examination of all feasible options and all relevant information.options and all relevant information.

Subjective Expected Utility Model Subjective Expected Utility Model (multiplying each option’s probability (multiplying each option’s probability of occurrence with its “utility” for the of occurrence with its “utility” for the decision maker)decision maker)

Satisficing Decision TheorySatisficing Decision Theory Choose the first satisfactory optionChoose the first satisfactory option

Decision Heuristic EffectsDecision Heuristic Effects(simplified methods for making judgments about (simplified methods for making judgments about

objects and events)objects and events)

Representativeness HeuristicRepresentativeness Heuristic – use – use resemblance between different objects or resemblance between different objects or events to estimate their relatedness (usually events to estimate their relatedness (usually leads to correct conclusions)leads to correct conclusions)

Availability HeuristicAvailability Heuristic – estimate the likelihood – estimate the likelihood of an event based on how easily it comes to of an event based on how easily it comes to mind (leads to satisfactory conclusions)mind (leads to satisfactory conclusions)

Anchoring HeuristicAnchoring Heuristic – initial value is used as – initial value is used as a basis for estimating a whole series of values a basis for estimating a whole series of values (leads to insufficient or incorrect conclusions)(leads to insufficient or incorrect conclusions)

Framing EffectsFraming Effects – occur when people’s – occur when people’s judgments are influenced by the way in which judgments are influenced by the way in which the relevant information is worded the relevant information is worded

Information UtilizationInformation Utilization Optimizing theoryOptimizing theory – presumes that all – presumes that all

relevant information has an equal chance relevant information has an equal chance of being brought up during discussionof being brought up during discussion

Satisficing theorySatisficing theory (information sampling (information sampling model) – information is more likely to model) – information is more likely to come up when more members are familiar come up when more members are familiar with itwith it

Information that is Information that is sharedshared within the within the group is more likely to be usedgroup is more likely to be used

Stress = Arousal (too little – not vigilant; Stress = Arousal (too little – not vigilant; too much – panic)too much – panic)

GroupthinkGroupthink Janis argues that groupthink occurs when Janis argues that groupthink occurs when

groups under stress establish the norm groups under stress establish the norm that displaying consensus is the group’s that displaying consensus is the group’s number one priority; increased levels of number one priority; increased levels of cohesiveness lead to groupthink.cohesiveness lead to groupthink.

Historical events support groupthink . . .Historical events support groupthink . . .

Task cohesion vs. Maintenance cohesionTask cohesion vs. Maintenance cohesion

SummarySummary Two Approaches to Decision TheoriesTwo Approaches to Decision Theories

Optimizing—choose best option after thorough Optimizing—choose best option after thorough examination of all feasible options.examination of all feasible options.

Satisficing—choose first satisfactory option.Satisficing—choose first satisfactory option. Decision Heuristic EffectsDecision Heuristic Effects

Representativeness HeuristicRepresentativeness Heuristic Availability HeuristicAvailability Heuristic Anchoring HeuristicAnchoring Heuristic Framing EffectsFraming Effects

Information UtilizationInformation Utilization ““GROUPTHINK”GROUPTHINK”

Conclusions . . .Conclusions . . .

Group discussion helps individuals Group discussion helps individuals overcome the errors that the use of overcome the errors that the use of decision heuristics cause. . . BUTdecision heuristics cause. . . BUT

Group discussion also makes these Group discussion also makes these errors more likely . . . ANDerrors more likely . . . AND

Results are contingent upon unique Results are contingent upon unique individuals, various heuristics, and individuals, various heuristics, and specific judgmentsspecific judgments