mgmt1001 topic 5 - decision making

7/23/2019 MGMT1001 Topic 5 - Decision Making

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Topic 5

Decision Making

Dr Lynn Gribble

[email protected]


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How many decisions

Food choices?

Boolean choices

Conscious or unconscious,

We cannot separate decision making from

information

is choice a decision too


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Information sources

Emailtalking with colleagues

printed materials

observations


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Sources you might use relevance isimportant too

Reference material

books & ebooks

academic journals

magazines

newspapers

statistics: how many people do they talk to, some research information

internet sites:

specialist information


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Managers make decisions dailyThey make choices between alternative courses of action

All decisions rely upon informationTherefore quality information is critical

Programmed decisions

Non programmed decisions


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What type of environment are we in?

Certain

Risk

Uncertain

Have to learn to function on probabilities

- alternatives are considered and the outcomes are known

- Alternatives and outcomes


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Lets explore rational decision making

first1. Find and define the problem

2. Generate and evaluate alternative solutions

3. Select preferred solution (conduct an ethical check here)

4. Implement the solution

5. Evaluate results


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But!

While rational decisions are good,

complexity can be confusing


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How do you generate possible

solutions?Benefits?

Costs

Timeliness

Acceptability

Ethical soundness


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But how do you choose the

alternative?Classical

Behavioural

Judgemental ( Heuristic approach)

:

Based on the cover. eg: when buying a carrot, you choose the carrot which

has orange color, red shinny apple


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Today is exploring how you make decisions ( and howorganisations do this also)

There are many types of decision making

Directive ( you decide) - problem is rarely does one peson have all the

information required

Conceptual- long terms results, brainstorms ideas and may lack data to

support

analytical- direct observations data and facts but is time consumingbehavioral - uses heuristics


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What are Heuristics?

Practical

Not perfect

Could be trial and error

Stereotyping is a form of heuristic


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Decision making biases increase when!- Uncertainty

- Complexity- Strength of cognitive bias

- Individual attributes

- past experiences

- Context in which the behavior occurs

- Social norms

- Time (delay - benefits now - costs later)


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Analysing and unpacking decisions- Perceptual filters are:

1 A process by which individuals give meaning (reality) to their environment

by organising and interpreting their sensory impressions

- Factors influencing perception:

1. Perceiver's personal characteristics (interests, biases, and expectation)

2. Target characteristics (distinctiveness, contrast and similarity)3. Situation (context) factor such as place, time, location, draw attention or

distract from the target


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How the actions of individuals are perceived by others depends on what

meaning (causation) we attribute to a given behavior.

- internally caused behaviour: under the individuals control- externally caused behaviour: due to outside factors

This is fundamental attribution error

We do this because of self-serving bias

- Protect self-esteem


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Optimism and over confidenceRelates to accuracy of estimating and forecasting

Strongest when there is high uncertainty and low feedback

Exposure to greater risk or missed opportunities.

Confirming evidences

Seek information that will support our existing instinct or point of view

Effects both collection or evidence and interpretation of evidence


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Other perceptual filters that we use

on people as well as things

Halo effect

Assumed similarity

Stereo typing

Selectivity

Anchoring and adjustment

Availability

Representativeness

Familiarity


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Escalation of commitment

When should we stop?

When our investment of time and emotion keeps us involved even when

there is evidence to stop

Good decision making: pull out emotion feeling (without emotion to make

decision)


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Unintended consequences

All actions have outcomes that we may not first see

Limiting what cars can drive on what days

Cull of cobras

Reduction of price of Johnny Walker Red in Japan

Smokers outside buildings and the lack of disposal


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To finish up

Critical analysis?

Be aware, about satisficing

Unintended consequences

mgmt1001 topic 5 - decision making

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