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Chapter 11
Decision making
entails identifying and choosing from alternate state of solutions that lead to a desired state of affairs
rational model of decision making
explains how managers should make decisions
opportunity
a situation in which results that exceed goals and expectations are possible
optimizing
solving problems by producing the best possible solution based on highly desirable conditions
non-rational models of decision making
explain how managers actually make decisions
bounded rationality
represents the notion that decision makers are bounded or restricted by a variety of constraints when making decisions
satisficing
consists of choosing a solution that meets some minimum qualifications and thus is good enough
Intuition
consists of judgements, insights, or decisions that “come to mind on their own, without explicit awareness of the evoking cues and of course without explicit evaluation of the validity of these cues.”
holistic hunch
judgement based on subconscious integration of information stored in memory
automated experience
represents a choice based on a familiar situation and a partially subconscious application of learned information related to it
expertise
an individuals combined explicit knowledge and tacit knowledge that is difficult to express or formalize
explicit knowledge
information we can easily put into words
tacit knowledge
information we gain through experience
judgmental heuristics
cognitive shortcuts or biases that are used to simplify the process of making decisions
confirmation bias
how we selectively gather information
overconfidence bias
overestimating our skills relative to others and overestimating the accuracy of our skills
availability heuristic
decision makers tendency to base decisions on information readily available in memory
representativeness bias
leads us to look for information that supports previously formed stereotypes
anchoring bias
when decision makers are influenced by the first information they receive about a decision, even if it’s irrelevant
hindsight bias
occurs when knowledge of an outcome influences our belief about the probability that we could have predicted earlier
framing bias
related to the manner that a question is posed or framed. It leads us to change the way we interpret alternatives
escalation of commitment bias
tendency to hold an ineffective course of action even when it is unlikely the bad situation can be reversed
evidence based decision making
the process of conscientiously using the best available data and evidence when making managerial decisions
big data
reflects the vast quantity of data available for decision making
Artificial Intelligence (AI)
form of computing that allows machines to perform cognitive features
decision making style
the way an individual perceives and comprehends stimuli and the general manner in which he or she chooses to respond to the information
decision tree
graphical representation of the process underlying decisions
goal displacement
occurs when the primary goal is overridden by a secondary goal
groupthink
a mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when members striving for unanimity override their motivation to realistically appraise alternative courses of action.
cohesiveness
a sense of “we-ness” tends to override individual differences and motives
minority dissent
occurs when group members feel comfortable disagreeing with other group members
consensus
reached when all members can say they either agree with the decision or have had their day in court and were able to convince others of their viewpoint
brainstorming
helps groups generate multiple ideas and alternatives of solving problems
electronic brainstorming
allows participates to submit their ideas and alternatives over the internet
delphi technique
a group process that generates anonymous ideas and judgements from physically dispersed experts in multiple rounds of brainstorming
decision support systems (dss)
computer based interactive systems that help decision makers to use data and models to solve unstructured problems
creativity
process of producing new and useful ideas concerning products, services, processes, and procedures
creative performance behaviors
four key behaviors that drive the production of creative outcomes
creative outcome effectiveness
the joint novelty and usefulness (quality) of a product or service as judged by others
high commitment work systems
rely on selective hiring, comprehensive training, comparatively high pay, pay contingent on performance, and good benefits
availability bias
readily assessable information
representativeness bias
generalizations are made based on one or a limited number of experiences
conformation bias
info is sought out to support previous decisions or positions
anchoring bias
early info influences decisions or views
overconfidence bias
tendency to be overly optimistic in ones estimates
hindsight bias
knowledge of an outcome influences youe perceived probability of it occurring
framing bias
presenting info or questions in a particular way influences judgement
escalation of commitment bias
persisting when an undesireable outcome is likely
True
True or false: The goal of decision making is to find a solution that leads to a desired state of affairs.
System 1
What type of thinking is described by Daniel Kahneman as intuitive and unconscious thought?
rational decision model
The decision-making model that assumes managers are fully objective and have all the data needed is the:
nonrational
What models of decision making explain how managers really come to decisions?
judgmental heuristics
What are the cognitive shortcuts used to simplify the decision making process called?
choosing from among alternative solutions
determining alternative solutions
Which two activities are included in the decision-making process?
It is automatic.
It is instinctive.
It relies on mental shortcuts.
Daniel Kahneman describes two types of thinking in his book Thinking, Fast and Slow. Why is System 1 "fast"?
evidence-based decision making
The process of conscientiously using the best available data when making managerial decisions is:
possess all information needed to make the best decision
are objective
Characteristics of the rational decision-making model include the assumption that managers:
to support a decision
to make a decision
to inform a decision
What are the three ways managers use evidence or data in the decision-making process?
False
True or false: An assumption of the nonrational decision making models is that managers possess all of the information needed to make optimal decisions.
enhance productivity.
be used to develop new products and services.
make information more transparent and usable.
Big data, the vast quantity of data available to decision makers, can
judgmental
Cognitive shortcuts or biases that are used to simplify the process of making decisions are known as ________ heuristics.
True
True or false: The goal of decision making is to find a solution that leads to a desired state of affairs.
artificial intelligence (AI)
What is a form of computing that allows machines to perform cognitive functions similar to the way humans do?
avoiding decision-making biases
improving performance
Evidence-based decision making holds the promise of:
value orientation
tolerance for ambiguity
The model of decision-making styles is based on which of the following dimensions?
to support a decision that has already been made
The least effective way to use evidence-based decision making is to ___.
leaked private information
cybersecurity breaches
What are disadvantages of big data?
tolerance for ambiguity
The extent to which a person has a high need for structure and control in his or her life is known as:
judgmental heuristics
The cognitive biases we use to facilitate the decision-making process are:
Directive
People who have a low tolerance for ambiguity and are task oriented when making decisions have which decision-making style?
gaining insight through data analysis
automating processes
managing customer communications
How can artificial intelligence (AI) help managers enhance business operations?
decision-making style
The way an individual perceives stimuli and the general manner in which he or she responds to it is a(n):
analytical
People who have a high tolerance for ambiguity and overanalyze a situation have the ______ decision making style.
to make a decision
to support a decision
to inform a decision
What are the three ways managers use evidence or data in the decision-making process?
Conceptual
People who have a high tolerance for ambiguity and focus on people and the social aspects of a work situation have which of the following decision making styles?
value orientation
The extent to which an individual focuses on either task and technical concerns or people and social concerns in making decisions is:
behavioral
People who prefer to avoid conflict and focus strongly on people and the social aspects of a work situation have the ______ style of decision making.
like to focus on facts
are decisive and action oriented
People who have a directive decision style:
age.
gender.
nationality.
Research indicates that most managers have multiple decision-making styles and that those styles are based on:
artificial intelligence (AI)
What is a form of computing that allows machines to perform cognitive functions similar to the way humans do?
A decision tree
What graphical representation of the process underlying decisions shows the consequences of making various choices?
Analytical
Which of the following decision making styles is associated with a high tolerance for ambiguity and focus on tasks and technical concerns?
groupthink
When people who are members of a cohesive in-group so strive for unanimity that they fail to realistically appraise alternative courses of action it is:
conceptual
People who have a high tolerance for ambiguity and focus on people and the social aspects of a work situation have the ______ decision making style
cohesiveness
The sense of "we-ness" that overrides individual differences and motives in a group is:
having a hard time saying no to others
avoiding conflict
working well with others
People who have the behavioral style of decision making can be characterized as:
when there is limited time to make the decision
What practical consideration might result in an individual rather than the whole group making a decision?
true
True or false: People's occupations and personality types influence their decision-making styles.
showing the consequences of making decisions
showing the process underlying decisions
A decision tree can be described as:
Decisions that maintain the cohesiveness of the group
Decisions that lack moral judgment
Decisions that fail to realistically evaluate alternative options
What is often result from groupthink?
cohesiveness
The sense of "we-ness" that overrides individual differences and motives in a group is ___________.
True
True or false: Consensus does not require unanimous agreement.
information and communication
routine and frequency
time constraints
What are three practical things to consider in the decision-making process?
age.
nationality.
gender.
Research indicates that most managers have multiple decision-making styles and that those styles are based on:
ideas; problems
Brainstorming is a technique used to help groups generate multiple ________ and alternatives for solving ________.
A decision tree
What graphical representation of the process underlying decisions shows the consequences of making various choices?
creativity
The process of producing new and useful ideas concerning products, services, processes, and procedures is ___________.
groupthink
The phenomenon that occurs when people who are members of a cohesive in-group so strive for unanimity that they fail to realistically appraise alternative courses of action is called
creative outcome effectiveness
The joint novelty and usefulness of a product or service as judged by others is:
consensus
When all members of a group either agree with a decision or are able to support it, they have reached a ________.
