JSU- Chapter 11 - OB

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

Fill in the Blank Question

When all members of a group either agree with a decision or are able to support it, they have reached a ________.