Chapter 10 Decision Making

Programmed Decision

Simple routine matter for which a manager has an established decision rule

Nonprogrammed Decision

New complex decision that requires a creative solution

Decision Making Process

recognize the problem and need, identify the objective, gather and evaluate data, list and evaluate alternatives, select action, implement decision, gather feedback, follow up

Effective Decision

timely decision that meets a desired objective and is acceptable to individuals affected by it

Rationality

logical (step by step) approach to decision making, with a thorough analysis of alternatives and their consequences

Bounded Rationality

Theory that suggests that there are limits upon how rational a decision maker can actually be

Heuristics

shortcuts in decision making that save mental activitiy

Satisfice

select the first alterative thats “good enough” to save costs

Z Problem Solving Model

Sensing (look at the facts), intuition (alternatives), thinking (analyze), feeling (impact)

Escalation of Commitment

Being overly committed to the wrong decision. Occurs: people dislike inconsistency, overly optimistic, illusion of control, sunk costs. Deal with it: split responsibility, closely monitor decision, provide a graceful exit, have groups make initial decision

Risk Aversion

Tendency to choose option that entail fewer risks and less uncertainty

Cognitive Style

Individuals preference for gathering information and evaluating alternatives

Left Hemisphere

Verbal, sequential logical, rational, western thought

Right Hemisphere

Nonverbal, simultaneous, intuitive, eastern thought

Intuition

Fast, positive force in decision making that is utilized at a level below consciousness

Creativity

Process influenced by individual and organization factors that results in the product of novel and useful ideas

Synergy

Positive force that occurs in groups when group members stimulate new solutions to problems

Social decision schemes

Simple rules used to determine final group decisions

Groupthink

Deterioration of mental efficiency and moral judgment resulting from pressures within the group

Group polarization

Tendency for group discussion to produce shifts toward more extreme attitudes among members