Chapter 11 & 12 Mana

Rational Model Of Decision Making

Explains how managers should make decisions

Optimizing

Solving problems by producing the best possible solution based on a set of highly desirable conditions

Nonrational models of decision making

Explains 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

Intuition

Consists of judgments, insights, or decisions that come to mind on their own, without explicit awareness of the evoking cues and of courses without explicit evaluation of the validity of these cues.

Holistic hunch

Judgement based on the subconscious integration of information stored in memory

Automated Experience

A choice based on a familiar situation and a partially subconscious application of learned information related to it.

Tacit knowledge

Information we gain through experience that is difficult to express and formalize

Expertise

An individual’s combined explicit knowledge or information that can easily be put into words

Judgmental Heuristics

Cognitive shortcuts or biases that are used to simplify the process of making decisions

Confirmation Bias

Pertains to how we selectively gather information

Overconfidence bias

Overestimating our skills relative to those of others, and the accuracy of our predictions.

Availability Heuristic

A decision maker’s tendency to base decisions on information readily available in memory

Representativeness Bias

Leads us to look for information that supports previously formed stereotypes

Hindsight Bias

Occurs when knowledge of an outcome influences our belief about the probability that we could have predicted the outcome earlier

Framing Bias

Relates to the manner in which a question is posed or framed. It leads us to change the way we interpret alternatives

Escalation of commitment bias

The tendency to hold to an ineffective course of action even when it unlikely the bad situation can be reversed

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 strivings for unanimity override their motivation to realistically appraise alternative courses of action.

Legitimate Power

Managers who obtain compliance primarily by using their formal authority to make decisions

Reward Power

If they can obtain compliance by promising or granting rewards valued by the other party

Coercive Power

Makes threats of punishment and deliver actual punishment

Organizational Politics

Intentional actions to improve individual or organizational interests