MGMT1110 Topic 5 - Decision Making

Decision-Making

A process of making a choice among alternatives to resolve a problem.

Problem

A discrepancy between an existing state and a desired state.

Programmed Decisions

Decisions made in response to frequent, routine situations that allow for the development of decision rules.

Nonprogrammed Decisions

Decisions made in response to unique, poorly defined, and consequential situations that require judgment and creativity.

Reasoning

A decision-making approach that is relatively effortful and involves the conscious use of logic.

Intuition

A subconscious process of decision-making based on experience and feelings.

Perfect Rationality

An ideal decision-making process that involves logically defining a problem, identifying all criteria, weighing them, generating all alternatives, and selecting the optimal one.

Bounded Rationality

A decision-making approach where managers attempt to be rational but are limited by their cognitive abilities and external constraints.

Satisficing

Choosing a satisfactory solution that is "good enough" rather than the optimal one, due to bounded rationality.

Decision Speed

The pace at which decisions are made, which can impact organizational performance differently in dynamic vs. stable environments.

Selective Perception

The tendency to focus on some elements of a situation while ignoring others, often influenced by context or self-interest.

Halo Effect

A cognitive bias where the perception of one trait of a person influences the perception of their other traits.

Availability Heuristic

A mental shortcut where people rely on immediate examples that come to mind when evaluating a topic or decision.

Inattentional Blindness

The failure to notice a fully-visible, but unexpected, object because attention was engaged on another task.

Motivated Cognition

The tendency to process information in a way that supports one's pre-existing beliefs or enhances self-image.

Overconfidence Bias

The tendency for an individual to overestimate their own abilities or the accuracy of their beliefs.

Self-Serving Bias

The tendency to attribute positive outcomes to oneself and negative outcomes to external factors.

Ultimate Attribution Error

The tendency to explain the negative behavior of an out-group member as a flaw in their character, while excusing the same behavior in an in-group member.

Escalation of Commitment

An increased commitment to a previous decision despite evidence that it may have been wrong.

Preference Inconsistency

The inability to maintain stable preferences, leading to decisions that can be influenced by the context.

Framing Effect

A cognitive bias where people react differently to a particular choice depending on how it is presented (e.g., as a loss or a gain).

Decoy Effect

A phenomenon where people's preference for one option changes when a third, asymmetrically dominated option is introduced.

Paradox of Choice

The concept that having too many choices can lead to anxiety, decision paralysis, and decreased satisfaction.

Choice Blindness

The failure to notice a mismatch between a chosen option and the outcome received, and subsequently confabulating reasons for the choice.

Wisdom of the Crowds

The idea that the aggregate judgment of a group of individuals is often more accurate than that of any single expert.

Groupthink

A phenomenon where group members strive for consensus at the expense of a realistic appraisal of alternative viewpoints.

Illusion of Invulnerability

A symptom of groupthink where the group discounts negative information or warnings.

Peer Pressure (in groupthink)

Pressure exerted on group members to conform to the group consensus.

Self-Censorship

Withholding dissenting views or counterarguments in a group to maintain harmony.

Illusion of Unanimity

The false belief that everyone in the group is in agreement, often because silence is interpreted as consent.

Psychological Safety

A shared belief that the team is safe for interpersonal risk-taking, crucial for effective group decision-making.

Process Losses

Inefficiencies in group decision-making that occur due to the complexities of coordinating and communicating within the group.