OAM 330 - Midterm

Organizational Behavior

systematic study and application of knowledge about how people and groups act within organizations

Goal of OB

understand and predict how people will behave

Decision Making

Making choices among alternative courses of action, including inaction

Why study decision making?

Decisions affect lives of others and change course of an organization

Decision Making Models/Theories List

1. Rational

2. Intuitive

3. Bounded Rationality

Rational Decision Making Theory

a series of steps if goal is to maximize outcome and make the best choice

What are the steps to Rational Decision Making Theory (8)

1. Identify the problem

2. Establish decision criteria

3. Weigh decision criteria

4. Generate alternatives

5. Evaluate the alternatives

6. Choose the best alternative

7. implement the decision

8. Evaluate the decision

What are advantages of the Rational Decision Making Theory?

(1) Establishes decision criteria

(2) Generates alternatives

What is decision criteria?

a set of parameters against which potential options will be evaluated

What are alternatives

the possible solutions to a problem in the decision making process

What are assumption in the Rational Decision Making Theory

1. People completely understand decisions to be made

2. People know all available choice

3. People have no biases

4. People want to make optimal decision

Do people use the rational decision making model?

Nope, they use a consequential model (evaluate the consequences)

Why do people not use the rational decision making model?

(1) Too much info and (2) too many choices can lead to analysis paralysis

What is the Intuitive decision making model?

arriving at a decision without conscious reasoning

Why use the intuitive decision making model?

B/c when influenced by time pressures, constraints, uncertainty, and changing conditions it is difficult to use rational decision making model

What process does the intuitive decision making model use?

Assessing only one option at a time

What is bounded rationality decision making theory?

recognizing limitations of decision making process

What process does bounded rationality use?

Satisficing

what is Satisficing

finding the first acceptable alternative "good enough" based on limiting options to a manageable set

Why is bounded rationality more commonly used?

Decision maker saves cognitive time and effort by accepting first choice that meets minimum threshold

What are heuristics

mental short cut or rules of thumb to make decisions quickly (anticipating outcomes)

What is a consequence of heuristics?

overreliance on heuristics can lead to predictable cognitive biases

what are cognitive biases?

errors in perception that lead to faulty decision making

what is bias?

tendency for people to over- or under- estimate the true parameter

what are the types of bias? (list)

1. availability bias

2. conjunction fallacy

3. representative bias

4. anchoring & adjustment bias

5. framing bias

6. confirmation bias

7. escalation of commitment bias

8. hindsight bias

9. correlation and causality bias

what is availability bias?

situation in which information that is more readily available is viewed as more likely to occur

what can influence availability bias?

Events that are emotional, vivid, or more easily imagined also tend to be more available in our memory

what is conjunction fallacy

people inaccurately judge that 2+ events are more likely to happen at once than one event

what is representative bias

tendency to assess an event as more likely to occur based on our own stereotypes

what influences representative bias

Largely based on one's own personal experience or familiarity with a situation

what is a consequence of representative bias?

People tend to disregard or ignore potentially relevant info (sample sizes, base rates, etc.)

what is anchoring & adjustment bias

tendency to rely too heavily on an initial figure and failing to adjust sufficiently

what can cause anchoring & adjustment bias?

Occurs even when numbers are arbitrary or irrelevant

why does anchoring & adjustment bias occur?

People are not good at perceiving things in absolute terms. Better at sensing relative terms

what is framing bias

tendency to be influenced by the way that problems are presented

what causes framing bias?

loss aversion: people are more sensitive to losses than wins

why does loss aversion happen?

When propositions are framed as losses, people engage in riskier behavior to avoid the pain of dealing with a loss

what is confirmation bias

tendency to process and analyze info that supports one's preexisting ideas or beliefs

why does confirmation bias occur?

People tend to be ego-affirming and see what they want to see, not seek out discomforting info or evidence to the contrary

What are remedies to bias?

Awareness and training, think from a 3rd person pov, and play devil’s advocate

what is awareness and training

gaining different experiences over time can help you become less susceptible to cognitive biases

what are methods of awareness and training

.

What is the key takeways for the rational decision making model

best for important, long-term decisions

What is the key takeways for the intuitive decision making model

best for when analysis paralysis would be costly

What is the key takeways for the bounded rationality decision making model

Best for when minimum criteria are clear and you are not trying to maximize outcome

what is the key takeaway for heuristics

Heuristics can save people cognitive time and effort

what is the key takeaway for bias

heuristics can result in biases and faulty decision making, which can be predictable and avoidable.

what is escalation of commitment bias

When people continue on a failing course of action after info reveals this may be a poor path to follow

why does escalation of commitment bias occur

Occurs because people do not want to admit they were wrong

Desire to save face and preserve reputation

what is sunk cost fallacy

people are reluctant to abandon decisions they've already invested significant time, resources, or energy into

what is hindsight bias

When people look at the past and judge a mistake that was made as if it should have been recognized in the moment

Why does Hindsight bias happen

1) Once we know the outcome, it is harder to imagine how much someone would have acted without knowledge

2) It is easier to pass judgement and conclude something should have been obvious after the fact

what is correlation & causality bias

When people confuse an association or connection between two events as a "cause and effect" relationship

People mistakenly believe "because X, therefore Y"

What is an example of correlation & causality bias

fire trucks and fires

what is perception

Process of how people detect and interpret environmental stimuli

how are perceptions impacted?

by biases which causes people to pay selective attention to some aspects or ignore other elements

what is the disconnect with perception

People tend to perceive themselves and others very differently

what is self-enhancement bias

people tendency to see themselves more positively than others do

what can self enhancement bias lead to?

When we perceive ourselves, we are subject to the false consensus error

We often overestimate how similar we are to other people

what is overconfidence bias

People have the tendency to overestimate their abilities (and even luck) to predict future events

what can overconfidence bias lead to? (list)

Planning fallacy and Endowment Effect

what is planning fallacy

People often underestimate the amount of time they will need to complete a task

planning fallacy occurs regardless of what

individual's knowledge or familarity with task at hand

what is endowment effect

Tendency for people to value something they own at a higher value than its market value

what is social perception

How we perceive others or form impressions directly influences how we treat or behave toward them

what does social perception led to?

attention to parts of the environment while ignoring other parts when perceiving others

what are types of selective attention? (list)

First impressions

Halo effect

Stereotypes

what are first impressions

Initial thoughts about people tend to be stable and have a lasting impact

what is the halo effect

Tendency for people to form an overall positive impression of someone based on a single characteristic or trait

what is the horns effect

Forming an overall negative impression of someone based on a single characteristic or trait

what is a stereotype

Generalizations based on a perceived characteristic (either positive, negative or neutral)

what can stereotypes become?

discriminatory when people generalize from a group to a particular person

what influences sterotypes? (one term)

selective perception

what is selective perception

Info that goes against our beliefs is seen as an "exception to the rule" and tends to get discounted

what is a self-fulfilling prophecy

Cycle that occurs when people believe a stereotype is accurate, leading to behavior that confirms the stereotype

what are attributions

Casual explanation we give for an observed behavior

what are the types of attributions (list)

internal and external attributions

what are internal attributions

explaining someone's behavior using their internal characteristics

"That's just how she is"

what are external attributions

explaining someone's behavior using the environment or situation

"that seems out of character for her"

"it must be the situation, not the person"

what are the types of attribution dimensions?

consensus

distinctiveness

consistency

what is consensus

do other people behave the same way?

what is distinctiveness

does this person behave the same way across different situations?

what does high consensus mean

everyone else behaviors this way

what does low consensus mean

no one else behaves this way

what does high distinctiveness mean

this person does not usually behave in this way in other situations

what does low distinctiveness mean

this person usually behaves this way in other situations

what is consistency

has this person behaved this way before in the same situation?

what is high consistency

every time this person is in this situation, they act this way

what is low consistency

this person does not usually behave this way in this situation

what are the fundamental attribution errors (list)

self-attribution and social attribution

What does self-attribution mean?

It refers to how individuals explain their own successes and failures.

In self-attribution, who gets credit for a positive outcome?

Yourself (internal attribution)

In self-attribution, who gets blame for a negative outcome?

Others but you (external attribution)

What does social attribution mean?

how individuals explain the causes of behavior and outcomes in social contexts (of others)

In social attribution, who gets credit for a positive outcome for a friend?

Not the friend (internal attribution).

In social attribution, who gets blamed for a negative outcome for a friend?

The friend (external attribution).

what is the key takeaway for self perception

people tend to be self-serving and ego-affirming

what is the key takeaway for social perception

people tend to be harsher and do not give people the benefit of the doubt

what is the key takeaway for attribution

We tend to prefer simple explanations for people's behaviors and default ot internal attributions about others' behaviors

what is the attribution dimensions of internal attributions?

Consensus L distinctiveness L consistency H