Ch.11 Decision Making and Creativity at Work

decision making

Making choices among alternative courses of action, including inaction.

programmed decisions

choices that occur frequently enough that we develop an automated response to them

decision rule

Automated response to problems that occur routinely.

non programmed decisions

decisions that require conscious thinking, information gathering, and careful consideration of alternatives

Strategic Decisions

Decisions that are made to set the course of an organization.

Tactical Decisions

decisions about how things will get done

operational decisions

Decisions employees make each day to make the organization function.

rational decision making model

a series of steps that decision makers should consider if their goal is to maximize their outcome and make the best choice

Rational decision making model steps

1. Define the problem

2. Identify the decision criteria

3. Develop the alternatives

4. Evaluate the alternatives

5. Select the best alternative/implement

decision criteria

A set of parameters against which all of the potential options in decision making will be evaluated.

Alternatives

possible solutions to a problem in the decision making process

Bounded Rationality Model

According to this model, individuals knowingly limit their options to a manageable set and choose the first acceptable alternative without conducting an exhaustive search for alternatives.

Satisfice

To accept the first alternative that meets minimum criteria. Identify solutions that are "good enough"

framing bias

the tendency of decision makers to be influenced by the way that problems are framed

overconfidence bias

when individuals overestimate their ability to predict future events

hindsight bias

The opposite of overconfidence bias as it occurs when a person, looking at the past, judges that a mistake that was made should have been recognized as a mistake at the time.

anchoring and adjustment bias

The tendency for individuals to rely too heavily on a single piece of information.

escalation of commitment bias

When individuals continue on a failing course of action after information reveals this may be a poor path to follow.

sunk cost

invested effort and time

confirmation bias

the tendency to process and analyze information in such a way that it supports one's preexisting ideas and beliefs

availability bias

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

fundamental attribution error

a situation in which good outcomes are attributed to personal characteristics, such as intelligence, but undesirable outcomes are attributed to external circumstances, such as the weather.

correlation and causality bias

confusing correlation with causation

sampling bias

When individuals draw broad conclusions from small sets of observations instead of more reliable sources of information derived from large, randomly drawn samples.