OAM 330

decision making

decision making

Refers to selecting choices among alternative courses of action (Also includes inaction)

Decisions are

- a component of any job

- not just made at the top but by every employee that is part of an organization

Decision Making Models

- Rational Decision Making Model

- Intuitive Decision Making Model

- Bounded Rationality Model

Rational Decision Making Model Advantages

- Establishes clear criteria for how options should be evaluated

- Urges decision makers to generate an exhaustive set of alternatives

Rational Decision Making Model Assumptions

- That people know all their available choices

- That people want to make the optimal decision

- That people have no cognitive biases

Intuitive Decision Making Model

- Arriving at decisions without conscious reasoning

- Decisions are not made between a list of well thought-out alternatives

Why decisions are not made between a list of well thought-out alternatives

- Changing conditions and circumstances, time pressures and constraints, uncertainty

- People instead scan the environment for cues to plan a course of action

- Only one choice is considered at a time

Bounded Rationality Model

Recognizes the limitations of decision-making processes

- Individuals knowingly limit their options to a manageable set

- Individuals choose the first acceptable alternative

Satisficing

Accepting the first alternative that meets yourminimum criteria

Heuristics

- mental shortcuts or rules of thumb

- people tend to rely on ______ which allows us to make decisions quickly

Satisficing Upside

We tend to save cognitive time and effort

Satisficing Downside

Over reliance on heuristics can result in cognitive biases

Cognitive biases

are errors in perception that result in faulty decision making

Bias

refers to a tendency for people to over (or under) estimate the true parameter

An over reliance on heuristics or gust instinct

how people fall into predictable decision making traps

Biases are what

lead people to have a distorted picture or inaccurate understanding of the environment

Availability Bias

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

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

How frequently we are exposed to the info

is how people conflate how likely something is to happen

Conjunction Fallacy

People judge that two or more events happening is more likely than one event

Representativeness bias

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

Representativeness bias affect

People tend to disregard or ignore potentially relevant information (ie. Sample sizes, base rates, etc.)

Representativeness bias is similar to

availability bias

Representativeness bias difference

is largely based on your own personal experience

Anchoring & Adjustment Bias

- Refers to the tendency to rely too heavily on an initial reference point when making decisions and failing to adjust sufficiently

- The initial reference point is often arbitrary and unrelated to subject

Anchoring & Adjustment Bias Impact

People are not good at perceiving things in absolute terms (only relative terms)

Framing Bias

Refers to the tendency to be influenced by the way that problems are presented

Loss Aversion

Losses tend to loom larger psychologically than gains

When problems are framed as losses people...

tend to engage in riskier behavior to avoid the psychological pain of dealing with a loss

Confirmation Bias

Refers to the tendency to processand analyze information thatsupports a person's preexistingideas

People tend to be (in relation to confirmation bias)

ego-affirming

Ego-affirming Impact

- We see what we want to see

- People tend to not seek out disconfirming information or evidence to the contrary

Remedies of Confirmation bias

Awareness and Training, Check yourself and try to think from a 3rd person perspective, and Expand your information search and play devil's advocate

Escalation of commitment bias

When individuals continue on a failing course of action after informationreveals this is a poor path to follow

Why commitment bias exists

People do not like admitting they were wrong (Choose to continue on poor course of action to try and save face or preserve reputation)

Sunk cost fallacy

Continuing with decision because you've already invested a significant amount of time or money

Hindsight bias

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

Problems caused by Hindsight Bias

- In a given moment, it's unclear what the right decision should be

- Things appear obvious after the fact with the benefit of knowing what happened

Correlation and causality bias

- Confusing an association or connection between two events as a "cause and effect" relationship

- People mistakenly believe because "X", therefore "Y"

Perception

Process with how people detect and interpret objects or actions in the environment

Self-Perception Biases (types)

Self-enhancement bias & Self-serving bias

Self-enhancement bias

People have a tendency to see themselves more positively than others actually do

Self-serving bias

People tend to attribute their successes to internal characteristics and failures to external situations

Overconfidence bias

- People have a tendency to overestimate their abilities (and even luck)

- People also tend to consistently overestimate ability to predict future events

Planning Fallacy

- People often underestimate the amount of time they will need to complete a future task(Stems from overconfidence bias)

- Occurs regardless of the individual's knowledge or familiarity with the task at hand

Endowment Effect

- Refers to a tendency for individuals to value something they own at a higher value than its market value

- People's positive self-concepts tend to spill over into their possessions (Ownership leads people to place items at a higher value)

First Impressions

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

Difficulty imposed by First Impressions

Once formed, first impressions are surprisingly resilient to contrary information

Selective Perception

We often ignore other parts of the environment when we perceive others

Difficulty imposed by Selective Perception

- People have a tendency to ignore factors that might contradict their prior beliefs

- We see what we want to see and ignore or discount information that seems inconsistent

Halo Effect

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

Halo Effect Impact

People tend to rate people who are good-looking as more intelligent and capable

Horns effect

Forming a negative overall impression based on a single trait

Stereotypes

- Generalizations based on a perceived characteristic

- Become potentially discriminatory is when we generalize from a group to a particular individual

Selective perception

perpetuates stereotypes

Difficulty imposed by Selective Perception--> in relation to stereotypes

Information that goes against our beliefs is often seen as an "exception to the rule" or gets discounted

Self-fulfilling prophecy

- Occurs when an established stereotype causes a person to behave a certain way in a way to make the stereotype come true

- Creates a perpetuating cycle in which beliefs influence peoples' behavior and that behavior reinforces one's subsequent beliefs

Attribution

is a causal explanation we give for an observed behavior

Internal attribution

Explaining someone's behavior using their internal characteristics

External attribution

Explaining someone's behavior by referring to the situation

Attribution Dimensions

Consensus, Distinctiveness, & Consistency

Consensus

Do other people behave the same way?

Distinctiveness

Does this person behave the same way in other situations?

Consistency

Did this person behave this way in the same situation previously?

Fundamental Attribution Error

Refers to the tendency for individuals to make internal attributions about others when they experience negative outcomes, but external attributions when they experience positive outcomes

Self-serving bias in relation to fundamental attribution error

This tendency is reversed when it comes to attributing our own behavior

Self-Perception Biases Types

Self-Enhancement, Self-Serving, Overconfidence (Planning Fallacy & Endowment Effect)

Social Perception Biases Types

First Impressions, Halo (Horns) Effect, Stereotypes (Self-Fulfilling Prophecy)

Cognitive Biases Types

Escalation of Commitment, Hindsight, Correlation and Causality

Attribution Types

Consensus / Distinctiveness / Consistency → Internal / External Attribution

Individual differences

refer to enduring psychological features that are stable over time and across situations

General mental ability (IQ) Definition (def.)

Refers to one's overall cognitive abilities (reasoning, verbal, numerical, analytical skills)

General mental ability (IQ)

Most powerful predictor of job performance (~25% of variance)

Emotional intelligence (EQ) Def.

Understanding others' emotions and how they respond to our own emotions

Emotional intelligence (EQ)

Also predictive of job performance(~8% of variance)

Core Self Evaluations

Refer to peoples' fundamental beliefs about their abilities and control

People's beliefs about themselves

have various implications for important organizational attitudes (job satisfaction) and behaviors (job performance)

Self-esteem

Degree to which a person has overall positive feelings about themselves

Self-efficacy

Belief that one can perform a specific task successfully

Job specific

You can have high self-esteem but low self-efficacy

Self-esteem & Self-efficacy

Belief that we can do something is a good predictor of job performance

Locus of control

Degree to which people feel accountable for their own behaviors and outcomes

Internal locus of control

Belief that what happens to me is my own doing and I control my own destiny

External locus of control

Belief that what happens to me is due to other people, situational factors, or luck

Demographic Features

have low predictive value for job performance

Personality

- Encompasses the relatively stable feelings, thoughts, and behavioral patterns

- Stable ≠ No change

- People tend to become more emotionally stable over time

Understanding personality

gives us clues about:

- Types of careers people choose

- How satisfied people are with jobs

- How well people handle stress

- How effective people will be as leaders

Personality Assesments

- Myers-Briggs Type Indicator (MBTI)

- Enneagram

- Love Language

MBTI

Most well-known and used personality assessment

MBTI Legitness

- Not legit

- Lacks validity--> Relies on personality "types" as opposed to "traits"•

- Lacks reliability--> Up to 75% of participants get a different result on a retest•

- Lacks predictive value

FiveThirtyEight

Legit Personality Quiz

Big 5 Personality Traits

(OCEAN)

Openness

Conscientiousness

Extraversion

Agreeableness

Neuroticism

Openness

Degree to which a person is curious, original, intellectual, creative, or open to new ideas

Openness attributes

imagination, complexity, change, & scope

Conscientiousness

Degree to which a person is organized, systematic, punctual, achievement oriented, and dependable

Conscientiousness Attributes

Organization, Drive, Concentration, & Methodical

Extraversion

Degree to which a person is outgoing, talkative, sociable, and enjoys being in social situations

Extraversion Attributes

Sociability, Energy Mode, Taking Charge, & Trust of Others

Agreeableness

Degree to which a person is nice, tolerant, sensitive, trusting, kind, and warm

Agreeableness Attributes

Agreement, Deference, Reserve, & Reticence

Neuroticism

Degree to which a person is anxious, irritable, temperamental, or moody