MAN 3025 Chapter 7

Analytics

sophisticated forms of business data analysis, Such as portfolio analysis or time-series forecast

Anchoring and adjustment bias

the tendency to make decisions based on an initial figure

Availability bias

managers use information readily available from memory to make judgments

bounded rationality

Concept that suggests that the ability of decision makers to be rational is limited by numerous constraints

Brainstorming

Technique used to help groups generate multiple ideas and alternatives for solving problems

confirmation bias

when people seek information to support their point of view and discount data that do not

Consensus

Occurs when members are able to express their opinions and reach agreement to support the final decision

Deciding to decide

A manager agrees that he or she must decide what to do about a problem or opportunity and take effective decision-making steps

Decision

choice made from among available alternatives

decision making

process of identifying and choosing alternative courses of action

Decision-making style

reflects the combination of how an individual perceives and responds to information

Decision tree

Graph of decisions and their possible consequences; it is used to create a plan to reach a goal

defensive avoidance

A manager can't find a good solution and follows by procrastinating, passing the buck, or denying the risk of any negative consequences

Delphi technique

Uses physical disbursed experts to fill out questionnaires to anonymously generate ideas; the judgments are combined and in effect averaged to achieve a consensus of expert opinion

Diagnosis

Analyzing the underlying cause of situation

electronic brainstorming (brainwriting)

Modern-day variation on brainstorming, in which members of a group come together over computer network to generate ideas and alternatives

escalation of commitment bias

Decision-makers increase their commitment to a project despite negative information about it

ethics officer

Someone trained about matters of ethics in a workplace, particularly about resolving ethical dilemmas

Framing bias

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

Goal displacement

occurs when the primary goal is subsumed by a secondary goal

Groupthink

Occurs when group members strive for agreement among themselves for the sake of unanimity and avoid accurately assessing the decision situation

Heuristics

strategies that simplify the process of making decisions

hindsight bias

Tendency of people to view events as being more predictable than they really are

Incremental model

Decision making is one in which managers take small, short term steps to alleviate a problem

Intuition

Making choices about the use of conscious thought or logical inference. The source is expertise and feelings

Nonrational models of decision making

Explain how managers do make decisions; they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimum decisions

Opportunities

Situation the present possibilities for exceeding existing goals

Overconfidence bias

Peoples subjective confidence in their decision making is greater than their objective accuracy

Panic

A manager so frantic to get rid of the problem that he or she can't deal the situation realistically

Participative management (PM)

Process of involving employees in setting goals, making decisions, solving problems and making changes in the organization

Predictive modeling

Data mining technique used to predict future behavior and anticipate the consequences of change

Problems

Difficulties that Inhibit the achievement of goals

Rational model of decision making (classical model)

Explains how managers should make decisions; it assumes that managers will make logical decisions that will be the optimum in furthering the organization's best interest

Relaxed avoidance

A manager decides to take no action in the believe that there will be no greater negative consequence

Relaxed change

A manager realizes that complete in action will have negative consequences but ops for the first available alternative that involves low risk

Representativeness bias

the tendency to generalize from a small sample or a single event

Risk propensity

Willingness to gamble or undertake risk for the possibility of gaining an increased pay off

Satisficing model

Managers seek alternatives until they find one that is satisfactory, not optimal

sunk cost fallacy (bias)

When managers add up all the money already spent on a project and conclude it is too costly to simply abandon it