buad 304 - decision making

thinking system 1

kahneman. automatic, fast, and emotional

thinking system 2

analytical and conscious. kahneman

rational model of deciding

objective, orderly

nonrational model of deciding

subjective, intuitive

bounded rationality

we are all bounded by constraints when making decisions (i.e. lack of time, information overload)

satisfice

choosing a solution that is "good enough"

confirmation bias

selectively gather information that supports beliefs or views

overconfidence bias

believing your judgement is better than it actually is

anchoring bias

influenced by first information we receive about a decision

hindsight bias

knowledge of an outcome influences belief about probability that we could have predicted outcome earlier

framing bias

interpret alternatives differently on how a question is posed or framed

escalation of commitment

sunk cost error. stick to an ineffective course of action even when it is unlikely the bad situation can be reversed

availability bias

tendency to base decisions on information readily available in memory

representativeness bias

estimate probability of an event's occurrence based on impressions about similar occurences

analytical

decision making style that is careful and slow. high tolerance for ambiguity and task for value orientation

conceptual

intuitive, broad, and long-term with high tolerance for ambiguity and people valued.

directive

efficient, logical, and fast with low tolerance for ambiguity and task valued

behavioral

warmth, verbal information with low tolerance for ambiguity and people valued

holistic hunch

judgement based on subconscious integration of information stored in memory- feels right. form of intuition

automated experience

form of intuition that represents a choice based on a familiar situation and a partially subconscious application of learned information related to it

expertise

explicit knowledge + tacit knowledge

explicit knowledge

information easily put into words

tacit knowledge

information we gain through experience that is difficult to express and formalize

judgmental heuristics

cognitive shortcuts or biases that are used to simplify the process of making decisions

goal displacement

primary goal is overridden by a secondary goal

groupthink

the mode of thinking that occurs when the desire for harmony in a decision-making group overrides a realistic appraisal of alternatives

minority dissent

group members feel comfortable disagreeing with other group members

electronic brainstorming

brainwriting. allows participants to submit their ideas and alternatives over the internet

delphi technique

group process that generates anonymous ideas from physically dispersed experts

decision support systems

computer based interactive systems that help decision makers to use data and models to solve unstructured problems