Decision making

Lecture Overview

Topic: Decision Making and Ethics

Instructor: Dr. Bahareh Assadi

   

Ethical Dilemmas

Scenario Analysis

  • Cheating in Exams
      - Observation: Classmate cheating during a final exam.
      - Ethical Question: What would you do?

  • Borrowing Notes
      - Situation: Friend frequently skips class and asks to borrow notes and share assignments.
      - Ethical Question: What would you do?

  • Coaching Decisions
      - Scenario: Superstar players are caught breaking rules leading to potential suspension before a crucial game.
        - Implications:
           - Team's chances of winning impacted.
           - Coach's dilemma on whether to enforce rules or prioritize winning.
      - Ethical Considerations:
        - Lessons learned by players caught breaking the rules.
        - Impact on coach's and university's reputation.
        - Influence on other players who follow rules.

  

Factors Influencing Decision Making

Complex Scenarios

  • Impact of Stakes
      - Player missing opportunity to attract professional scouts if suspended.
      - Financial implications for the team and coach depending on game outcome.  

The Nature of Decision Making

Key Concepts

  • Definition: Decision making is part of everyday life, encompassing various choices from simple to complex.

  • Involvement:
      - Gathering information.
      - Considering emotions and managing biases.

  • Important Traits:
      - Critical thinking.
      - Patience and practice enhance decision-making skills.

  • Aspects of Decision Making:
      - Trade-offs and risk assessments.
      - Long-term consequences.

  

Example of Internal Decision Making

Running Race Scenario

  • Participant in a challenging race having a mental struggle:
      - Perspectives:
        - Body signals claiming to stop.
        - Values advocating for completion and perseverance.
        - Various emotions (determination, despair, courage, uncertainty) influencing decision.
        - Past experiences and peer encouragement affecting the choice to continue or quit.

  

Rational Decision Making

Key Insights

  • Rational Decision Making:
      - Psychologists Amos Tversky and Daniel Kahneman emphasize that rationality in decision making is an illusion.
      - Personal biases from past experiences taint decisions.

  • Emotional Influence:
      - Emotions often supersede logic in decision-making processes.
      - Neuroscientist Antonio Damasio's research shows individuals with emotional impairments struggle with making decisions despite logical understanding.

  • Advice for Decision Making:
      - Encourage exploration of feelings associated with decision-making to recognize emotional influences.

  

The Paradox of Options

Effects of Too Many Choices

  • Simplicity and Decision Making:
      - Research from Sheena Lyengar observed that too many options hinder decision making.
      - Study of jam displays:
        - Outcome:
          - 24 types of jam attracted more visits but only 6 types led to more purchases.
      - Conclusion: Reducing options promotes decision making ease.

     

Bounded Rationality

Challenges in Decision Making

  • Complex Decisions
      - Often lead to information overload, impeding clear decision-making.
      - Simplifying the choice process can aid in overcoming these complexities.

  • Sequential Handling of Information:
      - Easier choices presented first can lead to better evaluation of complex decisions.
      - Example: Discussing simpler engine sizes prior to color options when selling cars.

  

Decision Fatigue

Effects on Decision Quality

  • Decision Fatigue:
      - Our capacity for making good decisions diminishes as fatigue increases.
      - Optimal Timing:
        - Important decisions should be made when the mind is fresh, preferably in the morning.

  • Study Insights:
      - Research at Ben-Gurion University depicted parole boards granting 70% of parole requests in the morning, but less than 10% in the afternoon due to fatigue affecting deliberation.

  

Decision-Making Frameworks

Rational Decision-Making Model

  • Definition: Rational decision-making involves a systematic approach in making a choice among alternatives.

  • Six-Step Model:
      1. Define the problem.
      2. Identify the criteria for decision-making.
      3. Allocate weights to each criterion.
      4. Develop alternatives.
      5. Evaluate these alternatives.
      6. Select the best alternative.

  • Relevance of Criteria:
      - What may be relevant to one decision-maker might differ from another due to varying personal interests and values.

  

Bounded Rationality and Satisficing

Key Concepts

  • Bounded Rationality:
      - Refers to the limitations in processing information due to cognitive constraints.

  • Satisficing:
      - Selecting the first acceptable option rather than the optimal one due to bounded rationality.
      - Example: Choosing universities based on easily accessible information rather than exhaustive evaluation.

  

Intuitive Decision Making

Insights on Intuition

  • Definition: Intuitive decision making arises from subconscious experiences influencing choices.

  • Characteristics:
      - Occurs outside conscious thought.
      - Fast and emotionally charged; can complement rational deliberation.

Real-Life Examples of Decision Making in Sports

Goalie Psychology

  • Anticipation Challenges:
      - Goalkeepers making split-second decisions during penalty kicks often do not remain centered for optimal blocking strategies.
      - Behavior Patterns:
      - Bias toward taking action leads to missed opportunities for success.

  • Research Findings:
      - Azar's findings illustrate that maintaining a central position might yield better outcomes than a biased action.

Cognitive Biases in Decision Making

Types of Biases

Overconfidence Bias

  • Definition: Overconfidence bias is the tendency to inflate belief in one’s skills and underestimate risks.

  • Examples in Practice: Frequently observed in stock traders and students.

Anchoring Bias

  • Definition: Anchoring bias occurs when initial information disproportionately influences subsequent decisions.

  • Examples: Presenting expensive cars first in negotiations changes perceived value of following options.

Confirmation Bias

  • Definition: Tendency to seek out information supporting pre-existing views while dismissing contradictory data.

  • Example: Political biases affecting news consumption behavior.

Availability Bias

  • Definition: Judgments influenced by easily retrievable information from memory, often skewed by emotionality or recency.

  • Example: Employee performance evaluations focusing on recent behaviors rather than comprehensive assessment.

Escalation of Commitment

  • Definition: Increased commitment despite negative feedback, often due to previous investments.

Randomness Error

  • Definition: Belief in unwarranted predictability of random events affecting decision-making.

Hindsight Bias

  • Definition: Retrospectively viewing past events as more predictable than they were, aiding self-esteem.

Risk Aversion

  • Definition: Preference for certain outcomes over riskier alternatives, leading to conservative decision-making patterns.

Groupthink

  • Definition: Pressure to conform within groups suppresses critical evaluation and diversity of thought.

Ethical Considerations in Decision Making

Definitions and Principles

  • Ethics: The study of moral principles guiding behavior.

  • Utilitarianism: Decision-making focusing on the best outcomes for the majority.

  • Whistle-blowers: Individuals reporting unethical practices, often facing significant challenges and consequences.

Conclusion

  • Importance of Ethics in Decision Making:
      - Ethical lapses can lead to significant long-term consequences and damage to reputations.
      - Call for accountability: Organizations must foster environments conducive to ethical decision-making.

  

A devil's advocate is a person who takes a position opposite to that of the group to challenge ideas and provoke discussion. This practice can help eliminate groupthink by:

  • Encouraging Critical Thinking: By forcing the group to consider alternative viewpoints, it promotes deeper analysis of the ideas presented.

  • Challenging Assumptions: It questions the prevailing beliefs and helps uncover underlying biases that might lead to poor decisions.

  • Promoting Diversity of Thought: It ensures that multiple perspectives are represented, minimizing the risk of conformity.

  • Enhancing Decision Quality: Evaluating the strongest opposing arguments can lead to better decision outcomes, as the group engages in thorough debate and evaluation of ideas.