Module 1 Study Guide Flashcards

📌 Key Topics in Module 1

1. Decision Process & Overconfidence

2. Framing & Cognitive Biases

3. Group Decision-Making & Groupthink

4. Learning from Experience

Each section includes concepts, examples, and practice questions with answers.

🔹 Part 1: The Decision Process & Overconfidence

📌 The Four Phases of Decision Making

1. Framing – Defining the problem & decision context.

2. Gathering Intelligence – Collecting relevant data.

3. Coming to Conclusions – Evaluating options & making a choice.

4. Learning from Experience – Reflecting on past decisions.

🛑 Key Idea: Framing is the only phase that is optional—it does not occur unless someone deliberately includes it in the decision process.

📌 Overconfidence Bias

🔹 Three Types of Overconfidence:

1. Misestimation – Incorrectly predicting outcomes (e.g., underestimating project completion time).

2. Misplacement – Thinking you are better than others (e.g., 90% of people believe they are better-than-average drivers).

3. Misprecision – Overestimating accuracy of judgments (e.g., making a narrow confidence interval that is too precise).

🛑 Key Example:

• NASA’s Challenger Disaster: Engineers were overconfident in their risk assessment and ignored warnings about O-ring failures.

🔹 Part 2: Framing & Cognitive Biases

📌 What is Framing?

🔹 Thinking Frames – Mental models that highlight some aspects and ignore others.

🔹 Decision Frames – The yardsticks, criteria, and reference points used to make decisions.

💡 Example:

• Poker vs. Gardening Metaphors for product development:

• Poker Frame → Betting on uncertain outcomes.

• Gardening Frame → Nurturing ideas and eliminating weak ones.

🛑 Key Idea: No frame is complete—different frames highlight different things, so relying on only one perspective can lead to poor decisions.

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📌 Common Heuristics & Biases

1. Affect Heuristic – Emotions impact decision-making.

• Example: Investors panic-sell stocks during market crashes.

2. Availability Heuristic – Judging probability based on ease of recall.

• Example: Fear of flying despite car accidents being more common.

3. Representativeness Heuristic – Using stereotypes instead of statistics.

• Example: Assuming a startup will succeed because it resembles Google.

4. Regression to the Mean – Extreme outcomes tend to revert to the average.

• Example: Athletes on magazine covers often underperform afterward.

🔹 Part 3: Group Decision-Making & Groupthink

📌 Strengths & Weaknesses of Group Decisions

✔ Strengths:

• Diverse perspectives → More information.

• Increased buy-in → Better implementation.

❌ Weaknesses:

• Groupthink – Pressure to conform suppresses dissent.

• Premature Convergence – Groups rush to conclusions.

💡 Example:

• Bay of Pigs Invasion: Kennedy’s advisors ignored dissenting views, leading to a disastrous military failure.

📌 Groupthink & Conformity Pressures

📌 Symptoms of Groupthink:

• Illusion of unanimity.

• Pressure on dissenters.

• Suppression of alternative views.

📌 How to Avoid Groupthink:

✅ Assign a devil’s advocate.

✅ Encourage anonymous feedback.

✅ Hold leaderless discussions.

🛑 Key Idea: Too little conflict is as dangerous as too much conflict—moderate disagreement leads to better decisions.

🔹 Part 4: Learning from Experience

📌 Why Do People Fail to Learn?

1. Ignoring Feedback – Only focusing on success.

2. Self-Serving Bias – Taking credit for wins but blaming failures on external factors.

3. Ambiguous Information – Unclear whether a decision was good or bad.

💡 Example: NASA O-Ring Failure

• Engineers ignored data from previous launches that showed cold temperatures increased failure rates.

📌 How to Improve Learning

✔ Structured Postmortems – Analyzing what went wrong.

✔ Failure Resumes – Documenting and learning from mistakes.

✔ Unlearning Outdated Beliefs – Being open to changing mental models.

🎯 Final Review

✔ Flashcards for Key Terms & Examples

✔ Concept Mapping for Decision Process & Biases

✔ Self-Quizzing & Practice Questions

✔ Teach the Material to Someone Else

📌 Key Takeaways

• Good decisions come from good processes—not luck.

• Overconfidence leads to poor judgment—beware of misestimation, misplacement, and misprecision.

• Framing matters—different perspectives reveal different insights.

• Group decision-making is tricky—balance between conflict and consensus.

• Learning is not automatic—actively seek feedback & reflect on mistakes.

With this comprehensive study guide, you are fully prepared for Module 1. Let me know if you need further clarifications! 🚀

📖 Practice Questions & Answers

Multiple Choice

1. Which step of the decision process is always optional?

a) Framing

b) Gathering Intelligence

c) Coming to Conclusions

d) Learning from Experience

✅ Answer: a) Framing

2. Which of the following is NOT part of the meta-decision?

a) Which phase deserves the most attention?

b) Have I identified the best course of action?

c) Are we solving the right problem?

d) Who should be involved in the decision?

✅ Answer: b) Have I identified the best course of action?

3. Which type of overconfidence is illustrated by people believing they are better-than-average drivers?

a) Misestimation

b) Misplacement

c) Misprecision

d) None of the above

✅ Answer: b) Misplacement

4. What is the biggest danger of striving for harmony in a group decision?

a) Eliminating conflict

b) Cutting short the framing process

c) Seeking premature consensus

d) All of the above

✅ Answer: d) All of the above

True/False

1. Frames are more complete than mental models.

✅ Answer: False

2. For a group decision to succeed, conflict should be encouraged.

✅ Answer: True

3. Ignoring alternative viewpoints is a symptom of overconfidence.

✅ Answer: True

4. Self-serving bias helps individuals learn from experience.

✅ Answer: False

Short Answer

1. Describe an example of overconfidence in real-world decision-making.

✅ Answer: The NASA Challenger disaster occurred because engineers were overconfident in their assessment of O-ring performance, ignoring disconfirming evidence.

2. What is the difference between affect heuristic and availability heuristic?

✅ Answer: Affect heuristic is when emotions influence decisions (e.g., fear of flying after a crash). Availability heuristic is when people judge probability based on recall (e.g., believing crime is high because of frequent news reports).

3. How can organizations improve learning from experience?

✅ Answer: Organizations can implement structured postmortems, failure resumes, and unlearn outdated beliefs to improve decision-making.