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Terms in this set (30)
Six steps to take when trying to make a decision
2) Identify the criteria
3) Weigh the criteria'
4) Generate alternatives
5) Rate each alternative on each criteria
6) Compute the optimal decision
System 1 and 2 thinking (Stanovich and West(2000))
Step 1 is intuitive this is fast, automatic, effortless and emotional.
Step 2 is reasoning that is slower, conscious, effortful.
The decision-making process that is logically expected to lead to the optimal result, given an accurate assessment of the decision maker;s values and risk preferences.
Prescriptive decision making
Develop methods for making optimal decisions but makes assumptions the decision maker can identify and evaluate all possible alternatives
Descriptive decision making
attempts to predict how people actually make choices, not to define ideal choices
Two biggest constraints from getting quality and quantity of available information for decisions.
Time and cost
a rule-of-thumb problem-solving strategy
1) The Availability Heuristic
2) Representatives Heuristic
3) Confirmation Heuristic
4) Affect Heuristic
Thaler's two bounds to decision making
1) WIll power is limited and focused to much on immediate issues which does not always benefit long term goals.
2) People are self interested only to a point because they care about the outcomes of others.
common tendency to overlook obvious important and readily available information beyond our immediate attention
refers to the notion that our ethics are limited in ways of which we are unaware.
a tendency to search for information that confirms one's preconceptions
Quickly dismiss in retrospect the possibility that things could have turned out differently.
Yet Lewin's three stages to remove imperfections from decision making
1) Get the individual to unfreeze existing decision-making process
2) Provide information necessary to promote change
3) Create the conditions to refreeze new processes
The biggest bias that is universal
overprecision, overestimation, overplacement
List some examples of overconfidence hurting decisions
1) Excessive trading even though history shows the more you trade the worse you are.
2) Managers stick to face to face interviews instead of unbiased tools such as IQ
3) Jelly bean study every candidate makes a guess of beans, all guesses exposed and then can re-guess, should average guesses but do not.
Part of the overconfidence bias, describes the tendency to be to sure our judgments and decisions are accurate, uninterested in testing the assumptions and dismiss evidence we are wrong
Part of the overconfidence bias is the common tendency to think we're better, smarter, faster and more capable then we actually are.
Part of the overconfidence bias tendency to falsely think we rank higher than others on certain dimensions, particularly in competitive contexts.
The tendency to make judgments based on their attention to only a subset of available information, to overweight that information and underweight unattended information.
a tendency to focus too much on a central aspect of an event while neglecting the possible impact of associated factors or other events
Searching for and choosing an acceptable, or satisfactory, response to problems and opportunities, rather than trying to make the best decision.
Explains decision making is inherently uncertainf and risky and why managers usually make satisfactory rather than optimum decisions.
The process through which managers seek to improve employees' desire and ability to understand and manage the organization and its task environment.
Senge's Principles for Creating a Learning Organization
1) Develop Personal Mastery (empower employees to experiment)
2) Build complex, challenging mental models. (challenges employees ways of thinking and promotes experimenting and risk taking)
someone who works inside an existing organization who sees an opportunity for a product or service and mobilizes the organization's resources to try to realize it
A manager who takes "ownership" of a project and provides the leadership and vision that take a product from the idea stage to the final customer.
estimating the likelihood of events based on their availability in memory; if instances come readily to mind (perhaps because of their vividness), we presume such events are common
occurs when we estimate likelihood of event by comparing it to an existing prototype that already exists in our minds.
tendency to attend to and accept facts that fit our pre-existing beliefs and to discount facts that are contradictory
The key to creating good alternatives and what is the criteria for grading them>=?
Define the opportunity or threat, then specify the criteria that should influence the selection of alternatives.
3) Economic feasibility
Recommended textbook explanations
J. Douglas Faires, Richard L. Burden
Advanced Engineering Mathematics
Complex Analysis: A First Course with Applications
Dennis G. Zill, Patrick D. Shanahan
Elementary Number Theory
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