Organizational Behavior
Chapter 11
Decision Making
What is decision making? * Decision making: process of developing a commitment to some course of action, making a choice among several action alternatives A problem exists when a gap is perceived between some existing state and some desired state * Well-structured problems: the existed state is clear, the desired state is clear and how to get from one state to the other is fairly obvious (simple) * Ill-Structured problems: a problem for which the existing and desired states are unclear and the method of getting to the desired state is unknown (difficult - risky)
Perfect vs. Bounded Rationality:
- Economic/Perfect rationality: analytical information processing is thorough and systematic (completely informed, perfectly logical, and orientated toward economic gain)
- Bounded rationality: heuristic information processing relies on rules that simplify decision making (relies on limited information and that reflects time constraints and political considerations)
- Framing and cognitive biases both illustrate the operation of bounded rationality, as does the impact of emotions and mood on decisions
- Framing: the aspects of the presentation of information about a problem that are assumed by decision makers
- Cognitive biases are tendencies to acquire and process information in an error-prone way
Problem Identification and Faming:
- Bounded rationality can lead to the following difficulties in problem identification: * Perceptual defense: a perceptual system may act to defend the perceiver against unpleasant perceptions * Problem defined in terms of functional specialty: Selective perception can cause decision makers to view a problem as being in the domain of their own specialty even when some other perspective might be warranted * Problem defined in terms of solution: this form of jumping to conclusions effectively short-circuits the rational decision making process * Problem diagnosed in terms of
Decision Making
What is decision making? * Decision making: process of developing a commitment to some course of action, making a choice among several action alternatives A problem exists when a gap is perceived between some existing state and some desired state * Well-structured problems: the existed state is clear, the desired state is clear and how to get from one state to the other is fairly obvious (simple) * Ill-Structured problems: a problem for which the existing and desired states are unclear and the method of getting to the desired state is unknown (difficult - risky)
Perfect vs. Bounded Rationality:
- Economic/Perfect rationality: analytical information processing is thorough and systematic (completely informed, perfectly logical, and orientated toward economic gain)
- Bounded rationality: heuristic information processing relies on rules that simplify decision making (relies on limited information and that reflects time constraints and political considerations)
- Framing and cognitive biases both illustrate the operation of bounded rationality, as does the impact of emotions and mood on decisions
- Framing: the aspects of the presentation of information about a problem that are assumed by decision makers
- Cognitive biases are tendencies to acquire and process information in an error-prone way
Problem Identification and Faming:
- Bounded rationality can lead to the following difficulties in problem identification: * Perceptual defense: a perceptual system may act to defend the perceiver against unpleasant perceptions * Problem defined in terms of functional specialty: Selective perception can cause decision makers to view a problem as being in the domain of their own specialty even when some other perspective might be warranted * Problem defined in terms of solution: this form of jumping to conclusions effectively short-circuits the rational decision making process * Problem diagnosed in terms of