2.2: Module Decision Making
Implications: Managers are responsible for making good decisions and for helping others make good decisions.
The Rational DecisionMaking Model
1. 2. 3. 4. 5. 6. 7. 8. Problem definition Identify decision criteria Allocate weights to criteria Generate alternatives Evaluate alternatives Select a solution Implementation Evaluation of results
Why isn't it easy?
Uncertain environment Individual biases, limitations, and tendencies Group biases and tendencies
Decision Making Situations
Problem Types Solution Types Decision Types
Well defined
Well defined
Routine
Certainty Probability
Unusual Untried Adaptive Innovative
Individual Limitations, Decision-Making Biases, or Tendencies
Bounded rationality Perceptual biases and heuristics Satisficing Escalating commitment
Group Decision-Making Biases, or Tendencies Obedience Conformity Groupthink Group Polarization
Improving Decision-Making
Dealing with uncertainty
Research (e.g., market survey) Simulation scenarios, and forecasting ...