MOS Final Notes - MOS FINAL EXAM STUDY NOTES Chapter 11...

MOS FINAL EXAM STUDY NOTES
Chapter 11 – Decision Making
Decision making is the process of developing a commitment to some course of action.
This is a process that involves making a choice, a process that involves more than simply
the final choice among alternatives, and it also involves making a commitment of
resources such as time, money or personnel.
- Involves a choice, it is a process and involves a commitment of resources
A problem exists when a gap is perceived between some existing state and some desired
state.
What kind of decisions do people make in the workplace?
• Handling complex problems individually
• Handling complex problems as a team
• Focusing effort – ex. 911
• Judging people – employee performance
In a well-structured problem , the existing state is clear, the desired state is clear, and
how to get from one state to the other is fairly obvious…problems are repetitive and
familiar and can be programmed
• Program s short-circuit the decision-making process by enabling the decision-
maker to go directly from problem identification to solution.
• Most problems are well structured and programmed.
• Go under labels such as rules, routines, standard operating procedures, etc
In an ill-structured problem , the existing and desired states are unclear, and the method
of getting to the desired state is unknown. …complex and involve a high degree of
uncertainty
• Usually unique, complex, and have not been encountered before.
• Cannot be solved with programmed decisions.
• Organizations use non-programmed decision making which means that they will
gather more information and be more self-consciously analytical in their
approach.
• Entail high risk and stimulate political considerations.
Perfect versus Bounded Rationality
Rational decision making model – might use a model that involves a sequence of steps
that are followed when making a decision
Perfect rationality involves a decision strategy that is completely informed, perfectly
logical, and oriented toward economic gain.
• These characteristics do not exist in real decision makers.
• Herbert Simon says that administrators use bounded rationality rather than
perfect rationality. While they try to act rationally, they are limited in their

capacity to acquire and process information, and time constraints and political
considerations also act as bounds to rationality. Framing and cognitive biases
illustrate the operation of bounded rationality.
• Economic person who is the perfect, cool, calculating decision maker…do not
exist in real life
Framing refers to 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… involve assumptions and shortcuts that can improve decision making efficiency
but frequently lead to serious errors in judgment.