Perception and individual decision making chap4

2 3 4 5 6 definetheproblem identifythedecisioncriteria

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Link Decision Making Decision Decision making occurs as a reaction to a problem Perception influences: • Awareness that a problem exists • The interpretation and evaluation of information • Bias of analysis and conclusions Rational Decision-Making Model 1. 2. 3. 4. 5. 6. Define the problem. Identify the decision criteria. Allocate weights to the criteria. Develop the alternatives. Evaluate the alternatives. Select the best alternative. Assumptions of the Model The problem is clear and unambiguous Options are known Clear preferences Constant preferences No time or cost constraints Maximum payoff Creativity in Decision Making The ability to produce novel and useful ideas Importance is: • • • • Better understand the problem See problems others can’t see Identify all viable alternatives Identify alternatives that aren’t readily apparent Bounded Rationality The limited information­processing capability of human beings makes it impossible to assimilate and understand all the information necessary to optimize So people seek solutions that are satisfactory and sufficient, rather than optimal Bounded rationality is constructing simplified models that extract the essential features from problems without capturing all their complexity Common Biases and Errors Overconfidence Bias – As managers and employees become more knowledgeable about an issue, the less likely they are to display overconfidence Anchoring Bias – a tendency to fixate on initial information and fail to adequately adjust for subsequent information Confi...
View Full Document

This note was uploaded on 04/10/2011 for the course OB 2011 taught by Professor Huyduong during the Spring '11 term at International University in Germany.

Ask a homework question - tutors are online