- Decision Making Dr Asha Rao CSUEB Dr Objectives Explain why decision making is a social Explain process process Define and explain how bounded

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Unformatted text preview: Decision Making Dr. Asha Rao, CSUEB Dr. Objectives Explain why decision making is a social Explain process process Define and explain how bounded Define rationality influences decision making rationality Describe five models of decision Describe making making Explain groupthink and how it can be Explain avoided avoided Dr. Asha Rao, CSUEB Dr. …Objectives Objectives Explain how experts make decisions Identify your personal approach to Identify organizational decision making organizational Apply the leader-participation model of Apply decision making decision Dr. Asha Rao, CSUEB Dr. Decision Making Process of choosing between alternatives Process Problem - discrepancy between current Problem state of affairs and desired state state Dr. Asha Rao, CSUEB Dr. Are Individual Decisions Are Independent? Independent? Individual decisions are not Individual independent, solitary events independent, Instead They are closely connected to previous They decisions decisions And Are influenced by the social processes Are that brought the decision point to a head that Dr. Asha Rao, CSUEB Dr. …Are Individual Decisions Are Independent? Independent? Decision making at very high levels A lonely, individual struggle? NO! Instead, It involves information sharing and interdependence among organization dependence members members Dr. Asha Rao, CSUEB Dr. The Manager’s Role The in Decision Making in The manager’s job is to handle the The decision process by assessing The information needed The players who need to be involved Dr. Asha Rao, CSUEB Dr. Process of Rational Process Decision Making 1. Recognize and define problem 5. Evaluate alternatives 2. Identify decision objective and criteria 6. Select the best alternative 3. Allocate weights to criteria 7. Implement the decision 4. List and develop alternatives 8. Evaluate the decision Dr. Asha Rao, CSUEB Dr. Assumptions of the Model One: Problem is clear Two: Four: Constant Preferences Five: Known Options No Constraints (time,cost) Three: Six: Have Clear Preferences Players Maximum Payoff Dr. Asha Rao, CSUEB Dr. Bounded Rationality - Defined The theory of bounded rationality maintains that The people are restricted in making decisions and settle for less than ideal solutions They satisfice, selecting the first satisfice selecting alternative that is satisfactory. alternative Dr. Asha Rao, CSUEB Dr. A Model of Bounded Rationality Ascertain the Need the for a Decision for Select Criteria Identify a Limited Set Limited of Alternatives of Compare Alternatives Against Criteria Simplify the Problem Expand Search for Alternatives Select the First “Good Enough” Choice No A “Satisficing” Alternative Exists Dr. Asha Rao, CSUEB Dr. Yes Common Decision Biases Anchoring and adjusting Representativeness Availability Overconfidence Bounded awareness Emotional involvement Self-serving reasoning Dr. Asha Rao, CSUEB Dr. Garbage Can Model Factors: Factors: Problems Participants Solutions Choice opportunities Above factors float randomly inside the Above organization and if they connect, a decision results decision Dr. Asha Rao, CSUEB Dr. Choice Shift Occurs when groups make more extreme Occurs decisions than individuals decisions Risky shift People support riskier decisions in a People group setting than they would individually individually Cautious shift The group decision is more The conservative than individual positions conservative Dr. Asha Rao, CSUEB Dr. Groupthink - Defined Groupthink is the tendency for Groupthink members of a highly cohesive group to seek consensus so strongly that they fail to do a realistic appraisal of other possibly better alternatives possibly Dr. Asha Rao, CSUEB Dr. Traditional Groupthink Model Antecedent Conditions Groupthink Symptoms •Self-censorship •Cohesion •Pressure on dissenters •Directive leadership •High stress & low esteem & low hope of finding solution •Limited search and appraisal Consensus seeking •Insulation •Pressure toward uniformity •Illusion of unanimity •Illusion of invulnerability •Belief in inherent morality •Collective rationalization •Outgroup stereotyping Defective Decision Making Symptoms • Poor information search • Selective information processing • Failure to appraise risks • Incomplete survey of alternatives and solutions Dr. Asha Rao, CSUEB Dr. Defective Decisions How to Avoid Groupthink Encourage all members to express their doubts Assign a devil’s advocate Assign Adopt the perspectives of other constituencies Bring in qualified outsiders to discuss decisions “Sleep” on a tentative decision and have a Sleep” second chance meeting second Leaders should listen to others’ opinions first Leaders should demonstrate willingness to be Leaders criticized criticized Dr. Asha Rao, CSUEB Dr. Escalation of Commitment Occurs when people continue to commit resources to a failing course of action Dr. Asha Rao, CSUEB Dr. Escalation of commitment “throw good money after bad” iincrease commitment to a failing decision, ncrease in spite of negative information in sunk cost argument don’t want to admit that they could be don’t wrong, “consistency” associated with effective leaders Dr. Asha Rao, CSUEB Dr. Leader-Participation Model Contingency theory of leadership Continuum of leadership styles ranges Continuum from autocratic to participative styles from Decide Consult individuals and groups Facilitate Delegate Dr. Asha Rao, CSUEB Dr. Leader decision style Nature of decision and information dictate Nature the right choice answering a set of diagnostic questions answering about the decision-making situations eventuates in recommending one or more decision-making strategies decision-making Dr. Asha Rao, CSUEB Dr. Vroom-Yetton Model AI - leader makes decision unilaterally using available information available AII - leader obtains necessary information and then makes the decision unilaterally then CI - leader shares the problem with subordinates individually and then makes the decision unilaterally unilaterally CII - leader shares the problem with the group but then makes the decision unilaterally but GII - decision made after reaching consensus Dr. with subordinates Dr. Asha Rao, CSUEB with A B C D E F G Yes No Is high-quality decision required? Do I have enough information to make such a decision? AI, AII, CI CII, GII GII AI, AII, CI, CII, GII AI, AII, CI, CII GII CII CI, CII AII, CI, CII AII, CI, CII, GII Is the problem structured? Is it crucial for implementation that subordinates accept the decision? If I make this decision alone, is it likely to be accepted by my subordinates? CII CI, GII CII Do subordinates CII disagree about Do subordinates share the goals that will be reached through solution of Dr. Asha Rao, CSUEB this problem? Dr. appropriate method for attaining goals, so that conflict will result from the decision? …Leader-Participation Model Choice of leadership style can affect Choice outcomes of the decision-making process process Decision Quality Decision Implementation Cost of Decision Making Dr. Asha Rao, CSUEB Dr. Development Seven Questions for Seven Managers to Ask about a Decision Decision Team Decision Significance Competence Group Expertise ? Group Support for Objectives Importance of Commitment Leader’s Expertise Likelihood of Commitment Dr. Asha Rao, CSUEB Dr. Types of Problems Structured Problems Repetitive, routine problems for which definite procedures have been developed Unstructured Problems Novel, infrequent and / or complex problems for which no procedures have been developed Dr. Asha Rao, CSUEB Dr. Intuition - Defined Intuition is a cognitive conclusion based on a decision maker’s previous experiences and emotional inputs Dr. Asha Rao, CSUEB Dr. Intuitive DM Unconscious process based on distilled Unconscious experience experience Chess expts. Grandmaster’s reconstruct board after Chess viewing for 10 sec, novices couldn’t do so. viewing Complements rational DM When do people use intuitive DM? - see When next slide next Dr. Asha Rao, CSUEB Dr. Intuitive Decision Making Usually happens when ... x High uncertainty levels x Little precedent to draw from x Hard to predict variables x Limited facts x Unclear sense of direction x Analytical data is of little use x Several plausible alternatives x Time constraints Dr. Asha Rao, CSUEB Dr. The Zone of Indifference Zone of indifference The range within which each person in The which he or she willingly accepts orders without consciously questioning authority without Dr. Asha Rao, CSUEB Dr. Recognition Primed Decision (RPD) Model Components of the Model Cue recognition and pattern Cue matching matching Action script activation Mental simulation driven by mental Mental models Dr. Asha Rao, CSUEB Dr. Klein’s RPD Model generate s to a ff e ct t he Situation Cues Mental Simulations Action Scripts which which you you assess assess by by us in g yo ur Mental Models that activate Dr. Asha Rao, CSUEB Dr. that let you recognize Patterns PreMortem Exercises Stage Designed to Designed expose vulnerabilities in planning in 1. Preparation Activity Review the plan 2. Imagine a fiasco Imagine causes of failures 3. Generate reasons for failure Individuals write down reasons for failures 4. Consolidate the lists Individuals take turns listing reasons 5. Revisit the plan Address issues of major concern; schedule additional meeting 6. Review the list Periodically revisit the list of reasons for failure Dr. Asha Rao, CSUEB Dr. ...
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This note was uploaded on 07/19/2011 for the course MGMT 3614 taught by Professor Rao during the Spring '10 term at CSU East Bay.

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