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ch11%20-%20Decision%20Making%20-%20Notes

ch11%20-%20Decision%20Making%20-%20Notes - 1 2 How would...

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How would you characterize the decision? Quality of information Quality of cognitive input Time & Resources 3
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A rational decision maker might use a model that involves a sequence of steps that are followed when making a decision. Perfect Information Information is available Information is of highest quality All possible alternatives known Criteria for correct decision known Homo-Economicus Perfectly logical Unbiased Maximum consideration given Oriented toward common gain Resource Availability time and money available to be albe to dedicate oneself to decision process 4
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unknowable states 7
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Well Structured Problem A problem for which the existing state is clear, the desired state is clear, and how to get from one state to another is fairly obvious. These problems are simple, and their solutions arouse little controversy. They are repetitive and familiar and they can be programmed. Ill-Structured Problem A problem for which the existing and desired states are unclear and the method of getting to the desired state is unknown. Unique and unusual problems that have not been encountered before. They tend to be complex and involve a high degree of uncertainty. They frequently arouse controversy and conflict. They cannot be solved with programmed decisions. Decision makers must resort to non-programmed decision making. They can entail high risk and stimulate strong political considerations. Programs A program is a standardized way of solving a problem. Programs short-circuit the decision-making process by enabling the decision maker to go directly from problem identification to solution. They are also known as rules , routines , standard operating procedures , or rules of thumb . They provide a useful means of solving well structured problems. Programs are only as good as the decision-making process that led to the adoption of the program in the first place. 8
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unknowable states 10
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Information Overload the reception of more information than is necessary to make effective decisions Decision makers seem to think that more is better Paralysisby Analysis 12
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Herbert Simon recognized that the rational characteristics of Economic Person do not exist in real decision makers.
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