Midterm 1 Study Guide

Procedural justice the perceived fairness of the

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Unformatted text preview: decision- an unconscious process created out of distilled experience Common Biases and Errors in Decision Making • Overconfidence bias Anchoring bias- a tendency to fixate on initial information, from which one then fails to adequately adjust for subsequent information • Confirmation bias- the tendency to seek out information that reaffirms past choices and to discount information that contradicts past judgments • Availability bias- the tendency for people to base their judgments on information that is readily available to them. • Escalation of Commitment- an increased commitment to a previous decision in spite of negative information • Randomness error- the tendency of individuals to believe that they can predict the outcome of random events • Risk aversion- the tendency to prefer a sure gain of a moderate amount over a riskier outcome, even if the riskier outcome might have a higher expected payoff. • Hindsight bias- the tendency to believe falsely, after an outcome of an event is actually known, that one would have accurately predicted that outcome. Influences on Decision Making; Individual Differences and Organizational Constraints • • Individual Differences Personality- dutiful people are more inclined to do what they see as best for the organization. People with high self- esteem are strongly motivated to maintain it • Gender- women spend much more time than men analyzing the past, present, and future. They are more likely to overanalyze problems. • Mental ability- people with higher levels of mental ability are able to process information more quickly, solve problems more accurately, and learn faster. • Cultural differences- the cultural background of a decision maker can significantly influence the selection of problems, the depth of analysis, the importance placed on logic and rationality, and whether organizational decisions should be...
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