Chapter 12 Notes - Chapter 12 Decision Making Creativity...

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Chapter 12 – Decision Making, Creativity, and Ethics Decision: the choice made from two or more alternatives. Rational Decision-Making Process Rational: refers to choices that are consistent and value-maximizing within specified constraints. Rational Decision-Making Model: a six-step decision-making model that describes how individuals should behave in order to maximize some outcome. Assumptions of the model Problem Clarity: the problem is clear and unambiguous and complete information is available. Known Options: it’s assumed that the decision maker can identify all relevant criteria, all workable alternatives, and their consequences. Clear Preferences: the criteria and alternatives can be ranked and weighted to reflect their importance. Constant Preferences: the specific decision criteria are constant and the weights assigned to them are stable over time. No Time or Cost Constraints: the decision maker can obtain full information about criteria and alternatives because there are no time or cost constraints. Maximum Payoff: the decision maker will choose the alternative that yields the highest perceived value. How do Individuals Actually Make Decisions – Bounded Rationality in Considering Alternatives Bounded Rationality: limitations on a person’s ability to interpret, process, and act on information. Satisficing: to provide a solution that is both satisfactory and sufficient. Intuition Intuitive Decision Making: a non-conscious process created out of a person’s many experiences. Judgment Shortcuts Overconfidence Bias: error in judgment that arises from being far too optimistic about one’s own performance. Occurs when organizational members are considering issues or problems outside their area of expertise. Individuals with weak intellectual and interpersonal abilities are likely to overestimate their performance. Anchoring Bias: a tendency to fixate on initial information, from which one then falls to adequately adjust for subsequent information.
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Often used in negotiations Confirmation Bias: the tendency to seek out information that reaffirms past choices and to discount information that contradicts past judgments. We accept information that confirms our preconceived views and we are critical of information that challenges these views.
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