Subset of group or team working towards own benefit o

Subset of group or team working towards own benefit
o
Intuition

An innate belief about something without conscious consideration

Feels like the right thing, prevents you from generating more options

Comfortable

o
Escalation of commitment

Staying with a decision even when it appears to be wrong

Going down wrong path but refuse to cut loses even though you know it’s
the wrong decision

Committed to course of action
o
Risk propensity

The extent to which a decision maker is willing to gamble when making a
decision

Very willing to make risky tendency

Low risk propensity = low risk
o
Availability bias

Tendency to judge the likelihood that something will happen by the ease
with which you can call examples to mind

Guided by the ease we remember things (limited on base of ease)
o
Ethics and decision making

Individual ethics (personal beliefs about right and wrong behaviors)
combine with organization’s ethics to create managerial ethics

Components of managerial ethics

Relationships of the firm to employee

Employees to the firm

The firm to other economic agents

Revisit CHAPTER 4

Other Cognitive biases (prevent us from making good decisions)
o
Outcome bias: judging the decision based on the outcome rather than how
exactly the decision was made in the moment

EX: gambling- judging based on outcome
o
Clustering illusion: tendency to see patterns in random events

EX: flip a coin- odds 50/50
o
Ostrich effect: the decision to ignore dangerous or negative information by
“burying” one’s head in the sand, like an ostrich

Can’t be real, if you don’t see it

EX: if an investor doesn’t look at the failing company they put money into
o
Advantages

More information and knowledge

More alternatives are likely to be generated

More acceptance of the final decision is likely

Enhanced communication

Better decisions emerge
o
Disadvantages

? Didn’t copy them down

Group and team decision making in organizations
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Forms of group decision making

Interacting groups or teams

Are the common form of decision making groups which consists of
an existing group or newly formed team interacting and then
making a decision

Companies use as basis

Formal EX: management interacting with people


Delphi groups

Are sometimes used for developing a consensus of expert opinion
from a panel of experts who individually contribute through a
moderator

Contrast; non-interacting group but still have group decision

EX: studies where experimenters use data separately to make
decision and share with group

Nominal groups

Are a structured technique designed to generate creative and
innovative ideas through the individual contributions of alternatives
that are winnowed down through a series of rank-ordering of the
alternatives to reach a decision

Built off brainstorming- create a list to fix problem except forcing
everyone to participate

Brainstorming

Idea generating; criticism not allowed; free-wheeling is welcome;