Please enable JavaScript.
Coggle requires JavaScript to display documents.
Managing Information & Decision-Making (Errors in Decision Making…
Managing Information & Decision-Making
Methods
Rationality
Decision making assumed to be rational
choices consistent and value making
"maximise" economic benefit for the organisation
Problem clear & ambiguous
Single, well defined goal
All alternative consequences known
Preferences are clear, constant and stable
No time or cost constraints exist
Final choice will maximise pay off
Bounded Rationality
Decision made within parameters of a simplified model
Captures essential features of a problem
Bounded by limitations and constraints
"Good enough" decisions- satisficing
Intuition
Previous Experience
"Gut-level feeling"
Accumulated judgement
Conditions of decision-making
Certainty
A manager can make accurate decisions because the outcome of every alternatives is known
Risk
A manager can estimate the likelihood of certain outcomes
Uncertainty
A manager has neither certainty nor reasonable probability estimates
Errors in Decision Making
Overconfidence
Hindsight
Understanding a situation only after it has happened
Selective Perception
Blocks out stimuli that contradicts our previous belief
Confirmation
Representation
Self Serving
Sunk Costs
Cost that has been incurred that cannot be recovered
Anchoring Effect
Relies too heavily on first piece of information received
Framing
Group decision-making
has advantages and disadvantages
ADVANTAGES:
All bring their unique perspectives from all fields- leads to rational decision making, therefore reliable
More options to consider
Increases acceptance as if they contribute, they are more likely to accept the final decision
Because of their own contribution in the decison-making process, the final decision is more legitimate in the employees' eyes
DISADVANTAGES:
Time-consuming because management has more options to consider
One individual/group dominate while others' opinions merely get subjugated
Some just go with the decision simply because they do not want to disagree
Responsibility is ambiguous- raises a question about collective/individual responsibility
The other option is individual decision-making
In group decision making, the best idea is highlighted not so much who suggested it.
Decision-making styles
Linear
Preference for using external data and facts
Process information through rational, logical thinking
Non-linear
Preference for internal sources of information
Process information through interest insights, feelings and hunches
Types of problems and decisions
Well structured problems and programmed decisions
Structured problems are easily defined
Programmed decision are those handled by a routine approach
Day to day problems
Programmed decisions have 3 forms
Procedure - sequential steps to address the problem
Rule - conditions, no flexibility
Policy - documents that gives flexibility in regards to decision making
Un-structured problems and non-programmed decisions
Un-structured problems are new or unusual (not anticipated)
Non-programmed decisions need a custom approach
Unique + Non recurring = Tailored solution