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Week 6 Managing Information and Decision Making - Coggle Diagram
Week 6 Managing Information and Decision Making
Methods of Decision Making
bounded rationality
satisfice - "good enough"
intuition
intuition of a product
Previous Experience
gut feeling
Accumulated judgement
value or ethics based decision
skills knowledge and training (cognitive)
affect initiated - feelings and emotions
sub conscious mental processing
rationality
assumption of rationality
group decision making
Advantages
diverse alternatives
legitamacy
increases acceptance of solution
more information and knowledge
Disadvantages
time consuming
pressure to conform
ambiguous responsibility
potential for domination over minorities
escalation of commitment
evidence shows that decision may have been wrong but the management do not want to admit that possibility so they back their decision more
Types of problems and decisions
Structured problems and programmed decisions
procedure -> rule -> policy
straight forward, familiar, and easily defined problems
a repetitive decision that can be handled by a routine approach
procedure: series of steps that a manager can use to respond to an issue
un-structured problems and non-programmed decisions
unique issue
requires unique solution
information for unstructured problems are incomplete
styles of decision making
linear
use of external data
rational information processing
non-linear
use of internal information
processing through insights and personal feelings
Errors / Bias in Decision Making
hindsight
overconfidence
self serving
sunk costs
randomness
representation
availabilty
framing
confirming
selective perception
anchoring effect
immediate gratification
The decision making process
identifying a problem
identifying decision criteria
allocation weights to criteria
developing alternatives
analysing alternatives
selecting an alternative
implementing the alternative
evaluating decision effectiveness
Decision making conditions
Certainty
Risk
Uncertainty
maximin
maximax
minimax