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POLC, INFO & DECISION-MAKING - Coggle Diagram
POLC, INFO & DECISION-MAKING
How to Managers Arrive at Decisions
Methods of Managerial Decision-Making
Rationality, Bounded Rationality, Intuition
Rationality
Decisions, value maximising
Assumes:
Problem is clear and straight forward
Single, well-defined goal
all alternatives and consequences known
Preferences are clear
Preferences are consistent and stable
No time and cost constraints exist
Final choice will max payoff
Bounded rationality
Decisions made within parameters and simplified model of features
Good enough decisions
Intuition
Previous experience
gut level thinking
Accumulated Judgement
Managerial Problems & Decisions
Types of Programs & Decisions
structured problem, and programmed decisions: procedure > rule > policy
unstructured programs, non-program decisions: unique + non-recurring = tailored solution
rationality
Managerial decision making is assumed to be rational
Rationaldecisionsdescribechoicesthatareconsistent
and value-maximising
assume
The problem is clear and unambiguous
A single, well-defined goal is to be achieved
All alternatives and consequences are known
Preferences are clear
Preferencesareconstantandstable
No time or cost constraints exist
Final choice will maximise payoff
Group Decision Making
Advantages:
more complete information & knowledge
diverse alternatives/ solutions
increase success/ acceptance
increase legitimacy
Disadvantages:
time consuming
Minority domination
pressure to conform
Ambiguous responsibility
conditions of decision making
certainty: accurate decisions because the outcome is known
risk: estimate likelihood of certain outcomes
uncertainty: no probability estimates
Decision making styles
Linear
preference using external data
process: rational, logical thinking
non-linear
internal sources of info
process: internal insights, intuition
Decision-making errors and biases
overconfidence, immediate gratification, anchoring effect, selective
perception, confirmation, framing, availability, representation, randomness, suck costs, self-serving, hindsight, overconfidence