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Managing information and decision making - Coggle Diagram
Managing information and decision making
Rationality
• Managerial decision making is assumed to be rational
• Value maximizing and consistent
• This theory of decision making assumes:
○ The problem is clear and unambiguous
○ A single, well defined is to be achieved
○ All alternatives and consequences are known
○ Preferences are clear
○ No time or cost constraints
Final choice will maximize payoff
Collaborative decision making
Advantages
• More complete picture of information
• More diverse alternatives
• Increase acceptance of solution
• Increases legitimacy
Disadvantages
• Time consuming
• Minority domination
• Pressure to conform
Ambiguous responsibility
Common errors and biases
Selective perception, hindsight, overconfidence, sunk cost, randomness, representation, etc.
Intuition
Previous experience
"Gut level feeling"
Accumulated judgement
Steve jobs intuition development... Was hands on, berating colleagues at Apple, moved along to pixar and discovered the advantages of being ore reliant, attentive and trusting of members of his teams.
Bounded rationality
• Decisions are made within the parameters of a simplified model that captures the essential feature of a problem
• Bounded by the limitations and constraints, managers attempt to behave rationally
Leads to "good enough" decisions