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Decision Making - Coggle Diagram
Decision Making
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Types
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Structured problems
Straightforward, familiar, and easily defined problems
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Biases and Errors
Definition
When managers make decisions, they may use “rules of thumb,” or heuristics, to simplify their decision making.
Help make sense of complex, uncertain, and ambiguous information.
Overcondidence bias
When decision makers tend to think they know more than they do or hold unrealistically positive views of themselves and their performance.
Selective perception
When decision makers selectively organize and
interpret events based on their biased perceptions,
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Anchoring effect
how decision makers fixate on initial infor mation as a starting point and then, once set, fail to adequately adjust for subsequent information.
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Representation
When decision makers assess the likelihood of an event based on how closely it resembles other events or sets of events.
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Confirmation
Decision makers who seek out information that
reaffirms their past choices and discounts information that contradicts past judgments
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Self - serving
Decision makers who are quick to take credit for their successes and to blame failure on outside factors
Hindsight
The tendency for decision makers to falsely believe that they would have accurately predicted the
outcome of an event once that outcome is actually known.
Approaches
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Intuition
Definition
Making decisions on the basis of experience, feelings, and accumulated judgment
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A manager who has had experience with a similar type of problem or situation often can act quickly with what appears to be limited information.
individuals who experienced intense feelings and emotions when making decisions actually achieved higher decision-making performance.
Bounded Rationality
Rational, but limited (bounded) by an individual’s ability to process information
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Conditions
Uncertainty
A situation in which a decision maker has neither certainty nor reasonable probability estimates available
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