MHR 405 Lecture Notes - Lecture 6: Satisficing, Representativeness Heuristic, Prospect Theory
23 Feb 2017
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Document Summary
Decision making conscious process of making choices among alternatives with the intention of moving towards some desired state of affairs. Rational choice paradigm the view in decision making that people should and typically do use logic and all available information to choose alternative with the highest value. Subjective expected utility probability (expectation) of satisfaction (utility) resulting from choosing a specific alternative in a decision. Rational decision making process: identifying problem or opportunity, choose the best decision process, discover/develop alternative solutions, choose best alternative, implement selected alternative, evaluate decision outcomes. Assumes people are efficient and logical information processing machines. Cannot simultaneously process large volumes of information. Stakeholder framing filter information to make organization look better, make glaring problems look less bad. Mental models if ideas don"t fit what is normally in your mind than it is dismissed. Decisive leadership coming to a conclusion too quick and decisions that could have been reached if longer time was spent on them are overlooked.
