MGMT1001 Lecture Notes - Lecture 2: Group Decision-Making, Decision-Making, Bounded Rationality
18 May 2018
School
Department
Course
Professor
2 – Individual and Group Decision Making
Decision – choice made from among available alternatives
• Decision making – process of identifying and choosing alternative courses of action
Rational Decision Making
• Stage 1: Identify the problem or opportunity
• Stage 2: Think up alternative solutions
Both obvious and creative
• Stage 3: Evaluate alternatives and select a solution
Ethics, feasibility and effectiveness
• Stage 4: Implement and evaluate the solution chosen
Successful implementation;
(a) Plan carefully
(b) Be sensitive to those affected
Whats rog ith the ratioal odel?
• Prescriptive – describes how managers ought to make decisions, not how they make
decisions
• Assumptions:
Complete information, no uncertainty
Logical, unemotional analysis
Best decision for the organisation
Non-rational decision making: managers find it difficult to make optimal decisions
• Non-rational – models do not assume decisions are guided by objective evidence
that gives perfect insight into the costs and benefits of alternative actions
• Bounded rationality (satisficing model): Satisfactory is good eough
Ability of decision makers to be rational is limited by constraints
(a) Complexity, time, money, cognitive capacity, values, skills, habits
Managers seek alternative until they find one that is satisfactory, not optimal
• Incremental model: The least that ill sole the prole
Small, short-term steps to alleviate a problem, rather than steps that will
accomplish a long-term solution
• Intuition model: It just feels right’
Choice without use of conscious thought or logical inference
Intuition that extends from expertise, is known as a holistic hunch
(a) Intuition based on feelings known as automated experience
• Political decision making – compromise between competing groups
Examines how people make decisions when managers disagree over what should
be done
• Inspirational decision making – the garage a odel
Concentrates on identifying conditions required to make decisions
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Decision choice made from among available alternatives: decision making process of identifying and choosing alternative courses of action. Rational decision making: stage 1: identify the problem or opportunity, stage 2: think up alternative solutions. Both obvious and creative: stage 3: evaluate alternatives and select a solution. Ethics, feasibility and effectiveness: stage 4: implement and evaluate the solution chosen. Successful implementation; (a) plan carefully (b) be sensitive to those affected. What(cid:859)s (cid:449)ro(cid:374)g (cid:449)ith the ratio(cid:374)al (cid:373)odel: prescriptive describes how managers ought to make decisions, not how they make decisions, assumptions: Ability of decision makers to be rational is limited by constraints (a) complexity, time, money, cognitive capacity, values, skills, habits. Managers seek alternative until they find one that is satisfactory, not optimal. Incremental model: (cid:858)the least that (cid:449)ill sol(cid:448)e the pro(cid:271)le(cid:373)(cid:859) Small, short-term steps to alleviate a problem, rather than steps that will accomplish a long-term solution. Choice without use of conscious thought or logical inference.
