MGMT1001 Lecture Notes - Lecture 2: Hindsight Bias, Satisficing, Delphi Method
MGMT1001 Lecture Week 2 Notes
• Humans can be non-rational due to heightened emotion, perhaps anger or sadness, in which it
drives different ways to think about the decisions needing to be made
• Rational decision making has problems in which there is no knowledge, attempts to be logical
with no emotion, and are just attempting to find the best decision for the business
• Bounded rationality depicts the way we are bound by certain constraints when attempting to
be rational
• Satisficing model: constraints mean managers don't exhaustively search for the best
alternatives, however seeking alternatives that are at a satisfactory level, not optimal for
success
• Incremental model is satisficing the long term solution throw short-term goals and steps
• Intuition is making decisions without conscious thought or logical inference. This stems from
expertise (knowledge makes you think you know higher) and automated experience
(automated emotional response)
• There are 9 common decision making biases
1. Escalation of commitment
2. Availability bias
3. Representation bias
4. Confirmation bias
5. Sunk cost bias
6. Anchoring and adjustment bias
7. Overconfidence bias
8. Hindsight bias
9. Framing bias
• There are 4 ineffective reactions to decision making
1. Relaxed avoidance
2. Relaxed change
3. Defensive avoidance
4. Panic
• Three effective reasons for decision making
1. Importance
2. Credibility
3. Urgency
• Disadvantages to working with groups affects workplaces in which groups are at times: less
efficient, satisficing, goal displacement, dominant or intimidating members, group think and
group polarisation
• Groupthink includes: sense of vulnerability, rationalisation, illusion of unanimity and peer
pressure, the wisdom of crowds
• Group problem-solving techniques: consensus, brainstorming, Delphi technique, computer-
aided decision making, defer judgement, build on the ideas of others, encourage wild ideas, go
for quantity of quality, be visual, stay focused on the topic, one conversation at a time
• General decision making styles are analytical, conceptual, directive and behavioural
• Knowledge of decision-making styles are knowing thyself facilitates self-improvement,
influence others by being aware of your and their style, deal with conflict that arises from
different decisions that use the same information
• Big Data is a corporate database in which the analytics is the process of examining large
amounts of data to uncover hidden patterns, unknown correlations and other useful
information to then create predictive modelling
•
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