BUS 272 Lecture Notes - Lecture 10: Bounded Rationality, Confirmation Bias, Satisficing

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 272
• Professor: Christopher Zatzick

Document Summary

Decision making and organizational culture (chapter 10&12: decision making. Choosing university: where do i want to study, cost, distance from home, rankings (quality), program, scholarship, sports, allocate weights: 1) cost 2) ranking 3) scholarship. Layoffs: performance, attitude, $, network, skills, seniority. Why rational decision-making is hard to do: bounded rationality, judgment shortcuts in the decision-making process, use of intuition to make some decisions. Bounded rationality: individuals make decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity. Satisficing: identifying a solution that is good enough , not using all the criteria. Decision-maker will choose a final solution that satisfices. Availability bias: base judgement on info that is readily available and not complete data. Confirmation bias: seek out information that reaffirms part choices and discount the one"s that contradict. Escalation of commitment: increase information despite negative info. Overconfidence bias: error in judgement by being too optimistic about one"s own performance.