Organizational Behavior Ted Mock
Perfect versus Bounded Rationality
Perfect Rationality – the assumption that decision making is an entirely rational process
and that the decision maker is perfectly informed with all necessary information, is
perfectly logical and is not influenced in any way by emotional issues. The soul orientation
of the decision maker is economic gain.
Bounded Rationality – more closely reflects real world decision making. Decision
makers have limited information, limited time and are influenced by emotional and political
Framing – how a problem is viewed eg. Focus on the risks of a bad decision or focus on
the rewards of a good decision. When we frame a problem as a choice between losses,
we tend to make risky decisions. When we frame alternatives as choices between gains,
we tend to make conservative decisions (Kahneman and Tversky)
Confirmation bias – the tendency to seek out information that conforms with our own
definition of or solution to the problem
Information overload – too much information – beyond the cognitive capacity of the
decision maker. Often becomes difficult to separate important information from
Satisficing – accepting an “adequate” level of acceptability for a solution rather than an
optimum or maximum solution. To obtain an outcome that is good enough. "Satisficing"
means deciding what constitutes a satisfactory outcome and then looking for ways to
achieve it. We stop looking when we have "satsficed ."
Sunk costs – resources that have been invested and lost due to past decisions. These
looses should not affect future decisions (but they often do)
Escalation of commitment – the tendency to invest additional resources in an apparently
• Supporters of the Iraq War have used the casualties of the conflict in Iraq since
2003 to justify years of further military commitment, despite worsening conditions
and lack of progress towards defined objectives or resolution. This rationale was
also used during the sixteen-year Vietnam War, another military example of the
logical fallacy Organizational Behavior Ted Mock
Group Decision Making
Groups are more vigilent than individuals – more people scanning the environment
Groups can generate more ideas than individuals
Groups can evaluate ideas better than inviduals
People wish to be involved in decisions that involve them
People better understand a decision in which they pariticipated
People aare more committed to a decision in which they invested personal time and
Diffusion of Responsibility – group members share the burden of responsibility for a
poor decision. This might lead group members to go along with decisions they personally
consider wrong or too risky.
Groupthink – a problem associated with high group cohesiveness as well as strong
identification with the group, concern for group approval and isolation of the group from
other sources of information. The strong promotion of an idea by the group leader is
among the strongest causes.
Eight Main Symptoms of Group Think
1. Illusion of Invulnerability: Members ignore obvious danger, take extreme risk, and
are overly optimistic.
2. Collective Rationalization: Members discredit and explain away warning contrary
to group thinking.
3. Illusion of Morality: Members believe their decisions are morally correct, ignoring
the ethical consequences of their decisions.
4. Excessive Stereotyping: The group constructs negative stereotypes of