Chapter 7 Decision Making.docx

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 3305A/B
Professor
Suzanne Kearns
Semester
Fall

Description
Chapter 7 DECISION MAKING September 25, 2013 What is Decision Making?  Decision making involves o Selecting one option o More than a few seconds to decide o Incomplete information o An element of uncertainty  Decision making involves risk  good decision makers effectively assess risks Phases of Decision Making  Acquiring & perceiving relevant information  Guessing what the cues mean  Planning and selecting choices  We start to see how a bad decision is made MODELS OF DECISION MAKING  Normative models  describe what people should do  Descriptive models  describes how people make decisions  Naturalistic decision making  real-world, dynamic, time-pressured decisions NORMATIVE DECISION MAKING (values)  Optimal, rational decision making o What people SHOULD do  Example: Grocery shopping comparing labels  Utility: subjective value of decision  Multi-attribute: compare along features UTILITD ECISIOM AKING  Subjective value o “I don’t care WHAT it costs, I’m getting it!”  Expected value o Is the gain worth the risk?  Lottery tickets M ULT-ATTRIBUTU TILITYHEORY  Compare ALL features o Example: Why CAM at Western?  One of the ways rational decision happens  Purchasing big assets/bigger decisions + time DESCRIPTIVE DECISION MAKING (emotional)  Based on rules of thumb (experience)  Heuristic o Shortcuts to a decision (biases) o Satisficing concept  People consider choices until they find one that is “good enough”  Why? o Remember working memory! o Why go through ALL alternatives?  Dynamic environments (i.e. time constraints, costs, benefits, outcomes)  For pilots – safety vs. on-time) NATURALISTIC DECISION MAKING (cockpit)  Real-world decision making (with experience) o Firefighters at the scene, scuba-diving, pilots responding to emergencies  Decision making features o Multiple goals o Lots of outcomes to consider o Time stress o High risk o Costs + benefits  If choices are slim and time is unlimited – careful analysis is possible…  HOWEVER, when info exceeds workload management capacity, OR time is limited, people shift to simplifying heuristics!  Skills-rules-knowledge o Skills: automatic, high skilled performance  Expertise… like driving cars – it’s automatic, you just do it o Rules: familiar,
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