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Management and Organizational Studies
Management and Organizational Studies 2181A/B
Victoria Digby

CHAPTER 11DECISION MAKINGWhat is Decision MakingDecision making The process of developing a commitment to some course of actionProblem A perceived gap between an existing state and a desired stateWellstructured problem A problem for which the existing state is clear the desired state is clear and how to get from one state to the other is fairly clearProgram A standardized way of solving a problemIllstructured problem A problem for which the existing and desired states are unclear and the method of getting to the desired state is unknownThe Compleat Decision MakerA Rational DecisionMaking ModelPerfect rationality A decision strategy that is completely informed perfectly logical and oriented toward economic gainBounded RationalityBounded rationality A decision strategy that relies on limited information and that reflects time constraints and political considerationsFraming Aspects of the presentation of information about a problem that are assumed by decision makersCognitive biases Tendencies to acquire and process information in an errorprone wayDifficulties in problem identificationoPerceptual defenseoProblem defined in terms of functional specialtyoProblem defined in terms of solutionoProblem diagnosed in terms of symptomsConfirmation bias The tendency to seek out information that conforms to ones own definition of or solution to a problemInformation overload The reception of more information than is necessary to make effective decisionsAlthough good info improves decisions organizational members often obtain more or less info than is necessary for adequate decisionsMaximization The choice of the decision alternative with the greatest expected valueAnchoring effect The inadequate adjustment of subsequent estimates from an initial estimate that serves as an anchorSatisficing Establishing an adequate level of acceptability for a solution to a problem and then screening solutions until one that exceeds this level is foundSunk costs Permanent losses of resources incurred as the result of a decisionEscalation of commitment The tendency to invest additional resources in an apparently failing course of actionHindsight The tendency to review the decisionmaking process to find what was done right or wrongGroup Decision MakingWhy use groupsoDecision qualityGroups are more vigilant generate more ideas and evaluate ideas betteroDecision acceptance and commitmentoDiffusion of responsibility The ability of group members to share the burden of the negative consequences of a poor decisionProblem with this abandon shipGroups usually produce more and better solutions to a problem than do individuals working aloneGroups perform better whenoMembers have different skills and abilitiesoDivision of labor can occuroRemembering facts is importantoIndividual judgments can be combinedDisadvantages of group decision makingoTime not very efficientoConflictoDomination one person should not dominateoGroupthink The capacity for group pressure to damage the mental efficiency reality testing and moral judgment of decisionmaking groupsIllusion of invulnerabilityRationalizationIllusion of morality
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