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Chapter 11

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COMM 151
Christopher Miners

COMM 151 – Chapter 11 (pg 359-374) Notes – Decision Making Decision Making  Decision Making: The process of developing a commitment to some courses of action a) The decision involves making a choice among alternatives b) Decision making is a process that involves more than the final choice among alternatives  We want to know how this decision was reached c) The “commitment” usually involves some commitment of resources  A Problem exists when a gap is perceived between some existing state and some desired state Well Structured Problems  Well Structured Problem: Occurs when the problems existing state is clear, the desired state, and how to get one from state to the other is fairly obvious  Problems are simple and their solutions cause little controversy  Because decision making is time consuming and error prone, orgs attempt to program the decision making for well-structured problems  A Program is a standardized way for solving a problem  Go under labels such as rules, routines, standard operating procedures, or rules of thumb  Ill-structured problem: A problem for which the existing and desired states are unclear and the method of getting to the desired state is unknown  Unique and complex problems that involve a high degree of uncertainty  These problems frequently arouse controversy and conflict among the people who are interested in the decision  These problems cannot be solved with programmed decisions – must gather more information and take a more analytical approach A Rational Decision Making Model Perfect vs. Bounded Rationality  Perfect Rationality: A decision strategy that is completely informed, perfectly logical, and oriented toward economic goal – less realistic  Perfect Rationality Decisions are Made 1. Complete Information – gathered all important info about problems and solutions 2. Perfectly Logical – solution A is better than B, B is better than C, A is better than C 3. One Criterion: Economic Gain  NOTE: See Diagram on page 361 The Rational Decision Making Process  When a problem is identified and the search for information begins, the chart clarifies the nature of the problem and suggests alternative solutions  Bounded Rationality: A decision strategy that relies on limited information and that reflects time constraints and political considerations – try to act as rational as possible  Bounded Rationality Decisions Are Made 1. Incomplete Information 2. Not Perfectly Logical 3. More Than One Criteria  Ex. Job offer (location, pay, status) NOTE: Know the flaws of decision making system and correct for the flaws when the stakes are high 1 COMM 151 – Chapter 11 (pg 359-374) Notes – Decision Making  Framing: Refers to the aspects of the presentation of information about a problem that are assumed by decision makers – ex. Boundaries of a problem, possible outcomes, reference points  People make different decisions on the same problem depending on the way it’s framed  When in the domain of gain, people tend to take few risks  Ex. Sure fire option guaranteed  When in the domain of loss, people take many risks  ex. Casinos  Cognitive Biases: Tendencies to acquire and process information in an error-prone way  These biases constitute assumptions and short-cuts that can improve decision making efficiency, but frequently lead to serious errors in judgement Problem Identification and Framing Difficulties in Problem Identification  Perceptual Defence  The perceptual system may act to defend the perceiver against unpleasant perceptions  Problem Defined in Terms of Functional Speciality  Selective perception can cause decision makers to view a problem as being in the domain of their own speciality even when some other perspective might be warranted  Problem defined in terms of the solution  This involves jumping to conclusions which effectively short-circuits the rational decision making process  Problem diagnosed in terms of symptoms  The concentration of surface symptoms will provide the decision maker with few clues to an adequate solution  Rational decision makers should be conscious about how they have framed problems and should try out alternative frames  Should also avoid overarching, universal frames for every problem you face Information Search – Bounded Rationality  Too Little Information  People tend to be lazy and use what information is readily available  We also tend to remember vivid, recent events even if they are irrelevant – even so, we curtail our info search and rely on familiar experience  Some people also tend to be over confident with their decision - Confirmation Bias is the tendency to seek out info that matches one’s own definition of a solution to a problem  Too Much Information  Information Overload is the reception of more information that is necessary to make effective decisions – can lead to errors, omissions, delays, and cutting corners  Decision makers often try to use all the info and then get confused and permit low-quality or irrelevant info to influence their decisions  One research review concluded that managers  Gather much info that has little to do with decision relevance  Use info that they collected to justify a decision  Request more info, regardless of what is already available  Complain that there is not enough info to make a decision even though they ignore available information 2 COMM 151 – Chapter 11 (pg 359-374) Notes – Decision Making Alternative Development, Evaluation, and Choice  Maximization: the choice of the decision alternative with the greatest expected value  Happens if the person has perfect rationality  have all info, complete, all options  Bounded – doesn’t know all alternatives, ignores important info  People are weak intuitive statisticians  People avoid incor
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