BUS 272 Chapter Notes - Chapter 12: Anchoring, Confirmation Bias, Bounded Rationality

28 views2 pages
Ch. 12 – Decision Making, Creativity, and Ethics
- decision making can be improved thru systematic thinking & an awareness of common biases
- 6-step rational decision-making model
1) define the problem
 many poor decisions can be traced to decision maker over-looking problem/defining
wrong problem
2) identify criteria relevant to making decision
 brings decision maker’s interests, values & similar personal preference into process b/c
not all indivs will consider same factors relevant for any particular decision
3) allocate weights to criteria
4) evaluate alternatives
5) select best alternative
- rational decision-making model assumes decision maker has complete info, able to identify all relevant
options in unbiased manner, and choose option w/ highest utility
 most ppl content to find acceptable/reasonable solution to problem rather than optimal one
 choices tend to be limited to neighbourhood of problem symptom & current alternative
- bounded rationality = limitations on person’s ability to interpret, process & act on info
 ppl satisfice, seek solutions that are satisfactory & sufficient
 first acceptable choice we encounter
 not always bad, simple process may be more sensible & practical
 human mind cannot formulate & solve complex problems w/ full rationality, we construct
simplified models that extract essential features from problems w/out capturing all their
complexity
 we can then behave rationally w/in limits of simple model
 when we identify alternatives, we find the ones that are highly visible & represent familiar
criteria & tried-and-true solution
- least rational way of making decision = intuitive decision making (unconscious process created from
distilled experience)
 affectively charged, relies on links b/t disparate pieces of info
 intuition can complement rational analysis, is complex & based on years of experience &
learning
 intuition can be useful to set up hypothesis
- judgment shortcuts helpful but can lead to distortions of rationality
 overconfidence bias = being far too optimistic in one’s own performance
 indivs whose intellectual & interpersonal abilities weakest most likely to overestimate
their performance & ability
 occurs more when org members considering issues/problems outside of their area of
expertise
 anchoring bias = tendency to fix on initial info, from which one then fails to adequately adjust for
subsequent info
 confirmation bias = tendency to seek out info that reaffirms past choices & discount info that
contradicts past judgments
 selective perception
 those who have a strong need to be accurate in making a decision less prone to
confirmation bias
 availability bias = tendency for ppl to base judgments on info that is readily avail rather than
complete data
 events that evoke emotions/recently occurred tend to be more avail in our memory
find more resources at oneclass.com
find more resources at oneclass.com
Unlock document

This preview shows half of the first page of the document.
Unlock all 2 pages and 3 million more documents.

Already have an account? Log in

Get access

Grade+
$10 USD/m
Billed $120 USD annually
Homework Help
Class Notes
Textbook Notes
40 Verified Answers
Study Guides
1 Booster Class
Class+
$8 USD/m
Billed $96 USD annually
Homework Help
Class Notes
Textbook Notes
30 Verified Answers
Study Guides
1 Booster Class