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Chapter 11

Chapter 11 - Decision Making

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Department
Management (MGH)
Course
MGHB02H3
Professor
Joanna Heathcote
Semester
Summer

Description
Chapter 11Decision Making What is Decision MakingDecision makingthe process of developing a commitment to some course of actionProblema perceived gap between an existing state and a desired stateWellstructured problemsa problem for which the existing state is clear and the desired state is clear and how to get from one state to the other is fairly obviousPrograma standardized way of solving a problemProgrammed decision making is effective as long as the program is developed rationally and conditions do not changeIllstructured problema problem for which the existing and desired states are unclear and the method of getting to the desired state is unknownThey are unique and recurrent requires nonprogrammed decision makingThe Complete Decision Makera Rational Decision Making ModelIdentify problem search for relevant informationdevelop alternative solutions to the problemevaluate alternative solutionschoose best solutionimplement chosen solutionmonitor and evaluate chosen solutionPerfect vs Bounded RationalityPerfect rationalitya decision strategy that is completely informed perfectly logical and oriented toward economic gainThe decision maker get gather info about problems and solutions wo cost and is completely informedIs perfectly logical has only one criterion for decision making economic gainBounded rationalitya decision strategy that relies on limited info and that reflects time constraints and political considerationframingaspects of the presentation of information about a problem that are assumed by decision makerscognitive biasestendencies to acquire and process information in a particular way that is prone to errorProblem Identification and Framingbounded rationality lead to difficulties in identifying problems such asperceptual defensedefend perceive against unpleasant perceptionsproblem defined in terms of functional specialtyselective perception cause decision makers to view problem as being in the domain of their own specialty even when some other perspective might be warrantedproblem defined in terms of solutionjumping to conclusions problem diagnosed in terms of symptomsconcentration on surface symptoms will provide the decision maker with few clues about an adequate solutionthe real problem involves the cause of the problemInformation searchtoo little informationwe tend to remember vivid recent events and tendency to be overconfident in decision makingconfirmation bias the tendency to seek out info that conforms to ones own definition of or solution to a problemtoo much informationinformation overloadthe reception of more information than is necessary to make effective decisions1
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