Chapter 11 Terms.docx

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

Chapter 11 Terms – Decision Making Decision Making: the process of developing a Information Search commitment to some course of action Confirmation bias: the tendency to seek out info Problem: a perceived gap between an existing that conforms to one’s own definition or solution to a problem; leads decision maker overconfident state and a desired state in decision making, a form of decision-based Well structured problem: a problem that follows 3 evidence making than evidence-based decision conditions making 1. Existing state is clear Information overload: reception of more info than 2. Desired state is clear 3. How to get from one state to another is is necessary to make effective decisions; e.g. the clear extra irrelevant case facts thrown in business case exam to make you thrown-off and think too hard Program (a.k.a. rules of thumb, standard routines): while losing focus of the problem a standardized way of solving a problem that allow decision maker to go directly from identifying a Maximization: the choice of the decision problem to solution; e.g. using a computer program alternative with the greatest expected value; to approve credit applications but still needs tweak choosing the next best alternative in face of a new situation like 2008 financial fiasco Alternative Development, Evaluation, Choice Ill-structured program: a problem for which the existing & desired states are unclear and the Anchoring effect: inadequate adjustment of method of getting to the desired state is unknown; subsequent estimates from an initial estimate that a.k.a. the complete opposite of a well-structured serves as an anchor; e.g. tendency to rely too problem much on memory rather than obtained existing data RATIONALITY Satisficing: establishing an adequate level of Perfect rationality (Economic Man): a decision acceptability for a solution to a problem and then strategy that is complete informed, perfectly logical, screening solutions until one that exceeds this level and oriented toward economic gain is found; a solution just above the min. acceptable level; opposite to maximization where one seeks Bounded rationality: the decision strategy that for the greatest gain in outcome relies on limited info, and reflects time constraints and political considerations (e.g. need to please Solution Evaluation others); reflects more on decisions made in reality Sunk costs: permanent uncoverable losses of Framing bias: aspects of presentation of info about resources incurred as the result of a decision a problem that are assumed by the decision maker; e.g. assumption on limits of problem, possible Escalation of commitment: the tendency to invest outcomes additional resources in an apparently failing course of action Cognitive bias: tendencies to acquire and process info in an error-prone way; they are the ones Hindsight: tendency to review the decision making constituting assumptions
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