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

Chapter ElevenDecision Making What is Decision MakingThe process of developing a commitment to some course of action The process of problem solvingA problem exists when a gap is perceived between some existing state and some desired state WellStructured Problems Existing state is clear desired state is clear and how to get from one state to the other is fairly obvious Programs are useful when dealing with wellstructured problems Programs are standardized ways of solving problems also called rules routines standard operating procedures or rules of thumb and allow the decision maker to go directly from problem identification to finding a solution IllStructured Problems Existing and desired states are unclear and the method of getting to the desired state is unknownCannot be solved with programmed decisionsmust resort to nonprogrammed decision making A Rational DecisionMaking Model 1 Identify Problem2 Search for Relevant Information3 Develop Alternative Solutions to Problem4 Evaluate Alternative Solutions5 Choose Best Solution6 Implement Chosen Solution7 Monitor and Evaluate Chosen Solution Perfect Rationality vs Bounded Rationality Perfect Rationality is a decision strategy that is completely informed perfectly logical and oriented toward economic gainthese characteristics do not exist in real decision makers more likely to useBounded Rationalitya decision strategy that relies on limited information and that reflects time constraints and political considerationsFraming and cognitive bias both illustrate the operation of bounded rationality as does the impact of emotions and mood on decisionsFraming aspects of the presentation of information about a problem that are assumed by the decision makers Cognitive biases tendencies to acquire and process information in an errorprone way Problem Identification and Framing Perceptual defense Problem defined in terms of functional specialty Problem defined in terms of solutionProblem diagnosed in terms of symptoms
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