assignment

Lesson 12: Managing International Teams and Heuristics

IBUS 718: Consulting & Organizational Development in the Multinational Corporation

Heuristics Quiz

Decision Making

The process of i. specifying a problem or opportunity; ii. identifying alternatives & criteria; iii. evaluating alternatives; and iv. selecting from among the

alternatives. Source: Mark Maltarich & Julian Dalzell

Decision Standards

Optimize Weighted outcomes

Maximize Find decision that meets maximum number of criteria

Satisfice Find the first satisfactory solution

Source: Mark Maltarich & Julian Dalzell

Bounded Rationality Economic utility models for decision-making • Optimize - choose the option that is most valuable overall • Full information, full prediction, unlimited computational power

Real decision-making • Work with the information you have

Heuristics save time and effort • Information seeking and information processing

Example: Satisficing

, cognitive limitations, and finite time

Source: Mark Maltarich & Julian Dalzell

Source: Mark Maltarich & Julian Dalzell

Source: Mark Maltarich & Julian Dalzell

Source: Mark Maltarich & Julian Dalzell

Population of South Korea

Is it greater than or less than 26 Million people?

How many people is it?

51.74 Million in 2021

Order Effects

The first object is used as a standard

New information is weighted more heavily

New negative information is weighted more strongly than new positive information

Source: Mark Maltarich & Julian Dalzell

Imagine that the U.S. is preparing for the outbreak of an unusual disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume that the exact scientific estimates of the consequences of the programs are:

Program A 200 people will be saved Program B 1/3 probability that 600 people will be saved

2/3 probability that no people will be saved

Program A 400 people will die

Program B 1/3 probability that no people will die 2/3 probability that 600 people will die

Source: Mark Maltarich & Julian Dalzell

•

Sunk Cost

Wason Selection Task

Source: Mark Maltarich & Julian Dalzell

Judgments of Frequency Availability Heuristic

Words in the English language that:

Start with r (“run”)

Have r as the third letter (“car”)

< 9,000

> 22,000

Source: Mark Maltarich & Julian Dalzell

Recognition Which African nation has a greater population?

• Malawi • Libya

(~19.65 MM) (~6.95 MM)

Source: Mark Maltarich & Julian Dalzell

Representativeness

Source: Mark Maltarich & Julian Dalzell

Source: Mark Maltarich & Julian Dalzell

Group Decision-Making Phenomena

Risky shift / Choice shift

Groupthink

Escalation of commitment (also individual)

Source: Mark Maltarich & Julian Dalzell

Confirmation bias: The tendency to easily accept information that confirms your point of view and reject information that does not support it.

Anchoring bias: The tendency to place excessive weight or importance on one piece of information - often the first piece of information you learned about a topic.

Dunning-Kruger effect: The tendency for incompetent people to overestimate their competence, and very competent people to underestimate their competence.

Curse of Knowledge bias: When well-informed people are unable to look at an issue from the perspective of a less informed person.

Functional Fixedness: This bias limits a person to utilizing an object or idea in only the way it is traditionally used.

Mere Exposure Effect: The tendency to like something just because you are familiar with it.

Not Invented Here bias: The tendency to discount information, ideas, standards, or products developed outside of a certain group.

Reactance: The urge to do the opposite of what you are asked to do in order to preserve your freedom of choice.

Status Quo bias: The tendency to want things to stay relatively the same as they have always been.

System Justification bias: The tendency to try to actively maintain the status quo.

Summary of this Lesson In this lesson: • We discussed the challenges of managing international teams. • You explored the use of heuristics in decision-making and and

revisited the importance of consultants to the multinational corporation.