HB homework

Lecture Notes for Decision Making

11.2 Understanding Decision Making

Decision Making

refers to making choices among alternative courses of action—which may also include inaction.

Programmed decisions: occur frequently enough that we develop an automated response to them

Non-programmed decisions: unique and important decisions requiring conscious thinking, information gathering, and careful consideration of alternatives.

Strategic decisions set the course for an organization

Tactical decisions are about how things will get done

Operational decisions are made by employees to make the organization fun

Rational Decision-Making Model

Bounded rationality model: recognizes the limitations of decision making. Certain factors will be used to limit alternatives (ie. Looking at colleges in Canada only)

Intuitive Decision-Making Model

A subconscious process created out of distilled experience

Best used:

· When time is short

· When policies, rules, and guidelines do not give clear cut advice

· When there is a great deal of uncertainty

· When detailed numerical analysis needs a check and balance

Creativity: generation of new, imaginative ideas

11.3 Faulty Decision Making: Judgment Shortcuts

Why do we make bad decisions?

What is Bias

A tendency to believe, feel or show prejudice for or against someone or something.

Judgment Shortcuts / Bias

· Overconfidence Bias: individuals overestimate their ability to predict future events. Ask yourself if you are being realistic in your judgements

· Hindsight Bias: occurs when looking backward in time and mistakes seem obvious after they have already occurred. We are selective in reconstructing events and tend to judge other’s decisions with this bias.

· Anchoring Bias: relying to heavily on one piece of information. Example: seeing a job with a great salary and ignoring the working environment, and if the job is really a fit for a person.

· Framing Bias: decisions that are influenced by the way the situation or problem is presented. Example: wording: packaging: 85% lean or 15% fat content or psychological pricing $8.99 vs $9.

· Escalation of Commitment: also known as sunken cost fallacy, it’s the decision to continue on a failing course of action after information reveals it may be a poor path to follow. Example: purchasing a used car that always needs repairs. At what point do you decide to sell it? Businesses have this happen when they invest in ideas, where they don’t factor in changing customer tastes or the market changes.

· Confirmation Bias: tendency to notice, focus on, and give more weight to evidence that fits our existing beliefs. Example: This is most pronounced when gathering evidence, there is so much information that we tend to gather the evidence that supports our belief or opinion vs seeking differing points of view. Example: When hiring for a server the manager may have a preconception of what makes a good employee, (i.e. someone young and energetic). When interviewing an older applicant we may focus more on “evidence” that supports our preconception that they may not be a fit as opposed to seeing other aspects the employee could bring to the job.

Group Decision Making (11.4 Decision Making in Groups)

Individual Decision Making	Group Decision Making
Pros	Cons	Pros	Cons
Typically faster than group decision making	Fewer ideas	Diversity of ideas and can piggyback on others’ ideas	Takes longer
Best individual in a group usually outperforms the group	Identifying the best individual can be challenging	Greater commitment to ideas	Group dynamics such as groupthink can occur
Accountability is easier to determine	Possible to put off making decisions if left alone to do it	Interaction can be fun and serves as a teambuilding task	Social loafing–harder to identify responsibility for decisions

Groupthink: tendency to avoid critical evaluation of ideas that the group majority favours.

There are tools and techniques for group decision making, explore some of these in the online textbook.

Lost At Sea activity

Definitions:

· A sextant is a doubly reflecting navigation instrument that measures the angular distance between two visible objects. The primary use of a sextant is to measure the angle between an astronomical object and the horizon for the purposes of celestial navigation.

· Marine VHF radio refers to the radio frequency range between 156 and 174 MHz, inclusive. The "VHF" signifies the very high frequency of the range.  Transmission power ranges between 1 and 25 watts, giving a maximum range of up to about 60 nautical miles(111 km) between aerials mounted on tall ships and hills, and 5 nautical miles (9 km; 6 mi) between aerials mounted on small boats at sea level

Lost at Sea The "correct" order, collated by the experts at the US Coast Guard