Decision making

Types
Programmed
Non-programmed

Top-down
Empowered
Processes - Individual
Identify problem
Establish decision
criteria
Weigh decision
criteria
Generate
alternatives
Evaluate
alternatives
Make a choice
Implement choice
Evaluate
Processes - Individual
Rational economic model

Bounded rationality
Satisficing

Intuitive decision-making

Creative decision-making
Processes Group/Org
Brainstorming

Nominal group

Stepladder

Delphi
Factors affecting DM -
individual
Styles
DIRECTIVE,
ANALYTICAL,
CONCEPTUAL,
BEHAVIOURAL
Factors affecting DM -
individual
Individual differences
Styles
Risk taking
Values
Intuition
Creativity


Factors affecting DM
Group/Org
Groupthink
Aschs experiment

Group polarization

Political pressures

Time pressures

Cultural context

Video time!
Factors affecting DM
Traps, biases
Overconfidence
Framing
Anchoring
Status-quo
Sunk cost
escalation of commitment

Points to note
Awareness of traps in our thinking
Keep questioning assumptions
Seek various perspectives/frames
Understand decision styles of self, others
Encourage dissent
Cultivate culture of openness, failure acceptance
Awareness of yes-(wo)men, groupthink
Use nominal techniques to allow private votes
QUIZ 3 [take home]
Individually work and
Map which traps and biases from the reading would
significantly affect which stages of the decision making
process. Substantiate with examples [10 marks]

Submit a print copy in tomorrows class

Mental accounting
Imagine that you have decided to see a movie and
have paid the admission price of $10 per ticket. As
you enter the theater, you discover that you have
lost the ticket. The seat was not marked, and the
ticket cannot be recovered. Would you pay $10 for
another ticket?

46% ready to buy
Imagine that you have decided to see a movie
where admissionis $10, but you have not yet
bought the ticket. As you walk to the theater, you
discover that you have lost a $10 bill. Would you
still pay $10 for a ticket to the movie?

88% ready to buy