Individual and

Group Decision
Making
• Ana Kristiana (1806160863)
• Brahmantia Brava P (1806249075)
Learning Objectives

01 Describe the type of decision making model.

02 Describe Eight decision making biases

03 Describe the Evidence-Based Decision Making (EBDM)

04 Explain the Model of Decision Making Styles

05 Explain The Model of Intuition and The Ethical Decision Tree

06 Explain The Pros and Cons of Involving Groups in The Decision Making Process

07 Explain Group Problem – Solving Techniques

08 Describe The Stages of Creativity Process

 Models of Decision Making
Decision Making : identifying and
choosing alternative solutions that
lead to a desired state of affairs

1 The Rational Model

2 Non Rational Models :

• Simon’s Normative Model
• The Garbage Can Model
 Models of Decision Making
The Rational Model

The Rational Model: proposes

→ Is the potential solution ethical?
that managers use a rational four- → Is it feasible?
→ Will it remove the causes and
step approach to decision making solve the problem?

→ Problem – exists when the actual

situation and the desired situation Three key decision making blunders :
1. Rushing to judgement → After solution is implemented,
differ
2. Selecting Readily available ideas or the evaluation phase is used to
→ Opportunity - represents a
solutions evaluate its effectiveness
situation in which there are
3. Making poor allocations to study → Optimizing – producing the best
possibilities to do things that lead to
alternative solutions possible solution
results that exceed goals and
expectations
Models of Decision Making
The Rational Model

Benefits Using The Rational Model

• The quality of decisions may be enhanced
• It makes the reasoning behind a decision transparent
• If made public, it discourages the decider from acting on
suspect considerations
Models of Decision Making
Non - Rational Models

The Non-Rational Models:

Attempt to explain how decisions
are actually made
Assumption :

1 Decision making is uncertain

Decision makers do not possess

2
complete information

Difficult for managers to make optimal

3
decisions
 Models of Decision Making
Non - Rational Models
Simon’s Normative Models : to
describe the process that managers
actually use when making decisions
• Bounded rationality : represents the notion that
decision makers are “bounded” or restricted by a
variety of constraints when making decisions
• Satisficing : choosing a solution that meets some
minimum qualifications, one that is “good enough”.
• Most frequent causes of poor decision making :
o Poorly defined processes and practices
o Unclear company vision, mission, and goals
o Unwillingness of leaders to take responsibility
o Lack of reliable, timely information
The Garbage Can Model : Holds
that decision making is sloppy and
haphazard
• decision making is sloppy and haphazard
• decisions result from complex interaction of four
independent streams of events: problems, solutions,
participants and choice opportunities
• Implications of the Garbage Can Model :
o More pronounced in industries that rely on
science-based innovations
o Many decisions are made by oversight
o Political motives frequently influence decision
makers
o Important decisions are more likely to be solved
Models of Decision Making

Integrating Rational and Nonrational Models

01 A simple context is stable,

and clear cause-and-effect relationships can be
discerned, so the best answer can be agreed on.

02 In a complicated context,
there is a clear relationship between cause and effect, but
some people may not see it, and more than one solution
may be effective

03 In a complex context,
there is one right answer, but there are so many unknowns
that decision makers don’t understand cause-and-effect
relationships.

04 In a chaotic context,
cause-and-effect relationships are changing so fast that no
pattern emerges.
 Decision-Making Biases
Availability Representative
heuristic ness heuristic
• People make a variety of systematic
mistakes when making decisions.
• These mistakes are generally associated Confirmation
with a host of biases that occur when we Anchoring Bias
Bias
use judmental heuristics
• Judgmental heuristics : rules of thumb or
shortcuts that people use to reduce
information processing demands. Overconfidence
Hindsight Bias
Bias

Escalation of
Framing Bias Commitment
Bias
Decision-Making Biases

Represents a decision maker’s tendency to base decisions on

Availability information that is readily available in memory
heuristic

is used when people estimate the probability of an event occurring. It

Representativeness
heuristic
reflects the tendency to assess the likelihood of an event occuring
based on one’s impressions about similar occurrences.

subconsciously decide something before investigating why it is the right

Confirmation
decision, and seek information that support while discounting
Bias
information that does not.

Anchoring Occurs when decision makers are influenced by the first information
Bias received about a decision, even if it is irrelevant
Decision-Making Biases

Overconfidence Relates to our tendency to be over confident about estimates or

Bias forecast.

Occurs when knowledge of an outcome influences our belief

Hindsight
about the probability that we could have predicted the outcome
Bias
earlier.

Framing Bias Relates to the manner in which a question is posed

Escalation of
Commitment Refers to the tendency to stick to an ineffective course of action
Bias when it is unlikely that the bad situation can be reserved.
 Evidence-Based Decision Making (EBDM)
• represents a process of conscientiously using the best available
Content A
data and evidence when making managerial decisions Modern PowerPoint
Presentation

EBDM - Model
 Evidence-Based Decision Making (EBDM)
7 Implementation Why IsAIt Hard to Be
Content
Principles Evidenced-Based
Modern PowerPoint ?
Presentation

1. Treat your organization as an unfinished 1. There’s too much evidence.

prototype
2. There’s not enough good evidence.
2. No brag, just facts
3. The evidence doesn’t quite apply.
3. See yourself and your organization as others
do 4. People are trying to mislead you.
4. Evidence-based management is not just for 5. You are trying to mislead you.
senior executives 6. The side effects outweigh the cure.
5. Like everything else, you still need to sell it 7. Stories are more persuasive anyway.
6. If all else fails, slow the spread of bad
practice
7. The best diagnostic question: What happens
when people fail?
 General Decision Making Styles
Rely on intuition, wants to discuss with
others to gather information, willing to
take risks, and good at finding creative
• A combination of how individuals perceive and solutions
respond to information.
• General decision making styles vary along two
different dimensions : value orientation and
tolerance ambiguity.
• value orientation : reflects the extent to which
an individual focuses on either task and technical
concerns or people and social concerns when
making decisions
• tolerance ambiguity : extent to which a person
has a high need for structure or control in his life

Careful decision makers who take longer

to make decisions

Supportive, receptive to suggestions,

Efficient, logical, practical, and systematic
show warmth, and prefer verbal to written
in approach to solving problems
information.
 The Role of Intuition in Decision Making
Intuition : represents judgments, insights, or decisions that “come to mind on their
own, without explicit awareness of the evoking cues and of course without explicit
evaluation of the validity of these cues”.

• Holistic Hunch : judgment that is based on

a subconscious integration of information
stored in memory
• Automated Experience: choice based on
a familiar situation and a partially
subconscious application of previously
learned information related to that situation
The Role of Intuition in Decision Making

Road Map to Ethical Decision Making: A Decision Tree

Decision Tree : graphical representation of the process underlying decisions and it shows the resulting
consequences of making various choices
 Group Involvement in Decision Making
Advantages and Disadvantages of
Group Aided Decision Making

Minority Dissent : extent to which group

members feel comfortable disagreeing
with other group members, and a group’s
level of participation in decision making
Group Involvement in Decision Making

Group vs Individual Performance

Five Important Issues to Consider When Using Groups to Make Decisions:
1. Groups were less efficient than individuals
2. Groups were more confident about their judgements and choices than individuals
3. Groups tend to make more moderate decisions
4. Decisions making accuracy was higher when groups knew a great deal about the issues at hand and
group leaders possessed the ability to effectively evaluate the group members’ opinions and judgements.
5. The composition of a group affects its decision making processes and ultimately performance.
 Group Problem Solving Techniques
1. Consensus : reached when all members can say they either agree with the decision or have had their
‘day in court’ and were unable to convince the others of their viewpoint. Everyone agrees to support the
outcome.
2. Brainstorming : process to generate a quantity of ideas
3. The Nominal Group Techniques :process to generate ideas and evaluate solutions
4. Delphi Techniques : process to autonomously generate ideas from physically dispersed experts
5. Computer – Aided Decision Making :
• a variety of computer, software, and electronic devices to improve decision making
• allows managers to quickly obtain larger amounts of information from employees, customers, or
suppliers around the world
• Chauffeur-driven systems, group-driven electronic meetings
 Creativity

1 Preparation
Creativity : process of using intelligence,
imagination, and skill to develop a new or
novel product, object, process, or thought 2 Concentration

3 Incubation

4 Illumination

The Creativity Stages 5 Verification