Description
The PPT explains on Decision Making.
Decision Making
Concepts
• • • • • We are continuously making decisions. Most trivial, occasionally the consequences are substantial. Learning, understanding, and applying critical thinking and creative problem solving skills can improve the quality of the decisions that mean most to us. Many decisions do not need much thought. Problem solving requires some thinking about our decisions. Decision quality improved if we critically and creatively analyze the problems by considering new and different options, weighing evidence objectively, looking at a problem from a different angle, developing novel solutions and accurately forecasting the probable impact of our decisions.
Critical Thinking
• A process that emphasizes a rational basis for what we believe and provides standards and procedures for analyzing, testing and evaluating our beliefs. • Critical thinking skills enable decision makers to: - Define problems within the proper context - Examine evidence objectively - Analyze the assumptions underlying the evidence and our own beliefs. - Understand and deal with the positions of others - Clarify and comprehend our own thoughts as well
Critical Thinking & Creativity
• Critical thinking determines what we know and why we know it. • Creativity involves generating, considering, and using new ideas, concepts and solutions. • Applied together, the two strategies enable decision makers: - to analyze objectively and reason out the situation facing them, and, - To come up with different and potentially unexpected ways of addressing and correcting problems. • Many of our decisions don’t take critical thinking and creativity • Applying rational decisions and intuitions can most likely solve our everyday routine and minor problems.
Rational Decision Process
• • 1. 2. 3. 4. • Using the rational decision process will help us end up with the best, most optimal solution all the time. Under ideal conditions, problem solving should follow the following steps: Problem Identification Criteria definition Alternative generation and evaluation Implementation If decision makers had all the info they needed, time and energy to reach the best possible solution and were not impeded by being human, they would use the rational decision making process.
Assumptions – Rational Decision Making
1. 2. 3. 4. 5. 6. • • Problem is clear and unambiguous Single and well defined goal can be identified Alternatives (and consequences) are all known Preferences and needs are clear, recognized, and unchanging Time and resources are abundant and accessible Decision will be implemented and supported by all Rational decision making is a time consuming and systematic process. The reality of business life is that we don’t have the time, energy, or resources to use the rational process for most of the hundreds of decisions we face every day.
Bounded Rationality
• Business decision makers are constrained from making the best possible decisions due to very real limitations in their thinking abilities • Although decision makers strive to be fully rational (to make the best or optimal decisions), they are limited or bounded by a number of factors: - A lack of complete or fully accurate information - A scarcity of time or resources required to search for more information and to formulate a ful spectrum of options. - An inability to retain more than a small amount of relevant information in the memory to attack the problem. - Intelligence and perceptual limitations that inhibit the ability to calculate optimal outcomes.
Bounded Rationality
• • Given these constraints, decision makers “satisfice” or willingly accept a decision that is reasonable rather than continue to search for the best possible solution. We normally prefer satisficing instead of continuing to seek out the optimal solution, why? Many if not most times, a solution that is good enough adequately and cheaply addresses our needs, whereas a more elaborate and thorough approaches are unduly expensive and time consuming. Decisions makers recognize that a trade off exists between thinking and accuracy. Consequently, we identify problems by lumping them with previous problems that seem similar. Rational decision making is a time consuming, systematic process; reality of business is otherwise.
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•
Biological factors influencing decisions
• Better decisions come from understanding how emotional and physiological responses brought about by the environmental conditions we are experiencing govern our thought processes. • Emotions and reactions can override our attempts to be rational • Part of being a human decision maker is realizing that biological factors have a continual and often unnoticed influence on how we solve problems. • Our vastly superior human brain is able to recognize and address uncertainties, abstractions, patterns and changes rapidly. • Almost all of the problems and difficulties we confront require us to create a quick and general response rather than a thorough, complete analysis filled with accuracy.
Emotional factors
• Our emotional side exists – it’s part of what makes us human. • Although emotions can be controlled and constrained, they cannot be learned (in the way we acquire knowledge), and they are very difficult to change. • The trick is to know when and how to use rational thinking self to constrain our emotions and when to allow ourselves the freedom to experience emotions to the fullest. • Emotions are triggered by sudden, possible threatening events, and these changes signal our minds to perk up and do something. • When solving problems, things that are novel, high-contrast, unusual, or emotional seize our attention.
Judgmental Biases
• Most of our judgments result from decisional shortcuts we use to generate solutions that are good enough most of the time. • Most of the job applicants have impressive resumes, but we hire them based on the impressions we derive from face-to-face interviews. • Two subordinates come to us with a personal conflict, but we quickly decide to do nothing because this type of problem usually resolves itself if we take a hands-off approach. • Decisional shortcuts that achieve reasonably good outcomes enable us to save time and effort. • However, decision makers are susceptible to a number of judgmental biases that lead to predictable inconsistencies and decisional errors.
Judgmental Biases
1. Selective perception: We are constantly bombarded with so much sensory information that it is impossible for us to pay attention to everything. Our subconscious mind scans our envm and selects what it deems may be important for us to notice. Even than, people not only see things the way they are, they also tend to see what they expect to see, as well as what they want to see.
Judgmental Biases
2. Impression effects: The timing of when we are exposed to and recall aspects of the problems we face can influence our judgment. A primacy effect occurs when initial impressions are believed to be even more relevant and important in rendering a decision than later impressions. The pattern of recalling the last event more clearly and believing it to be more important than previous events is known as the recency effect. The halo effect occurs when we believe a single characteristic possessed by someone is associated with a host of other desirable traits. (e.g.attractive persons believed to be smarter)
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Judgmental Biases
3. Presentation effects: Occur when how we receive information influences how we decide. (e.g. people decide they have more headaches if asked whether they get headaches frequently rather than occasionally; people judged to be taller when we ask how tall was the person) The tendency for decision makers to anchor from an initial starting point can influence our judgment When information becomes an anchor, we adjust insufficiently from that amount when making decisions. Playing the devils advocate helps to uncover the reasons why we feel as we do.
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Judgmental Biases
4. Framing effects: Occur when decision makers tend to avoid risk when problems are framed as gains and seek risk when problems are viewed as losses. E.g. select the alternative when said there was a 64% chance of success than when said there is a 36% chance of failure. Framing can sway our evaluation of an attribute if it is presented to us positively than negatively. (e.g. shampoo has 1a5 natural protein than 99% non-protein ingradients). Escalation of commitment effects: Recognized than when we realize a bad decision we should quickly “cut our losses”. However bad decisions are followed by even more ineffective decisions. Throw good money after bad.
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doc_191587968.ppt
The PPT explains on Decision Making.
Decision Making
Concepts
• • • • • We are continuously making decisions. Most trivial, occasionally the consequences are substantial. Learning, understanding, and applying critical thinking and creative problem solving skills can improve the quality of the decisions that mean most to us. Many decisions do not need much thought. Problem solving requires some thinking about our decisions. Decision quality improved if we critically and creatively analyze the problems by considering new and different options, weighing evidence objectively, looking at a problem from a different angle, developing novel solutions and accurately forecasting the probable impact of our decisions.
Critical Thinking
• A process that emphasizes a rational basis for what we believe and provides standards and procedures for analyzing, testing and evaluating our beliefs. • Critical thinking skills enable decision makers to: - Define problems within the proper context - Examine evidence objectively - Analyze the assumptions underlying the evidence and our own beliefs. - Understand and deal with the positions of others - Clarify and comprehend our own thoughts as well
Critical Thinking & Creativity
• Critical thinking determines what we know and why we know it. • Creativity involves generating, considering, and using new ideas, concepts and solutions. • Applied together, the two strategies enable decision makers: - to analyze objectively and reason out the situation facing them, and, - To come up with different and potentially unexpected ways of addressing and correcting problems. • Many of our decisions don’t take critical thinking and creativity • Applying rational decisions and intuitions can most likely solve our everyday routine and minor problems.
Rational Decision Process
• • 1. 2. 3. 4. • Using the rational decision process will help us end up with the best, most optimal solution all the time. Under ideal conditions, problem solving should follow the following steps: Problem Identification Criteria definition Alternative generation and evaluation Implementation If decision makers had all the info they needed, time and energy to reach the best possible solution and were not impeded by being human, they would use the rational decision making process.
Assumptions – Rational Decision Making
1. 2. 3. 4. 5. 6. • • Problem is clear and unambiguous Single and well defined goal can be identified Alternatives (and consequences) are all known Preferences and needs are clear, recognized, and unchanging Time and resources are abundant and accessible Decision will be implemented and supported by all Rational decision making is a time consuming and systematic process. The reality of business life is that we don’t have the time, energy, or resources to use the rational process for most of the hundreds of decisions we face every day.
Bounded Rationality
• Business decision makers are constrained from making the best possible decisions due to very real limitations in their thinking abilities • Although decision makers strive to be fully rational (to make the best or optimal decisions), they are limited or bounded by a number of factors: - A lack of complete or fully accurate information - A scarcity of time or resources required to search for more information and to formulate a ful spectrum of options. - An inability to retain more than a small amount of relevant information in the memory to attack the problem. - Intelligence and perceptual limitations that inhibit the ability to calculate optimal outcomes.
Bounded Rationality
• • Given these constraints, decision makers “satisfice” or willingly accept a decision that is reasonable rather than continue to search for the best possible solution. We normally prefer satisficing instead of continuing to seek out the optimal solution, why? Many if not most times, a solution that is good enough adequately and cheaply addresses our needs, whereas a more elaborate and thorough approaches are unduly expensive and time consuming. Decisions makers recognize that a trade off exists between thinking and accuracy. Consequently, we identify problems by lumping them with previous problems that seem similar. Rational decision making is a time consuming, systematic process; reality of business is otherwise.
-
•
Biological factors influencing decisions
• Better decisions come from understanding how emotional and physiological responses brought about by the environmental conditions we are experiencing govern our thought processes. • Emotions and reactions can override our attempts to be rational • Part of being a human decision maker is realizing that biological factors have a continual and often unnoticed influence on how we solve problems. • Our vastly superior human brain is able to recognize and address uncertainties, abstractions, patterns and changes rapidly. • Almost all of the problems and difficulties we confront require us to create a quick and general response rather than a thorough, complete analysis filled with accuracy.
Emotional factors
• Our emotional side exists – it’s part of what makes us human. • Although emotions can be controlled and constrained, they cannot be learned (in the way we acquire knowledge), and they are very difficult to change. • The trick is to know when and how to use rational thinking self to constrain our emotions and when to allow ourselves the freedom to experience emotions to the fullest. • Emotions are triggered by sudden, possible threatening events, and these changes signal our minds to perk up and do something. • When solving problems, things that are novel, high-contrast, unusual, or emotional seize our attention.
Judgmental Biases
• Most of our judgments result from decisional shortcuts we use to generate solutions that are good enough most of the time. • Most of the job applicants have impressive resumes, but we hire them based on the impressions we derive from face-to-face interviews. • Two subordinates come to us with a personal conflict, but we quickly decide to do nothing because this type of problem usually resolves itself if we take a hands-off approach. • Decisional shortcuts that achieve reasonably good outcomes enable us to save time and effort. • However, decision makers are susceptible to a number of judgmental biases that lead to predictable inconsistencies and decisional errors.
Judgmental Biases
1. Selective perception: We are constantly bombarded with so much sensory information that it is impossible for us to pay attention to everything. Our subconscious mind scans our envm and selects what it deems may be important for us to notice. Even than, people not only see things the way they are, they also tend to see what they expect to see, as well as what they want to see.
Judgmental Biases
2. Impression effects: The timing of when we are exposed to and recall aspects of the problems we face can influence our judgment. A primacy effect occurs when initial impressions are believed to be even more relevant and important in rendering a decision than later impressions. The pattern of recalling the last event more clearly and believing it to be more important than previous events is known as the recency effect. The halo effect occurs when we believe a single characteristic possessed by someone is associated with a host of other desirable traits. (e.g.attractive persons believed to be smarter)
-
-
Judgmental Biases
3. Presentation effects: Occur when how we receive information influences how we decide. (e.g. people decide they have more headaches if asked whether they get headaches frequently rather than occasionally; people judged to be taller when we ask how tall was the person) The tendency for decision makers to anchor from an initial starting point can influence our judgment When information becomes an anchor, we adjust insufficiently from that amount when making decisions. Playing the devils advocate helps to uncover the reasons why we feel as we do.
-
Judgmental Biases
4. Framing effects: Occur when decision makers tend to avoid risk when problems are framed as gains and seek risk when problems are viewed as losses. E.g. select the alternative when said there was a 64% chance of success than when said there is a 36% chance of failure. Framing can sway our evaluation of an attribute if it is presented to us positively than negatively. (e.g. shampoo has 1a5 natural protein than 99% non-protein ingradients). Escalation of commitment effects: Recognized than when we realize a bad decision we should quickly “cut our losses”. However bad decisions are followed by even more ineffective decisions. Throw good money after bad.
5. -
-
doc_191587968.ppt