Chapter 12Individual and Group

Decision Making

Decision MakingIdentifying and choosing solutions that lead to a

desired end result First, determine responses or actions necessary to

alleviate a problem Second, choose the best alternative

Decision Making

Models of Decision Making

The Rational Model-- Managers use logical approach-- Focus on how decisions should madeOptimizing : choosing the best possible solution

Nonrational modelsExplain how decisions actually made

Bounded rationality : Constraints that restrict rational decision makingSatisficing :Choosing a solution that meets a minimum standard of acceptance

Models of Decision Making

Models of Decision Making

The Rational Models

Four step when making decisions :

Step 1 Step 2 Step 3 Step 4

Models of Decision Making

Nonrational Models- Simon’s Normative model

the constrain include any personal or enviromental characteristic that reduce rational decision making

- The garbage can model

decision result from a complex interaction between four independent streams of events : problems, solutions, participants, and choice opportunities

Integrating Rational and Nonrational Model

Models of Decision Making

LO. 2 DECISION – MAKING BIASES

The mistakes are people made when

making decision generally associated with

a host of bias that occur when we use

JUDGMENTAL HEURISTICS.

Eight biases that affect decision making : Availability heuristic Representativeness heuristic Confirmation bias Anchoring bias Overconfidence bias Hindsight bias Framing bias Escalation of commitment bias

LO. 3 IMPROVING DECISION MAKING THROUGH EFFECTIVE KNOWLEDGE MANAGEMENT

There are two types of knowledge that impact the quality of decision :

Tacit knowledge Explicit knowledge

Decision Making Styles

Analytical Conceptual

Directive Behavioral

Tasks and TechnicalConcerns

People and SocialConcerns

Value Orientation

Low

High

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Intuition

Ethical Decision Tree

Group Development in Decision Making

Advantages & Disadvantages

Group Development in Decision Making

Group vs Individual Performance

Group Development in Decision Making

3 Group Problem-Solving Techniques

Computer-Aided Decision Making

Improve information processing & decision making within virtual teams

Creativity & Innovation

• important during brainstorming & discussion• highliting individual characteristic

Creativity & Innovation CREATIVITY is thinking up new

things. INNOVATION is doing new things. ~ Theodore Levitt

Process of developing something new or unique

Three types…CreationSynthesisModification

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Creativity

Use when….. No readily available

alternative seems to exist Existing information is

ambiguous or incomplete Outcome is unpredictable

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Model of Creativity

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