Post on 14-Dec-2015
Decision MakingDecision Making
ByByDr.Raafat Youssef ShehataDr.Raafat Youssef Shehata
Making choices from among two or more alternatives
Decision Making
The situation:
In 2nd of April, 2004 at 09:00 am you were traveling via air with a group of your colleagues toward a city in Canada called Norway House. Just a few miles before the city, the pilot
suddenly faced a technical problem in the plane, and he was forced to land somewhere in the northern pole. A few seconds before landing, the pilot contacted his base and informed them that they were 50 aero miles away from Norway House. While
landing, the surroundings conditions were not at your side, unfortunately, the pilot died and most of the plan was damaged.
Exercise:“Stay alive in the Northern-Pole”
The situation:
Your plane landing was on top of a lake covered with a very thin layer of ice, which made the plane started to sink due to the
pressure of the shock. Lucky enough, you and your colleagues succeeded to collect 15 items, see attached list, out of which you will be able to risqué just few items. Before traveling, you were able to explore the net to get the weather forecast of the following week, see attached. Because other neighbor cities are very far from Norway House, you can not go to any other place. At the crashing place, you found that the surroundings
were between snow, water flows, green grass, but plenty of mountains. In the direction of Norway House, there was a great
mountain in the way.
“Stay alive in the Northern-Pole”
The problem:You do not know will you be able to carry all collected items that is why, you
need to prioritize them according to your need. Please do that in your own once, then in the group. Calculate the differences between yourself, the
team, and the expert.
Crash day Day2 Day3 Day4 Day5
Temp OC
Day
Night
10
-1
6
-3
4
-7
3
-8
1
-12
Sun conditions Sunny Partially sunny
Partially cloudy
Cloudy Very cloudy
Temperature forecast over the coming 5 days
“Stay alive in the Northern-Pole”
# Description Your rank Team rank (Team – you)
Expert rank (Expert – you) (Expert – team)
1 Compass
2 A can of honey
3 Sleeping bag
4 Water filter
5 Piece of leather 5m*5m
6 Match
7 Nylon rope 750 m
8 Torch
9 Three pairs of snow shoes
10 A bottle of alcohol
11 Shaving set with mirror
12 Clock
13 A strong metal pin
14 Three Inside tiers
15 A book about topography
Total
Exercise “Stay alive in the northern pole!”
# Description Your rank
Team rank (Team – you)
Expert rank (Expert – you)
(Expert – team)
1 Compass 14
2 A can of honey 3
3 Sleeping bag 7
4 Water filter 13
5 Piece of leather 5m*5m 2
6 Match 5
7 Nylon rope 750 m 12
8 Torch 4
9 Three pairs of snow shoes 11
10 A bottle of alcohol 10
11 Shaving set with mirror 1
12 Clock 9
13 A strong metal pin 8
14 Three Inside tiers 6
15 A book about topography 15
Total
A systematic approach to decision making process
1 -Identification of a problem/opportunity2 -Identification of decision criteria
3 -Allocating weights to criteria4 -Development of alternatives
5 -Analysis of alternatives6 -Selection of an alternative
7 -Implementation of the alternative8 -Evaluation of decision effectiveness
222004
Decision makingDecision making
Evaluation of decision effectiveness
Implementation of the alternative
Selection of an alternative
Analysis of alternatives
Development of alternatives
Allocating of weights to criteria
Identification of decision criteria
Identification of a problem
Volvo
Volvo
BMW –Mercedes- Volvo- Opel
BMW- Mercedes- Volvo- Opel
Safety 8 price 7durability 5 spare parts 4
Price, safety , durability and spare parts
I need a new car
The Decision-Making Process
Certainty, Risk, Uncertainty, Ambiguity
Certainty all the information is fully available
Risk decision has clear goals information is available future outcomes are subject to chance
Uncertainty managers know which goals they wish to achieve information is incomplete may need to develop creative alternatives
Ambiguity goals to be achieved or the problem to be solved is unclear alternatives are difficult to define information about outcomes is unavailable
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Conditions that Affect the Possibility of Decision Failure
OrganizationalProblem
ProblemSolution
Low HighPossibility of Failure
Certainty Risk Uncertainty Ambiguity
ProgrammedDecisions
NonprogrammedDecisions
Classification of decisions
Programmed decisions Programmed decisions are routine decisions, made by lower-level
personnel, that rely on predetermined courses of action
Non-programmed decisions Non-programmed decisions are decisions for which there are no
ready-made solutions. The decision maker confronts a unique
situation in which the solutions are novel
Strategic decisions Strategic decisions are non-programmed decisions that have
important long-term implications for the organization and are made by
coalitions of high-level executives
Programmed vs. Non-programmed
Programmed vs. Non-programmed
Programmed Non-programmed
Type of task Simple, routine Complex, creative
Reliance on organizational policies
Guidance from past decisions
No guidance form past decisions
Typical decision maker Lower level Upper level
Rational decision making
Rational decision making
Intuitive decision making
Rational versus Intuitive
Rational decision making-The problem is clear
-A single well defined goal is to be achieved
-All alternatives and consequences are known
-Preferences are clear
-Preferences are constant and stable
-No time or cost constraints
Intuitive decision making
A subconscious process of making decisions on the basis of experience and accumulated judgment
Intuition
1-Experience based decisions:
- Making decisions based on their past experiences
2-Affect-initiated decisions:
-Making decisions based on emotions
3-Cognitive-based decisions:
-Making decisions based on knowledge &training
4-Subconscious mental processing :
-Making decisions from subconscious mind
Intuition
Use a blend of information ,logic, emotions and intuition
Escalation of CommitmentEscalation of Commitment The tendency for individuals to continue to support previously
unsuccessful courses of action because they have sunk costs invested in them
Biases (Imperfection) in Decision Making
Escalation of commitment
An increased commitment to a previous decision despite evidence that it may have been wrong
This is because they do not want to admit that their initial decisions have been wrong
Reasons why people have difficulty in making decisions
-Fear of failing
-Fear of success/believing that others will expect always expect perfection following a success
-Unable to set priorities/don’t know what to do first
-Not knowing where to get the information needed to help with the decision
-Hoping someone else will decide
• -Having little experience in making decisions and feeling overwhelmed
• -Not being willing to sacrifice immediate comfort for the long-term gain
• -Fear that others will disapprove of the decision
• -Believing decisions won’t really matter, other circumstances will ultimately dictate the outcome
Reasons why people have difficulty in making decisions
Decision quality
1. Know your biases
2. Do you do enough analysis?
3. Are you hesitant to make a decision?
4. Sleep on it
5. Use others to help
6. Study decision makers
Decision-Making Styles
Types of Decision MakersDirective
• Use minimal information and consider few alternatives.Analytic
• Make careful decisions in unique situations.Conceptual
• Maintain a broad outlook and consider many alternatives in making long-term decisions.
Behavioral• Avoid conflict by working well with others and being receptive to
suggestions.
Decision-Making Styles
Source: S.P. Robbins and D.A. DeCenzo, Supervision Today. 2nd ed. (Upper Saddle River, NJ: Prentice Hall, 1998). p. 166.
Common Decision-Making Errors and Biases
Overconfidence Bias
-Holding unrealistically positive views of one’s self and one’s performance.
-Individuals whose intellectual and interpersonal abilities are weakest are most likely to overestimate their performance and ability
Immediate Gratification Bias
Choosing alternatives that offer immediate rewards and that to avoid immediate costs.
Anchoring Effect
Fixating on initial information and ignoring subsequent information.
Selective Perception
Selecting organizing and interpreting events based on the decision maker’s biased
perceptions.
Confirmation Bias
-It is a type of selective perception.
-Seeking out information that reaffirms past choices and discounting contradictory information.
Framing Bias
Selecting and highlighting certain aspects of a situation while ignoring other aspects.
Availability Bias
Tendency for people to base judgments on information that is readily available
Self-Serving Bias
-Taking quick credit for successes and blaming outside factors for failures
-Korean managers found that, contrary to the self-serving bias, they tended to accept responsibility for group failure
Contrast Effects
We do not evaluate a person in isolation. Our reaction to one person is influenced by other persons we have recently encountered.
For example, an interview situation in which one sees a pool of job applicants can distort perception. Distortions in any given candidate’s evaluation can occur as a result of his or her place in the interview schedule
Stereotyping
Stereotyping—judging someone on the basis of our perception of the group to which he or she belongs.
In organizations, we frequently hear comments that represent stereotypes based on gender, age, race, ethnicity, and even weight.
Halo Effect
The halo effect occurs when we draw a general impression on the basis of a single characteristic
This phenomenon frequently occurs when students appraise their classroom instructor.