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• Asch’s 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 tomorrow’s 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