Decision Making and Approaches
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Questions and Answers

Which type of decision is concerned with daily operations in an organization?

  • Strategic Decisions
  • Tactical Decisions
  • Operational Decisions (correct)
  • None of the above

Programmed decisions are unique and rare, requiring careful consideration.

False (B)

What is the first step in the Rational Decision-Making Model?

Identify the decision to be made

The approach that involves limiting options to a manageable set is known as ____.

<p>Bounded Rationality</p> Signup and view all the answers

Match the decision-making models to their descriptions:

<p>Rational Decision-Making Model = Maximize quality of outcomes through a series of steps Bounded Rationality Model = Limit options to manageable set Intuitive Decision-Making Model = Decisions made based on prior experience Creative Decision-Making Model = Generation of new, imaginative ideas</p> Signup and view all the answers

Which type of decisions require conscious thinking and careful consideration?

<p>Non-programmed decisions (A)</p> Signup and view all the answers

Intuitive Decision-Making relies on conscious reasoning to make decisions.

<p>False (B)</p> Signup and view all the answers

What does the term 'satisfice' refer to in decision making?

<p>Accepting the first alternative that meets minimum criteria</p> Signup and view all the answers

What is the first step in the creative decision-making process?

<p>Problem Identification (D)</p> Signup and view all the answers

Hindsight bias helps individuals make more rational judgments about past decisions.

<p>False (B)</p> Signup and view all the answers

What is the term used to describe the moment when a solution to a problem becomes obvious?

<p>Illumination</p> Signup and view all the answers

The tendency to rely too heavily on one piece of information during decision-making is known as _____

<p>anchoring</p> Signup and view all the answers

What is a common result of the overconfidence bias?

<p>Underestimating risks (C)</p> Signup and view all the answers

Framing bias can affect consumer choices by altering the presentation of information.

<p>True (A)</p> Signup and view all the answers

Match the type of bias with its description:

<p>Overconfidence Bias = Overestimating one's ability to predict outcomes Hindsight Bias = Seeing past events as more predictable than they were Escalation of Commitment = Continuing a failing course of action due to prior investment Framing Bias = Influence of presentation on decision-making</p> Signup and view all the answers

What happens during the incubation step of the creative decision-making process?

<p>The individual sets the problem aside while their brain works on it unconsciously.</p> Signup and view all the answers

What is the main purpose of having a rotating devil's advocate in a group?

<p>To provide a different perspective and challenge assumptions (C)</p> Signup and view all the answers

Self-censorship occurs when group members express their doubts and counter-arguments openly.

<p>False (B)</p> Signup and view all the answers

What technique involves all members independently writing down ideas before discussing them?

<p>Nominal Group Technique</p> Signup and view all the answers

Illusions of __________ occur when the absence of dissent is misinterpreted as unanimous agreement.

<p>Unanimity</p> Signup and view all the answers

Match the following group decision-making techniques with their descriptions:

<p>Delphi Technique = Written responses to questionnaires leading to consensus Consensus = Discussing issues repeatedly until agreement is reached Majority Rule = Selecting an option based on the highest number of votes Group Decision Support Systems (GDSS) = Computer-based systems that aid group communication and decision-making</p> Signup and view all the answers

Which of the following is NOT a recommendation for avoiding groupthink?

<p>Ensure all members agree before proceeding (C)</p> Signup and view all the answers

Self-appointed mindguards protect the group from information that supports the group's assumptions.

<p>False (B)</p> Signup and view all the answers

What is one recommended behavior that individuals should monitor to avoid groupthink?

<p>Self-censorship</p> Signup and view all the answers

What is a common reason for escalation of commitment?

<p>Decision-makers believe spending more may help recover losses. (C)</p> Signup and view all the answers

Escalation of commitment can occur when individuals feel it is acceptable to admit they were wrong.

<p>False (B)</p> Signup and view all the answers

What is one of the eight characteristics of groupthink?

<p>Illusion of Invulnerability</p> Signup and view all the answers

Groups are more effective when they can draw from a larger number of individual __________.

<p>experiences</p> Signup and view all the answers

Match the group decision-making disadvantages with their descriptions:

<p>Process losses = Coordination problems within the group Social loafing = Members may contribute less effort in a group Groupthink = Pressure leads to flawed decisions Decision-making time = Groups take longer than individuals to decide</p> Signup and view all the answers

Which of the following is a strategy to avoid escalation of commitment?

<p>Setting strict turning back points (C)</p> Signup and view all the answers

A diverse group is likely to make worse decisions due to conflicting ideas.

<p>False (B)</p> Signup and view all the answers

What phenomenon can lead to poor decision-making in groups?

<p>Groupthink</p> Signup and view all the answers

Flashcards

Problem Identification

The first step in creative decision making, where the need for problem-solving becomes apparent.

Immersion

The second step where the decision-maker gathers information and consciously thinks about the problem.

Incubation

The third step where the decision-maker sets the problem aside and lets their subconscious work on it.

Illumination

The 'eureka' moment in step four, where the solution becomes apparent, often unexpectedly.

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Verification and Application

The final step where the decision-maker checks the feasibility of the solution and implements it.

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Overconfidence Bias

Overestimating your ability to predict future events.

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Hindsight Bias

Mistakes seem obvious once they've happened, making it difficult to judge someone's past decisions.

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Anchoring

Focusing heavily on one piece of information, ignoring other factors.

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Decision-Making

The process of choosing among different options, including inaction, to achieve desired outcomes.

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Strategic Decisions

Decisions that establish an organization's overall direction and long-term goals.

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Tactical Decisions

Decisions about how to implement strategic goals efficiently and effectively.

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Operational Decisions

Everyday decisions made by employees to keep the organization running smoothly.

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Programmed Decisions

Decisions that are routine and have clear, established procedures for handling them.

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Non-programmed Decisions

Unique and important decisions that require conscious consideration and careful analysis.

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Rational Decision-Making Model

A systematic approach to decision-making aiming to maximize the quality of outcomes by following defined steps.

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Bounded Rationality Decision-Making Model

Recognizing the limitations of decision-making, this approach focuses on choosing the best option within a manageable set without exhaustive search.

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Direct Pressure

Group members who voice dissent are directly pressured to conform to the group's dominant viewpoint.

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Self-Censorship

Individuals in a group suppress their own doubts and opposing arguments to avoid conflict or social disapproval.

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Illusions of Unanimity

The lack of dissent in a group is misinterpreted as complete agreement, leading to a false sense of unity.

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Self-Appointed Mindguards

Group members act as protectors against information that challenges the group's consensus or course of action.

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Nominal Group Technique

A structured group decision-making process where individuals silently write down their ideas, share them, and then vote.

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Delphi Technique

A group decision-making process using a series of questionnaires to reach consensus without direct interaction.

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Majority Rule

A decision-making method where the option with the most votes wins, regardless of the level of support.

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Consensus

A decision-making process where all members agree on a proposal, addressing concerns until a shared understanding is reached.

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Escalation of Commitment

Continuing to invest resources into a failing course of action, even when it's clear it's not working, often due to sunk costs or a desire to avoid admitting a mistake.

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Sunk Costs

Resources already invested in a project or decision that cannot be recovered, leading to a bias toward continuing the investment even if it's no longer a good idea.

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Avoiding Escalation of Commitment

Strategies to minimize the risk of continuing a failing course of action, such as setting clear stopping points, having separate decision-makers for initial investment and later decisions, and regularly evaluating the decision's effectiveness.

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Group Decision-Making Advantages

Benefits of involving multiple people in decision-making, including diverse perspectives, increased creativity, higher satisfaction, and smoother implementation.

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Group Decision-Making Disadvantages

Potential drawbacks of collaborative decision-making, such as the risk of the group performing worse than the best individual, process inefficiencies, social loafing, groupthink, and longer decision-making time.

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Groupthink

A phenomenon where group pressure leads to flawed decisions, characterized by reduced critical thinking, ignoring dissenting opinions, and overly confident assumptions.

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Illusion of Invulnerability

A symptom of groupthink where the group believes they are invincible and incapable of making mistakes, which can lead to excessive risk-taking.

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Collective Rationalizations

A symptom of groupthink where a group dismisses or downplays any warnings or negative information that might challenge their initial assumptions.

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Study Notes

Decision Making

  • Decision-making involves choosing from various courses of action, including inaction.
  • Decisions can be categorized as strategic, tactical, or operational.
    • Strategic decisions guide organizational direction.
    • Tactical decisions detail how tasks are performed.
    • Operational decisions are daily tasks.
  • Two types of decisions exist:
    • Programmed decisions are routine, with automated responses (decision rules).
    • Non-programmed decisions are unique, requiring careful consideration and thought.

Decision-Making Approaches

  • Rational Decision-Making Model: A systematic approach that aims to maximize decision quality. Steps include:
    • Identifying the decision.
    • Defining criteria.
    • Weighing criteria.
    • Generating options.
    • Evaluating alternatives.
    • Choosing the best option.
    • Implementing the decision.
    • Evaluating the outcome.
  • Bounded Rationality Decision-Making Model: Acknowledges that decision-makers are often limited in their ability to gather complete information and consider every possible option. They tend to "satisfice," accepting the first option that meets minimum requirements.
  • Intuitive Decision-Making Model: Decision-making based on unconscious patterns and prior experience. Experts recognize cues to evaluate potential outcomes.

Faulty Decision-Making

  • Overconfidence Bias: Overestimating one's ability to predict future events.
  • Hindsight Bias: Mistaking past mistakes as obvious after they've occurred.
  • Anchoring Bias: Overreliance on an initial piece of information.
  • Framing Bias: Decisions being influenced by how information is presented.
  • Escalation of Commitment: Continuing a failing course of action despite negative outcomes.

Creative Decision-Making

  • Creative decision-making uses imaginative ideas to solve problems.
  • Five steps involve:
    • Problem identification.
    • Immersion.
    • Incubation.
    • Illumination.
    • Verification and application.

Group Decision-Making

  • Advantages: Drawing on diverse perspectives, enhancing creativity, and deeper member investment in implementation.
  • Disadvantages: Can be slower, prone to process losses (coordination difficulties, social loafing), and susceptible to flaws like groupthink (where pressure to conform stifles independent thinking).
  • Techniques for better group decision-making include:
    • Nominal group technique.
    • Delphi technique.
    • Majority rule.
    • Consensus.
    • Group decision support systems (GDSS).

Project Premortem

  • A method to anticipate potential problems for a project by simulating a failed project and exploring the causes.

Decision-Making Methods

  • Decision Trees: Visual diagrams to guide step-by-step decision-making.

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Related Documents

Foundations for Business Successes (PDF)

Description

This quiz explores the mechanics of decision making, including strategic, tactical, and operational decisions. It also outlines various decision-making models such as the Rational Decision-Making Model and Bounded Rationality. Test your understanding of how to make effective choices in different scenarios.

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