Podcast
Questions and Answers
What characterizes a situation of certainty in decision-making?
What characterizes a situation of certainty in decision-making?
- The decision-maker can accurately predict the outcomes of each choice. (correct)
- There is a possibility of estimating outcome probabilities.
- Outcomes of alternatives are unknown to the decision-maker.
- Decisions are based solely on intuition and gut feelings.
Which decision-making style relies primarily on logical analysis and external data?
Which decision-making style relies primarily on logical analysis and external data?
- Linear thinking style (correct)
- Nonlinear thinking style
- Heuristic processing
- Intuitive decision-making
In the context of decision-making, what does the term 'satisficing' refer to?
In the context of decision-making, what does the term 'satisficing' refer to?
- Selecting the first acceptable option that meets minimum criteria. (correct)
- Adjusting decisions based on feedback and evaluations.
- Choosing the alternative with the highest potential payoff.
- Analyzing all available alternatives exhaustively before deciding.
What decision-making condition involves estimating probabilities of outcomes?
What decision-making condition involves estimating probabilities of outcomes?
Which choice would a pessimistic manager likely adopt under the maximin criterion?
Which choice would a pessimistic manager likely adopt under the maximin criterion?
What is a key characteristic of unstructured or nonprogrammed decisions?
What is a key characteristic of unstructured or nonprogrammed decisions?
What does the regret matrix primarily demonstrate?
What does the regret matrix primarily demonstrate?
Which statement best describes the concept of bounded rationality in decision-making?
Which statement best describes the concept of bounded rationality in decision-making?
Flashcards
Well-structured decisions
Well-structured decisions
Decisions made in predictable situations with known outcomes.
Unstructured decisions
Unstructured decisions
Decisions made in complex and uncertain situations with unknown outcomes.
Rationality in decision making
Rationality in decision making
The idea that a decision-maker will always choose the most logical and rational option to maximize their gain.
Bounded rationality
Bounded rationality
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Intuition in decision making
Intuition in decision making
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Linear thinking style
Linear thinking style
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Nonlinear thinking style
Nonlinear thinking style
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Maximizing in decision making
Maximizing in decision making
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Study Notes
Types of Problems and Decisions
- Well-structured (programmed) problems: Decisions with clear goals and readily available information.
- Unstructured (nonprogrammed) problems: Decisions with unclear goals and limited information.
Decision-Making Approaches
- Rationality: Making decisions based on logic and a clear understanding of the situation.
- Bounded rationality: Making decisions with limited information and time constraints.
- Intuition: Making decisions based on instinct and subjective judgment.
Decision-Maker Styles
- Linear thinking style: Relies on external data and logical analysis.
- Nonlinear thinking style: Relies on internal insights and feelings.
Decision-Making Errors and Biases
- (No specific errors or biases listed, but implied as part of the overall discussion.)
Decision-Making Steps
- Choosing the best alternative: Maximizing (seeking the best possible outcome) or satisficing (choosing a good-enough outcome).
- Implementation: Putting the chosen alternative into action.
- Evaluation: Assessing the effectiveness of the chosen alternative.
Decision-Making Conditions
- Certainty: All possible outcomes are known.
- Risk: Possible outcomes and their probabilities are known.
- Uncertainty: Outcomes and probabilities are unknown.
Decision-Making Strategies under Uncertainty
- Maximax: Selecting the alternative with the best possible outcome (optimistic approach).
- Maximin: Selecting the alternative with the best minimum outcome (pessimistic approach).
- Minimax: Selecting the alternative with the lowest maximum regret (focuses on minimizing potential losses).
Regret Matrix Explanation
- Regret Matrix: Shows the difference between the actual outcome and the best possible outcome for each alternative.
- Maximax: Identifies the maximum payoff in each column then selects the highest maximax.
- Minimax: Identifies the maximum regret in each row then selects the lowest minimum.
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