OB Midterm Review PDF

Week 1 Taylorism - a theory of management that analyzes and synthesizes workflows Shortcomings of Taylorism -​ Repetitive work is boring and incompatible with people’s desire to develop new skills and experience the accompanying sense of achievement -​ When tasks are specialized,...

Week 1 Taylorism - a theory of management that analyzes and synthesizes workflows Shortcomings of Taylorism -​ Repetitive work is boring and incompatible with people’s desire to develop new skills and experience the accompanying sense of achievement -​ When tasks are specialized, people lose sight of the significance of their work -​ Strict rules can lead people to do the bare minimum or even rebel -​ Customers suggestions aren’t heard because only the lower levels interact with the consumer Organizational Behaviour: the field of behavioral science that examines how individuals act, think, and feel in organizations by studying individual and group processes Chapter 1 1.1 Define organizations and describe their basic characteristics Organizations: social inventions for accomplishing common goals through group effort 1.​ Social Inventions → an essential characteristic of the coordinated presence of people ​ “Understanding people and managing them to work effectively” 2.​ Goal Accomplishment → “How can organizations survive and adapt to change” 3.​ Group Effort → “How to get people to practice effective teamwork” 1.2 Explain the concept and meaning of organizational behavior. Organizational Behavior: the attitudes and behaviors of individuals and groups in organizations Human capital: The knowledge, skills, and abilities (KSAs) embodied in an organization’s employees Social capital: Social resources that individuals obtain from participation in a social structure 1.3 Describe the goals of organizational behavior Predicting ​ Predicting when people will make ethical decisions, create innovative products, or engage in sexual harassment Explaining ​ why people are more or less engaged, motivated, satisfied, or prone to resign Managing Management: the art of getting things accomplished in organizations through others Evidence-based Management: translating principles based on the best scientific evidence into organizational practices 1.4 Contrast the classical management viewpoint with that advocated by the human relations movement. Classical Viewpoint Human Relations Movement Scientific management/Taylorism Hawthorn studies: demonstrate the importance of psychological factors at work 1.​ High specialization of labor 2.​ Intensive coordination 1.​ Advocated for management styles 3.​ Centralized decision-making that were more participative and oriented toward employee needs Bureaucracy Advocated for more interesting job design, more employee participation in decisions, and less centralized control 1.5 Describe the contingency approach to management. Contingency Approach: an approach to management that recognizes that there is no one best way to manage and that an appropriate management style depends on the demands of the situation 1.6 Explain what managers do—their roles, activities, agendas for action, and thought processes. Managerial Roles​ Managerial Activities 1.​ Routine communications 2.​ Traditional management 3.​ Networking 4.​ Human resources management Agendas 1.​ Agenda setting 2.​ Networking 3.​ Agenda implementation 1.7 Describe the five contemporary management concerns facing organizations and how organizational behavior can help organizations understand and manage these concerns. 1. Diversity - Local and Global​ → Helps organizations develop cultural intelligence, improve cross-cultural teamwork, and create inclusive workplaces that leverage diversity as a competitive advantage. 2. Employee Health and Well-Being​ → Examines stress management, motivation, and workplace design to foster well-being, engagement, and a positive organizational culture. 3. Talent Management and Employee Engagement​ → help firms attract, develop, and retain people with the required skills 4. Alternative Work Arrangements 5. Focus on Corporate Social Responsibility​ → refers to an organization taking responsibility for the impact of its decisions and actions on its stakeholders Week 2 - Personality and Abilities History of Organizational Behavior Turn of the 20th century -​ Goods were often produced by skilled craftsmen from beginning to end -​ Accumulation of resources and technology but labour productivity was low Early 1900s -​ Rapid industrialization and factory work -​ “What can we do to get workers to do more in less time?” -​ Scientific Management/Taylorism 1920s and 1930s -​ Human Relations Movement: “What social factors influence the behavior of workers?” -​ Hawthorne studies the effects of interventions on performance Today Contingency Approach: If... then... Personality Traits: Psychological characteristics that influence the way in which an individual interacts with their environment, and that remain relatively stable across situations and over time Personality Traits The Big Five ​ Extraversion ​ Emotional Stability ​ Agreeableness ​ Conscientiousness ​ Openness to Experience Personality Traits Self-Monitoring High self-monitors Low self-monitors Use social cues to Do not use social cues to guide their own guide their own behaviour behaviour Personality Traits Locus of Control Personality Traits Self-Esteem The degree to which a person has a positive evaluation of themselves High self-esteem Positive relationship with job performance Low self-esteem Positive relationship with job satisfaction More susceptible to external influence Good at behavioral modeling Respond poorly to negative feedback Key Questions ​ Can stable personality differences change? Yes (over long periods of time) ​ How much do stable personality differences account for job performance and career success? For most criteria, more than 50% depends on knowledge and skills that you can learn. In addition, with effort, you can change personality traits Can Personality Change? ​ Extraversion: Little discernable change ​ Emotional Stability: Increases, mostly in young adulthood ​ Agreeableness: Increases ​ Conscientiousness: Increases ​ Openness to Experience: Inverted U Does Your Personality Limit You? ​ For most criteria, more than 50% depends on knowledge and skills that you can learn ​ In addition, with effort, you can change personality traits Cognitive Intelligence Cognitive intelligence: an individual’s overall ability to process, understand, and learn information ex) Verbal ability Quantitative ability Reasoning Ability Measure by - Wonderlic Personnel Test (50 items, 12 minutes) Emotional Intelligence Myths about emotions -​ Emotions impede rational thinking -​ It is impossible to make good decisions when we feel emotions The reality of emotions -​ Emotions are useful; they are functional ex) Identifying emotions Using emotions to guide thinking Understanding why emotions happen Regulating emotions in oneself and in others Measure by - Mayer-Salovey-Caruso Emotional Intelligence Test (141 items, Untimed) Chapter 2 2.1 Define personality and describe the dispositional, situational, and interactionist approaches to organizational behavior. Personality: a relatively stable set of psychological characteristics that influences the way an individual interacts with their environment Dispositional Approach: individuals possess stable traits or characteristics that influence their attitudes and behaviors Situational Approach: characteristics of the organizational setting influence people’s attitudes and behavior Interactionist Approach: individuals' attitudes and behaviors are a function of both dispositions and the situation Trait Activation Theory: traits lead to certain behaviors only when the situation makes the need for the trait important 2.2 Discuss the Five-Factor Model of personality, locus of control, self-monitoring, and self-esteem. Five-Factor Model (FFM) of Personality High extroverts enjoy social situations, while introverts avoid Sociable, talkative them Extraversion Vs. Quiet, reserved Extraversion is esp important for jobs requiring lots of interpersonal interaction (Ex. sales, management) The degree of a person having appropriate emotional control High emotional stability (low Stable, confident neuroticism) – self-confident, high Emotional stability / Neuroticism Vs. self-esteem, calm, secure Depressed, anxious Lower emotional stability (high neuroticism) – tends toward self-doubt, depression, prone to stress, Agreeableness is most likely to contribute to job performance in  Tolerant, cooperative jobs that require interaction and Vs. involve helping and nurturing others, Agreeableness Cold, rude as well as jobs involving teamwork and cooperation Responsible, goal-orientedness Dependable, responsible People high in conscientiousness Conscientiousness Vs. are likely to perform well in most Careless, impulsive jobs, given their tendency toward hard work and achievement Thinking flexibly, receptivity to new ideas Openness to experience Curious, original Vs. People high in openness to Conventional, conservative experience are likely to do well with jobs involving learning and creativity Locus of Control: a set of beliefs about whether one’s behavior is controlled mainly by internal or external forces Self-Monitoring: the extent to which people observe and regulate how they appear and behave in social settings and relationships Self-Esteem: the degree to which a person has a positive self-evaluation Behavioral plasticity theory: People with low self-esteem tend to be more susceptible to external and social influences than those who have high self-esteem 2.3 Discuss positive and negative affectivity, proactive personality, general self-efficacy, and core self-evaluations and their consequences. Positive Affectivity (PA) Negative Affectivity (NA) Propensity to view the world (including Propensity to view the world (including themselves and other people) in a positive themselves and other people) in a negative light. light. ​ PA is the strongest predictor of ​ Experience higher levels of workplace employee engagement stress ​ Higher job satisfaction and ​ Lower job satisfaction and performance engagement ​ Engaged in more organizational ​ Have poorer job performance citizenship behaviors Proactive Personality: Proactive personality: A stable disposition that reflects a tendency to take personal initiative across a range of activities and situations, and to effect positive change in one’s environment. General Self-Efficacy: A general trait that refers to an individual’s belief in their ability to perform successfully in various challenging situations. (motivational trait) Core Self-Evaluations: Refers to a broad personality concept that consists of more specific traits that reflect the evaluations people hold about themselves and their self-worth. Four traits make up a person’s core self-evaluation: -​ Self-esteem -​ general self-efficacy -​ locus of control -​ neuroticism (emotional stability) 2.4 Define learning, and describe what is learned in organizations. Learning: a relatively permanent change in behavior potential that occurs due to practice or experience What do Employees Learn: -​ Practical skills: Job-specific skills, knowledge, technical competence -​ Intrapersonal skills: Problem-solving, critical thinking, learning about alternative work processes, risk-taking -​ Interpersonal skills: Communication, teamwork, conflict resolution -​ Cultural awareness: Learning the social norms of organizations, understanding company goals, business operations, and company expectations and priorities 2.5 Explain operant learning theory and how to increase the probability of behavior using positive and negative reinforcements, and explain organizational errors involving reinforcement and when to use immediate versus delayed reinforcement and continuous versus partial reinforcement. Increase Probability of Behavior Operant learning: A type of learning where a behavior changes based on its consequences. Reinforcement: the process by which stimuli strengthen behaviors Positive reinforcement Negative reinforcement The application/addition of a stimulus that The removal of a stimulus that results in increases/maintains the probability of some increases or maintains the probability of behavior. some behavior. ex) food, praise, money → Negative reinforcers increase the probability of behavior  ex) nagging, fines Organizational Errors Involving Reinforcement Confusing rewards with reinforcers: Rewards can fail to serve as reinforcers if organizations don’t make them contingent on specific behaviours that are of interest to the organization Neglecting diversity in preferences for reinforcers: People have different preferences for what motivates them; preferences can vary across cultures, individuals, and time. Neglecting important sources of reinforcement: Performance feedback: Providing quantitative/qualitative info on past performance to change/maintain performance in specific ways.​ Social recognition: Informal acknowledgment, attention, praise, approval, or genuine appreciation for work well done from one individual/group to another. Reinforcement Strategies​ 2.6 Explain how to reduce the probability of behavior using extinction and punishment, and explain how to use punishment effectively. Reduce Probability of Behavior Extinction: The gradual dissipation of behavior following the termination of reinforcement. Punishment: The application of an aversive stimulus following some behavior designed to decrease the probability of that behavior. -​ Make sure the chosen punishment is truly aversive -​ Punish immediately  -​ Do not reward unwanted behaviors before or after the punishment -​ Do not inadvertently punish desirable behavior 2.7 Explain the social cognitive theory and discuss observational learning, self-efficacy beliefs, and self-regulation. Social Cognitive Theory: Emphasizes the role of cognitive processes in learning and in the regulation of people’s behavior. Observational Learning: the process of observing and imitating the behavior of others Self-Efficacy Beliefs: beliefs people have about their ability to successfully perform a specific task Self-Regulation: the use of learning principles to regulate one’s behavior -​ Collect self-observation data  -​ Observe models -​ Set goals -​ Rehearse -​ Reinforce oneself 2.8 Describe the following organizational learning practices: organizational behavior modification, employee recognition programs, and training and development programs. Organizational Learning Practices Organizational Behavior Modification: the systematic use of learning principles to influence organizational behavior Employee Recognition Programs: formal organizational programs that publicly recognize and reward employees for specific behavior Peer recognition programs: Formal programs in which employees can publicly acknowledge, recognize, and reward their coworkers for outstanding work and performance. Training and Development Programs: training is planned organizational activities that are designed to facilitate knowledge and skill acquisition to change behavior and improve performance on one’s current job; development focuses on future job and responsibilities Behavior modeling training (BMT): A training method where trainees observe a model performing a task followed by opportunities to practice the observed behaviors. Week 3 - Motivation & Job Performance Motivation: the extent to which persistent effort is directed toward a goal Equity theory: Employees compare the inputs they invest in a job and the outcomes they receive from the job to the inputs and the outcomes of other workers Goal-setting theory: Employees are motivated to attain goals when those goals are: -​ Specific -​ Challenging Goals are most effective when accepted by workers or, even better, when workers are actively involved in setting them Goals are most effective with frequent feedback Job Characteristics Model Principles of Job Design Core Job Characteristics Involved 1. Combine jobs enabling an employee to Autonomy, Skill variety, Task Identity perform the entire job 2. Establish client relationships allowing Task Significance, Feedback from Job, Task providers of a service to meet the recipients Identity 3. Allow greater responsibility and control Autonomy over work Key Questions ​ What are the components of job performance? ​ Do managers value the components of job performance equally? ​ How should you reward job performance? Job Performance Performance: the extent to which an employee contributes to achieving the objectives of the organization Three dimensions Task Performance Organizational Citizenship Behaviour Counterproductive Work Behaviour Three types of managers Task performance dominates Counterproductive performance dominates Task and counterproductive performance weighed equally Strongest Performers -​ Intelligent (i.e., high IQ) -​ Emotionally intelligent -​ Conscientious -​ Extraverted... but introverts and ambiverts can be better -​ Agreeable Factors Contributing to Job Performance Pay: Pay can be a powerful source of motivation when it is tied to job performance Production jobs: Piece-rate Benefits -​ Increased productivity -​ Decreased turnover Potential Problems -​ Lowered quality -​ Differential opportunity -​ Reduced co-operation -​ Incompatible job design -​ Restriction of productivity Professional and managerial jobs: Merit pay Benefits -​ Limited (i.e., a missed opportunity) Potential Problems -​ Little differentiation between various levels of job performance -​ Small increases -​ Pay secrecy Chapter 5 5.1 Define motivation, discuss its basic properties, and compare and contrast intrinsic and extrinsic motivation. Motivation: the extent to which persistent effort is directed toward a goal ​ Effort - The strength of someone’s work-related behaviour, or the effort they exhibit on the job. ​ Persistence - Persistence and consistency that workers exhibit by applying effort to their work ​ Direction - Whether workers channel persistent effort in a direction that benefits the organization ​ Goals - Having an objective where motivation is directed towards Intrinsic Motivation Extrinsic Motivation Motivation that stems from the direct Motivation that stems from the work relationship between the worker and the task environment external to the task (usually (usually self-applied) applied by others) ex) Feelings of achievement, ex) Pay, company policies, various forms of accomplishment, and interest in the job itself supervision 5.2 Define performance, explain and discuss the different factors that predict performance, and define general cognitive ability, and emotional intelligence. Performance: the extent to which an organizational member contributes to achieving the objectives of the organization General Cognitive Ability: a person's basic information-processing capacities and cognitive resources Emotional Intelligence: the ability to understand and manage one’s own and others feelings and emotions Perceiving emotions accurately in oneself: Involves the ability to accurately identify emotions in people’s faces and in non-verbal behaviour Using emotions to facilitate thinking: Ability to assimilate emotions and emotional experiences to guide and facilitate one’s thinking and reasoning Understanding emotions, emotional language, and the signals conveyed by emotions: Understanding emotional information, the determinants and consequences of emotions, and how emotions evolve and change over time. Managing emotions to attain specific goals: Ability to manage one’s own and other's feelings and emotions, as well as emotional relationships 5.3 Explain and discuss need theories of motivation and self-determination theory Need Theories: motivational theories that specify the kinds of needs people have and the conditions under which they will be motivated to satisfy these needs in a way that contributes to performance Maslow’s Hierarchy of Needs: A five-level hierarchal need theory of motivation that specifies that the lowest level of unsatisfied need has the greatest motivating potential ERG Theory: a three-level hierarchical need theory of motivation (existence, relatedness, growth) that allows for movement up and down the hierarchy Existence needs: Satisfied by some material substance or condition. Corresponds closely to Maslows physiological and safety needs Relatedness needs: Satisfied upon open communication and the exchange of thoughts & feelings with other organizational members; satisfied by open and honest interaction rather than uncritical pleasantness. Corresponds with belongingness and self-esteem needs involving feedback from others Growth needs: Fulfilled by strong personal involvement in the work setting; full utilization of one’s skills and creative development of new abilities McClelland’s theory of needs: a non-hierarchal need theory of motivation that outlines the conditions under which certain needs result in particular patterns of motivation Need for achievement (n Ach): strong desire to perform challenging tasks well Need for affiliation (n Aff): desire to establish and maintain friendly, compatible interpersonal relationships Need for power (n Pow): desire to influence others, making a significant impact/impression Self-Determination Theory: a theory of motivation that relates the satisfaction of three basic physiological needs to autonomous motivation and controlled motivation Autonomous Motivation: self-motivation or intrinsic motivation that occurs when people feel they are in control of their motivation Controlled Motivation: Motivation that is externally controlled, such as when one is motivated to obtain a desired consequence or extrinsic reward 5.4 Explain and discuss the process theories of motivation Process Theories: motivation theories that specify the details of how motivation occurs Expectancy Theory: the belief that motivation is determined by the outcomes that people expect to occur as a result ​ Equity Theory: Employees compare the inputs they invest in a job and the outcomes they receive from the job to the inputs and the outcomes of other workers. Goal-Setting Theory: Employees are motivated to attain goals when those goals are specific & challenging 5.5 discuss the cross-cultural limitations of theories of motivation 5.6 Summarize the relationships among the various theories of motivation, performance, and job satisfaction Integrative Model of Motivation Theories Chapter 6 6.1 Discuss the motivational effects of money and the meaning of variable pay Variable Pay: a portion of employees pay that is based on a measure of performance 6.2 Discuss how to tie pay to performance on production jobs and the difficulties of wage incentive plans Piece-Rate: a pay system in which individual workers are paid a certain sum of money for each unit of production completed Wage Incentive Plans: various systems that link pay to performance on production jobs Problems With Wage Incentives -​ Lowered quality -​ Differential opportunity -​ Reduced cooperation -​ Incompatible job design -​ Restriction of productivity 6.3 Explain how to tie pay to performance on white-collar jobs and the difficulties of merit pay plans Merit Pay Plans: systems that attempt to link pay to performance on white-collar jobs Problems with Merit Pay Plans -​ Little differentiation between various levels of job performance -​ Pay increases are too small to be effective motivators -​ Extreme secrecy around salaries and compensation 6.4 various approaches to use pay to motivate teamwork Profit Sharing: the return of some company profit to employees in the form of a cash bonus Employee Stock Ownership Plans: give employees a share of company shares Gainsharing: a group pay incentive plan based on productivity or performance improvements over which the workforce has some control Skill-Based Pay: a system in which people are paid according to the number of jobs they have acquired 6.5 compare and contrast the different approaches to job design, including the traditional approach, the job characteristics model, job enrichment, work design, and relational job design, and discuss the meaning and relevance of job crafting for job design Traditional Approach (Scientific Management & Taylorism) Focus: Efficiency and specialization Key Idea: Jobs are simplified and standardized to maximize productivity. Pros: High efficiency, clear roles, easy training. Cons: Repetitive tasks, low motivation, risk of burnout. Job Characteristics Model (JCM) – Hackman & Oldham: Psychological motivation through job design. Job Enrichment: design of jobs to enhance intrinsic motivation, quality of life, and job involvement Work Design: The broader work environment, including social and technological factors. Relational Job Design: Employees are more motivated when they see how their work benefits others. Job Crafting: The process by which employees reshape their jobs to align with their strengths, passions, and goals. 6.6 understand the connection between goal setting and management by objectives Management by Objective: an elaborate, systematic, ongoing program designed to facilitate goal establishment, goal accomplishment, and employee development 6.7 explain how flexible work arrangements respect employee diversity 6.8 factors that organizations should consider when choosing motivation practices Week 4 - Job Satisfaction & Stress What predicts job satisfaction? ​ Job performance ​ Adequate compensation ​ Challenging work ​ Satisfying social relationships ​ Personality traits Fairness Distributive fairness: perceived fairness of outcomes, such as salaries, promotions, rewards, or workloads Procedural fairness: the fairness of the processes used to make decisions. This includes transparency, consistency, opportunities for voice/input, and unbiased decision-making. Interactional fairness: Relates to the way people are treated during the decision-making process What does job satisfaction predict? ​ Weak relationship with task performance ​ Moderate relationship with customer satisfaction and turnover intentions ​ Strong relationship with organizational citizenship behavior Thriving Vitality - A sense of energy, enthusiasm, and aliveness Learning - The continuous development of skills, knowledge, and abilities To promote thriving ​ Involve employees in decision-making ​ Share information ​ Encourage and protect civility ​ Provide (performance) feedback Emotional Labour: Effort to regulate emotions exerted to comply with the display rules of the organization Causes of Stress at Work ​ Role ambiguity ​ Role conflict ​ Load demands or role overload ​ Heavy responsibilities ​ Interpersonal conflict ​ Sexual harassment ​ Dangerous work conditions ​ Poor job design Stress Outcomes Physiological -​ Sleep disturbance -​ Headaches -​ Illness Psychological -​ Job dissatisfaction -​ Depression -​ Burnout Behavioural -​ Low job performance -​ High absenteeism -​ Workplace Managing Stress: Individual-Level Problem-solving (i.e., get rid of the stressor or reduce its effect on you) -​ Delegation -​ Time management -​ Discuss the issue -​ Ask for help -​ Search for alternatives Managing Stress: Organizational-Level Job redesign -​ Increase autonomy (etc.) Family-friendly Human Resource policies -​ On-site daycare, flex-time, telecommuting(etc.) Stress management programs -​ Relaxation exercises, time management training, education about stressors Chapter 4 4.1 Define values and discuss the implications of cross-cultural variation in values for ob Values: broad preferences for particular states or affairs; tend to differ across generations and cultures Important cross-cultural dimensions of values:​ - Power distance​ - Uncertainty avoidance​ - masculinity/feminity​ - individualism/collectivism​ - Time orientation 4.2 Define attitudes and explain how people develop attitudes Attitudes: a function of what we think about the world (our beliefs) and how we feel about the world (our values) 4.3 explain the concept of job satisfaction and discuss some of its key concepts, including discrepancy, fairness, disposition, mood, and emotion Job Satisfaction: a collection of attitudes that workers have about their jobs Discrepancy Theory: a theory that job satisfaction stems from the discrepancy between job outcomes wanted and the outcomes that are perceived obtained Distributive fairness: when people receive the outcomes that they believe they deserve from their jobs Procedural fairness: when the process used to determine work outcomes is seen as reasonable 4.4 explain the relationship between job satisfaction and absenteeism,, turnover performance, organization citizenship behavior, counterproductive work behavior, and customer satisfaction Absenteeism (Negative Relationship)​ Higher job satisfaction → Lower absenteeism Turnover (Negative Relationship)​ Higher job satisfaction → Lower turnover Job Performance (Positive Relationship)​ Higher job satisfaction → Better job performance Organizational Citizenship Behavior (OCB) (Positive Relationship)​ Higher job satisfaction → More OCB (going above and beyond job duties) Counterproductive Work Behavior (CWB) (Negative Relationship)​ Higher job satisfaction → Less CWB (harmful workplace behavior) Customer Satisfaction (Positive Relationship)​ Higher job satisfaction → Higher customer satisfaction 4.5 differentiate effective, continuance, and normative commitment Organizational Commitment: an attitude that reflects the strength of the linkage between an employee and an organization Affective Commitment: commitment based on identification and involvement with an organization Continuance Commitment: commitment based on the costs that would e incurred in leaving an organization or a lack of suitable job alternatives Normative Commitment: commitment based on ideology or a feeling of obligation to an organization ​ ​ Chapter 13 13.5 distinguish stressors, stress, and stress reactions Stressors: environmental conditions that have the potential to induce stress Stress: a reaction to a stressor that can make a person feel tense or anxious because they may feel incapable of coping with the demands made by a stressor Stress Reactions: the behavioral, psychological, and physiological consequences of stress 13.6 review sources of stress Role Overload: too many tasks to be performed​ Heavy Responsibility 13.7 describe behavioral, psychological, and physiological reactions to stress ​ Sleep disturbance Physiological ​ Headaches ​ Illness ​ Job dissatisfaction Psychological ​ Depression ​ Burnout ​ Low job performance Behavioural ​ High absenteeism ​ Workplace aggression Week 5 - Individual Decision Making Decision-Making: Decision-making is the process of developing a commitment to a course of action Availability Heuristic: People make decisions based on what is easily accessible in their minds ​ Information that is common (words ending in ING) is mare easily retrievable from memory ​ Vivid information is more easily accessible Representative Heuristic: When making a judgment about an individual or event, people look for characteristics the individual or event may have in common with previously formed thoughts ​ judgments about people are often based on previously formed stereotypes Framing Heuristic: People make different decisions on the same problem depending on the way the problem is framed ​ When in the domain of gain, people tend to take fewer risks ​ When in the domain of loss, people tend to take many risks Anchoring and Adjustment Heuristic​ When people make decisions they use anchors to begin their decision-making process and then fail to adjust sufficiently Decision-Making Complexity and Uncertainty ​ The power of default - A number of decisions that people make are in fact, made for them ​ General principle - People don’t know their preferences well, so they are susceptible to influence from external factors when they make a decision. Escalation of Commitment (to a failing course of action) ​ People who have initiated a failing course of action all face a similar dilemma in deciding whether to continue down the same path or to strike out in a new direction ​ Although attempts to salvage these situations may make matters worse, people tend to escalate their commitment to failing courses of action ​ Explanations for escalation of commitment ○​ Self-justification/dissonance reduction ○​ Failure to treat sunk costs as sunk costs ○​ Social norm of consistency in behavior  ○​ Avoiding the appearance of being wasteful ○​ Framing ​ To help prevent escalation of commitment ○​ Change the frame ○​ Set specific goals that must be met before committing further resources ○​ Place more emphasis on the decision-making process and less on the outcome of it The perfect rationality model: analytical information processing that is thorough and systematic​ 1. Complete Information​ 2. Perfectly Logical​ 3. One criterion The bounded rationality model: heuristic information processing that relies on rules that simplify decision-making Paradox ​ Most of the time, people make good decisions ​ Even so, it is impossible to make optimal decisions all of the time, and mistakes can be costly ​ So, it is important to know the flaws of the decision-making system, and to correct for the flaws when the stakes are high Chapter 11 11.1 define decision-making and differentiate well-structured and ill-structured problems Decision-Making: the process of developing a commitment to some course of action Well-Structured Problem: a problem for which the existing state is clear, the desired state is clear, and how to get from one state to the other is obvious Ill-Structured Problem: a problem for which the existing and desired states are unclear and the method of getting to the desired state in unknown 11.2 compare and contrast perfectly rational decision-making with decision-making under bounded rationality Perfect Rational Decision-Making: a decision strategy that is completely informed, perfectly logical, and oriented toward economic gain Bounded Rartionality: a decision strategy that relies on limited information and that reflects time constraints and political considerations 11.3 discuss the impact of framing and cognitive biases on the decision process 11.4 explain the process of escalation of commitment to a failing course of action