Decision Making

Presentation Outline
What Is Decision Making? What Is Perception? Attribution Theory Frequently Used Shortcuts In judging Others Decision Making In Organizations Common biases And Errors In Decision Making Influences On Decision Making Ethics In Decision Making

Decision Making
Decision making is the process of identifying and
choosing among alternatives, based upon the values and preferences of decision maker.

Making a decision implies that there are

alternative choices are to be considered.

Identify as many of these alternatives as possible but to chose one that have highest probability of success.

Kinds Of Decisions
1. Decisions

Whether:

yes/no, either/or, decision that must be produce before we proceed with the selection of alternative.
2

. Decision Which:
Decisions involve a choice of one or more alternatives from among a set of possibilities, the choice being based on how well each alternative measures up to a set of predefined criteria.

Kinds Of Decisions
3. Contingent Decisions:
Decisions that have been made but put on hold until some condition is met. i.e. I have decided to buy that car if I can get it for the right price.

Perception
Process of attaining awareness or
understanding the environment by organizing and interpreting sensory information Involves signals in the nervous system

Perception can be substantially different from objective reality Employees of a firm may view it as great place

Perception

Favorable working conditions, excellent benefits, interesting job assignments, good pay and responsible management.

in real life it is unusual to find such agreements

Factors That Influence Perception

Personal characteristics of the individual perceiver. To Perceive the young people to be lazy Characteristics of the target we observe. Loud people are more likely to be noticed in a group than quiet ones. Context in which we see objects or events. At a nightclub on Saturday night, we may not notice a young guest dressed to the nines

Attribution Theory
It tries to explain the ways in which we judge people differently, depending on the meaning we attribute to a given behavior.

distinctiveness
Consensus Consistency

Frequently Used Shortcuts In judging Others

Selective perception Halo effect Contrast effect Stereotyping

Decision Making In Organizations

Bounded Rationality: Most people respond to a complex problem by reducing it to a level at which they can readily understand it. Intuition: Rely on the intuition is the least rational way. Intuitive decision making is a nonconscious process. It relies on holistic association, its fast and affectively charged.

Common biases And Errors In Decision Making

Overconfidence bias Anchoring bias Confirmation bias Availability bias Escalation of commitment Randomness error Winners curse Hindsight bias

Influences On Decision Making

Individual differences: Personality Gender Age Experience Organizational constraints: Performance evaluation Reward system Formal regulations

Ethics In Decision Making

What is ethics? Three different ways to frame decision making 1. Utilitarian 2. Focus on rights 3. Focus on justice