Decision Making: is a conscious process of making choices
(see image 1)
Problem Indentification Challenges
-stakeholder framing/filter
-block out bad news
-mental models: shape our reality
-decisive leadership: give a quick answer to look good
-solution: focused problems skips over the problem
Identifying Problems Effectively
-be aware of perceptual and diagnostic limitations
-fight against pressure to look decisive
-maintain “divine discontent”: avoid complacancy
(see image 2)
Biased Decision Methods: people have built-in decision methods that filter evaluation of alternatives
-anchoring and adjustment: people anchor early information and won’t move despite new data
-availablity method: we estimate probabilities by how easily we can recall the event
-represent/resemble method: we estimate probabilities by how much they represent something (e.g. stereotypes)
Paralyzed by Choice: presented with many decisions and can’t make decisions
Emotions & Making Choices: emotions form preferences before we consciously evaluate those choices/moods and emotions influence how well we follow
Intuitive Decision Making:
-ability to know when a problem or opportunity exists and select the best course of action
-intuition as emotional experience
Escalation of Commitment
-tendency to repeat a bad decision or allocate more resources to a failing course of action
-4 main causes of escalation:
1. self-justification: protect my rep
2. prospect theory: take more risks to avoid losses
3. perceptual blinders: just miss the danger
4. closing costs
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