Transcript Decision Making, Learning, Creativity, and Entrepreneurship

Decision Making,
Learning,
Creativity, and
Entrepreneurship
chapter seven
lecture 2
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Cognitive Biases and Decision Making
• Heuristics
– Rules of thumb that simplify the process of
making decisions.
• Systematic errors
– errors that people make over and over and that
result in poor decision making
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Sources of Cognitive Biases
• Prior Hypothesis Bias
– A cognitive bias resulting from the tendency to
base decisions on strong prior beliefs even if
evidence shows that those beliefs are wrong.
• Representativeness
– A cognitive bias resulting from the tendency to
generalize inappropriately from a small sample or
from a single vivid event or episode.
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Sources of Cognitive Biases
• Illusion of Control
– The tendency to overestimate one’s own ability to
control activities and events.
• Escalating Commitment
– A source of cognitive bias resulting from the
tendency to commit additional resources to a
project even if evidence shows that the project is
failing.
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Group Decision Making
• Superior to individual making
• Choices less likely to fall victim to bias
• Able to draw on combined skills of group
members
• Improve ability to generate feasible
alternatives
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Group Decision Making
• Potential Disadvantages
– Can take much longer than individuals to make
decisions
– Can be difficult to get two or more managers to
agree because of different interests and
preferences
– Can be undermined by biases
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Group Decision Making
• Groupthink
– Pattern of faulty and biased decision making that
occurs in groups whose members strive for
agreement among themselves at the expense of
accurately assessing information relevant to a
decision
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Devil’s Advocacy and Dialectical
Inquiry
Figure 7.7
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Organizational Learning and Creativity
• Organizational learning
– Managers seek to improve a employee’s desire and
ability to understand and manage the organization
and its task environment so as to raise effectiveness.
• Learning organization
– An organization in which managers try to maximize
the ability of individuals and groups to think and
behave creatively and thus maximize the potential for
organizational learning to take place.
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Organizational Learning and Creativity
• Creativity
– The ability of the
decision maker to
discover novel ideas
leading to a feasible
course of action.
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