Transcript No Slide Title

11-1
Chapter Eleven
Decision Making
McGraw-Hill/Irwin
© 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Learning Objectives
• Define the phases in the decision-making process
• Identify some models and styles of behavioral decision
making
• Present the participative decision-making techniques
• Discuss the creative process and group decision-making
techniques
McGraw-Hill/Irwin
© 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
Mintzberg’s Phases Of Decision Making
In Organizations
Phase 1
IDENTIFICATION
1. Recognition
2. Diagnosis
Phase 2
DEVELOPMENT
1. Search
2. Design
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Phase 3
SELECTION
1. Judgment
2. Analysis
3. Bargaining
Authorization
McGraw-Hill/Irwin
© 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
The Continuum Of Decision-Making Behavior
Economic
rationality
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Simon’s bounded
rationality model
Judgmental heuristics
and biases model
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Social
model
© 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
Assumptions Of The Economic Rationality Model
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1. The decision will be completely rational in the means-end sense
2. There is a complete and consistent system of preferences that
allows a choice among the alternatives
3. There is complete awareness of all the possible alternatives
4. There are no limits to the complexity of computations that can be
performed to determine the best alternatives
5. Probability calculations are neither frightening nor mysterious
McGraw-Hill/Irwin
© 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
Biases Affecting Judgmental Heuristics
The Availability
Heuristic
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The
Representative
Heuristic
The Anchoring
and Adjustment
Heuristic
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© 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Decision-Making Styles
High
Analytical
Conceptual
Directive
Behavioral
Tolerance
for
Ambiguity
Low
Task and
mechanical
concerns
People and
social
concerns
Value Orientation
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© 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.
Inquiry Versus Innovative Observation
Traditional Inquiry
People are often unreliable when it comes
to explaining the types of goods and
services they would be interested in
purchasing
People often give answers that they feel
are acceptable to the questioner
People are often unable to recall how they
felt about a particular product or service
that they received
The questions that are asked can bias the
responses
Peoples’ routines are often interrupted by
someone stopping them to ask questions
When comparing two similar products,
respondents often have difficulty
explaining why they like one better than
the other
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Innovative Observation
Observers can rely on how people act in
drawing conclusions regarding what
types of products and services they
would be willing to buy in the future
People give nonverbal clues through
body language and spontaneous,
unsolicited comments
Observers can see how well people like
a product or service based on their
reactions
There are no questions asked; all data
are based on open-ended observation
People continue doing whatever they
are doing, oblivious to the fact they
are being observed
By giving people an opportunity to use
two similar products, observers can
determine which is better liked or
easier to use by watching others behave
© 2002 The McGraw-Hill Companies, Inc., All Rights Reserved.