Problem Solving And Decision Making

Define First and See? People selectively perceive what they expect and hope to see

Examples Any book which is published will have been read possibly hundreds of times, including by professional proof readers. And yet grammatical and other errors still get into print. Why? Because the mind is very kind and corrects the errors that our eyes see.

Thinking Ways of thinking Analysis – breaking down a large complex problem into smaller simpler problems Synthesis – combining two or more concepts into a complex form Divergent thinking – generating many ideas or possible solutions to a problem Convergent thinking – choosing the best solution or idea of a possible many

Categories of thinking processes Problem solving – developing a solution to a problem situation Judgments and decision making – involves making choices Reasoning – drawing conclusions given specific information Creativity – production of original thoughts and ideas

Definition Problem solving refers to active efforts to discover what must be done to achieve a goal that is not readily attainable.

Decision Making Two types of decisions Making choices (selecting among alternatives) Taking chances (deciding amidst uncertainty)

Definitions Decision making – selecting one choice from a number of choices involving some level of uncertainty. Intuitive Decision Making – quick and relatively automatic responses to a problem. Example: Response to yellow traffic light Analytic Decision Making – slow, deliberate, and controlled responses to a problem. Example: What college to attend

Decisions under situations of certainty You have all the necessary information to make a correct decision

Judgment and decision making in situations of uncertainty The individual is not given all the information necessary to be certain of the answer and has to use previously acquired knowledge Primary problem: lack of knowledge and misinterpretation

Utility Maximization Theory Humans attempt to make decisions that provide us with the maximum gain Subjective utility theory – modification that takes into consideration that humans are not always objective, but take consider subjective factors

Examples of Subjective factors Satisficing – we do not always pursue the optimal decision, but accept one that is adequate Immediate benefit versus delayed reward – discounting delayed rewards The way the problem is framed (presented) is important

Criteria for “Good” Decisions Outcome produces maximum value Problem is that decision are often made to avoid worst outcome rather than maximize value Example: Decision to buy the extended warranty on an appliance Positive vs. Negative outcome Problem is decision may be positive in the short term, but turn out to be a big mistake later Example: Japan’s decision to attack U.S. in 1941 Comparison to expert’s decisions Problem is that experts don’t always make good decisions Example: Experts’ decision to launch Challenger

Example 1 of framing You go to New York and decide to go to a Broadway play. You buy a ticket for $100 in the morning, but when you go to the theater that evening, you discover you have lost the ticket. You have plenty of money to buy another one: do you? You go to New York and decide to go to a Broadway play and tickets cost $100. You go to the theater that evening and when you start to pay for your ticket, you discover you have lost $100. You have plenty of money to buy a ticket: do you?

Blaming the victim Paul normally leaves work at 5:30 and drives directly home. One day, while following his routine, Paul is broadsided by a driver who violated a stop sign and is seriously injured. Paul, feeling restless at work, leaves early to see a movie. He is broadsided by a driver who violated a stop sign and is seriously injured. Paul receives an emergency call to return home. While driving home, Paul is broadsided by a driver who violated a stop sign and is seriously injured.

Decision traps – summary Plunging in Beginning to gather information and reach conclusions without first taking a few minutes to think about the crux of the issue you’re facing or to think through how you believe decisions like this should be made. Frame blindness Setting out to solve the wrong problem (Type 3 error) because you have created a mental framework for your decision, with little thought, that causes you to overlook the best options or lose sight of important objectives. Lack of frame control Failing to consciously define the problem in more ways than one or being unduly influenced by the frames of others. Overconfidence in your judgments Failing to collect key factual information because you are too sure of your assumptions and opinions. Shortsighted shortcuts Relying inappropriately on ”rules of thumb” such as implicitly trusting the most readily available information or anchoring too much on convenient facts.

Decision traps - summary Shooting from the hip Believing you can keep straight in your head all the information you’ve discovered, and thereby ”winging it” rather than following a systematic procedure when making the final choice. Group failure Assuming that with many smart people involved, good choices will follow automatically, and therefore failing to manage the group decision-making process. Fooling yourself about feedback Failing to interpret the evidence from past outcomes for what it really says, either because you are protecting your ego or because you are tricked by hindsight. Not keeping track Assuming that experience will make its lessons available automatically, and therefore failing to keep systematic records to track the results of your decisions and failing to analyze these results in ways that reveal their key lessons. Failure to audit your decision process Failing to create an organized approach to understand your own decision making, so you remain constantly exposed to all of the above mistakes.

Making Decisions in Groups Group Polarization Groupthink

Group Polarization Group Polarization- tendency to shift toward more extreme positions after group discussion Risky Cautious Neutral

Groupthink Groupthink - syndrome of bad decision-making 12.17 4 12 13

Group decision making 3 frequent errors Group think Incremental-decision making Content error

Group Polarization Group Polarization - tendency to shift toward more extreme positions after group discussion Risky Cautious Neutral

Groupthink Groupthink - syndrome of bad decision-making 12.17 4 12 13

drama classical music popular music folk dancing games cooking dress The cultural iceberg Primarily in awareness Primarily out of awareness fine arts literature drama classical music popular music folk dancing games cooking dress notions of modesty conception of beauty cosmology ideals governing childrearing rules of descent relationship to animals patterns of superior subordinate relations definition of sin courtship practices conception of justice incentives to work notions of leadership tempo of work patterns of decision making conception of cleanliness attitudes towards the dependent theory of disease approaches to problem solving conception of status mobility eye behavior roles in relation to status by age, sex, class, occupation, kinship etc.. conversational patterns in social contexts conception of past and future definition of insanity nature of friendship ordering of time conception of “self” patterns of visual perception preference for competition or cooperation body language social interaction rate notions of adolescence notions about logic and validity patterns of handling emotions facial expressions arrangement of physical space ...AND MUCH, MUCH MORE... Temporal perspective Attitude towards change Bias against problem diagnosis Reliance on the scientific method

The perfect problem-solver SENSE: Collect data with all 5 senses INTUITION: Look for patterns, inferences, relationships THINKING: Logically analyze data, patterns, inferences to reach conclusion FEELING: Evaluate impact of solution on stakeholders inside and outside the organization