Link between Perception & Individual Decision Making Decisions: The choice made from among two or more alternatives. Problem: a discrepancy between some current state of affairs and some desired state. Every Decision needs: – Interpretation. – Evaluation of information.

How should a decision be made? Rational: Making consistent, value maximizing choices within specified constraints. Rational Decision Making Model Select the Best Alternative Evaluate the Alternatives Develop the Alternatives Allocate Weights to the Criteria Identify the Decision Criteria Define the problem

Creativity Ability to produce novel and useful ideas Creative Potential found: – Intelligent people. – Independence. – Self confidence. – Risk taking – Internal locus of control – Tolerance for ambiguity. – Perseverance in the face of frustration.

Three component model of creativity Expertise Creativity Skills Task Motivation Creativity

Decision Making in Organizations Bounded Rationality: Making decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity. Intuition: An unconscious process created out of distilled experience. Cultural Differences: based on background, beliefs. Individual differences: Personality and gender.

Common Biases and errors Decision makers engage in bounded rationality. Are attempts to shortcut the decision process. Overconfidence bias:Representative bias Anchoring bias:Escalation of commitment Confirmation bias:Randomness error Availability bias:Winner’s curse Hindsight bias

Ethics in decision making Three Ethical Decision Criteria: – Utilitarianism: decisions made greatest good for greatest number. – Rights: respecting and protecting basic rights of individual. – Justice: equal distribution of benefits and costs. Ethics & National Culture. Organizational Constraints: Performance evaluationReward systems Formal regulationsSystem imposed time constraints Historical precedents