1. Organizational Behavior: An Experiential Approach 7/E Mgt 4310 Topic 8

2. Organizational Behavior: An Experiential Approach 7/E Rational Decision-Making Process 1. Recognize and define the problem 2. Identify the objective of the decision and decision criteria 3. Allocate weights to the criteria 4. List and develop the alternatives 5. Evaluate the alternatives 6. Select the best alternative 7. Implement the decision 8. Evaluate the decision

3. Organizational Behavior: An Experiential Approach 7/E Bounded Rationality Satisficing—selecting the first satisfactory alternative Available information and situation definition are incomplete Decisions made without considering all alternatives

4. Organizational Behavior: An Experiential Approach 7/E Heuristics Systematic methods or “rules of thumb” used to reduce information processing demands of decision making Which often lead to systematic errors or biases in decision making

5. Organizational Behavior: An Experiential Approach 7/E Availability Bias Information that is more available or more common has greater influence Ease of Recall Retrievability Presumed Associations

6. Organizational Behavior: An Experiential Approach 7/E Representativeness Heuristic Base rate reasoning can be overwhelmed by qualitative judgements drawn from descriptive information. Insensitivity to base rates Insensitivity to sample size Misconceptions of chance Regression to the mean Conjunctive fallacy

7. Organizational Behavior: An Experiential Approach 7/E Anchoring and Adjustment People start from initial information (anchor) and adjust from there the make a final decision. Conjunctive and Disjunctive Biases Overconfidence

8. Organizational Behavior: An Experiential Approach 7/E Confirmation Trap People seek confirming evidence when disconfirming evidence provides the most useful insights

9. Organizational Behavior: An Experiential Approach 7/E Hindsight Bias People are not good at reconstructing the way an uncertain situation appeared before decision was made

10. Organizational Behavior: An Experiential Approach 7/E Garbage Can Model Problems Choice opportunities Participants Solutions

11. Organizational Behavior: An Experiential Approach 7/E The Garbage Can Model Characteristics of the decision 1. The problem, alternatives, and solutions can be ill defined 2. The relationship among the key variables is hard to define 3. Participants can vary

12. Organizational Behavior: An Experiential Approach 7/E Garbage Can Model Consequences Problems may lead to a proposed solution or not. Problems may not be solved Potential Solutions may be proposed. People may be attracted to solutions whether or not they solve the problem. Solutions can be independent of the problem Participation can determine what and when problems and solutions are proposed Choice opportunities or decision opportunities will determine which problems are proposed, what solutions are suggested, and which decision is made (a matter of timing)

13. Organizational Behavior: An Experiential Approach 7/E Garbage Can Model Consequences solutions may be proposed even when problems don’t exist Choices are made without solving problems Problems may persist without being solved A few problems are solved

14. Organizational Behavior: An Experiential Approach 7/E Escalating Commitment Continuing on a losing course of action or throwing good resources after bad

15. Organizational Behavior: An Experiential Approach 7/E Some primary determinants 1) expected pay off 2) past failure 3) not recognizing the issue of sunk costs 4) self-justification (image management) 5) to be consistent (image management and face saving) 6) need to change is not always recognized 7) politics 8) inertia

16. Organizational Behavior: An Experiential Approach 7/E Escalating Commitment To help overcome set up specific goals put more emphasis on the decision making process rather than the results try to see the outcomes from a different perspective separate initial decision makers from those evaluating the continuance of the program

17. Organizational Behavior: An Experiential Approach 7/E Symptoms of Groupthink Illusion of invulnerability Illusion of morality Stereotyping Self-censorship Illusion of unanimity Direct pressure on dissidents