Descriptive Approaches to Decision Making

1
Descriptive Approaches to Decision Making

• Chapter 12

2
Overview

• Two Approaches to Decision Theories
• Optimizingchoose best option after thorough
  examination of all feasible options.
• Satisficingchoose first satisfactory option.
• Decision Heuristic Effects
• Representativeness Heuristic
• Availability Heuristic
• Anchoring Heuristic
• Framing Effects
• Information Utilization
• GROUPTHINK

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Theoretical Approachesto Individual Decision
Making

• Optimizing Decision Theory
• Choose the best option after a thorough
  examination of all feasible options and all
  relevant information.
• Subjective Expected Utility Model (multiplying
  each options probability of occurrence with its
  utility for the decision maker)
• Satisficing Decision Theory
• Choose the first satisfactory option

4
Decision Heuristic Effects(simplified methods
for making judgments about objects and events)

• Representativeness Heuristic use resemblance
  between different objects or events to estimate
  their relatedness (usually leads to correct
  conclusions)
• Availability Heuristic estimate the likelihood
  of an event based on how easily it comes to mind
  (leads to satisfactory conclusions)
• Anchoring Heuristic initial value is used as a
  basis for estimating a whole series of values
  (leads to insufficient or incorrect conclusions)
• Framing Effects occur when peoples judgments
  are influenced by the way in which the relevant
  information is worded

5
Information Utilization

• Optimizing theory presumes that all relevant
  information has an equal chance of being brought
  up during discussion
• Satisficing theory (information sampling model)
  information is more likely to come up when more
  members are familiar with it
• Information that is shared within the group is
  more likely to be used
• Stress Arousal (too little not vigilant too
  much panic)

6
Groupthink

• Janis argues that groupthink occurs when groups
  under stress establish the norm that displaying
  consensus is the groups number one priority
  increased levels of cohesiveness lead to
  groupthink.
• Historical events support groupthink . . .
• Task cohesion vs. Maintenance cohesion

7
Summary

• Two Approaches to Decision Theories
• Optimizingchoose best option after thorough
  examination of all feasible options.
• Satisficingchoose first satisfactory option.
• Decision Heuristic Effects
• Representativeness Heuristic
• Availability Heuristic
• Anchoring Heuristic
• Framing Effects
• Information Utilization
• GROUPTHINK

8
Conclusions . . .

• Group discussion helps individuals overcome the
  errors that the use of decision heuristics cause.
  . . BUT
• Group discussion also makes these errors more
  likely . . . AND
• Results are contingent upon unique individuals,
  various heuristics, and specific judgments