Individual and Group

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Chapter 9

• Individual and Group
• Decision Making

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Individual Decision Making

• Two Basic Types of Decision Models
• Rational/classical - one general ideal type of
  model
• Behavioral
• Bounded rationality model
• Implicit favorite decision model
• Garbage can model

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Rational/Classical Model (R/C)

• Seven Steps
• 1. Identify/characterize the decision situation
• A. Problem?
• B. Opportunity?
• 2. Develop criteria and objectives for decision
• A. Criteria used?
• B. Weightings of criteria?

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• 3. Generate alternatives
• A. Past solutions?
• B. New solutions?
• 4. Analyze the /- of alternatives
• A. Minimally acceptable results?
• B. Best case results?
• C. Feasibility of alternatives?

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• 5. Select the preferred alternative
• 6. Implement the decision
• A. Potential for resistance?
• B. Sequence and timing of activities?
• C. Required resources?
• D. Delegation/assignment of tasks?
• 7. Monitor and evaluate the results of the
  decision

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Problems with the Rational/Classical Model

• Biases in human perception
• The true nature of problems is clear (?)
• Objectives are clear to all (?)
• Persons perceive the criteria and their weights
  similarly (?)
• Limits of human information processing capacity
• All alternatives are known (?)
• All consequences can be anticipated (?)
• Rational assumptions about human nature
• Decision makers are not biased (?)
• Decision makers search for the alternative that
  maximizes the outcome of interest (?)

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Problematic Factors in Rational Decision Making

• Information bias (mum effect)
• Uncertainty absorption
• Selective perception
• Stereotyping
• Cognitive complexity
• Stress

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Behavioral Models

• Bounded Rationality Decision Model
• Reaction to shortcomings of rational model
• Based on the notion that humans are limited
  information processors
• Use of decision heuristics (guides
  rules-of-thumb)
• Satisficing good enough outcomes
• More of a natural model of what people actually
  do
• In many ways, the BR model is a reduced,
  simplified, realistic version of the
  rational/classical model

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Behavioral Models, contd.

• Implicit Favorite Decision Model
• Aka retrospective decision model one can also
  employ an implicit favorite model in a
  prospective (future-oriented) mode
• Basically, decide first, then shape (bias) the
  decision process to fit the preferred outcome
• Positively distort the benefits of the implicit
  favorite choice and negatively distort those of
  other choices

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• Biased decision process no real search only
  the appearance of one
• Also applies in a prospective sense to political
  decision making situations in organizations
• Sense-making (retrospective) and framing
  processes (prospective)

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Behavioral Models, contd.

• Garbage Can Model
• The garbage can is a collection of seemingly
  unrelated problems, solutions, and participants
  that might come together at a given point in time
• Often characterized as a Solution waiting for the
  right Problem (Solution -gt Problem, not
  Problem-gt Solution)
• Another deviation from rational decision making
  really more of a model of problem solving

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Types of Decisions

• Programmed Decisions pre-determined solutions
  to common/routine problems and issues (occur at
  lower level of firm)
• Non-Programmed Decisions novel, new solutions
  to unfamiliar/non-routine problems and issues
  (occur at higher level of firm)
• Greshams Law of Planning paradoxical tendency
  for managers to give precedence to programmed
  decisions over non-programmed ones

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Group Decision Making

• Benefits and Limitations of Groups in Decision
  Making
• Benefits
• More cumulative knowledge and facts
• Broader perspective
• Participation enhances commitment to decisions
• Limitations
• Processing time/decision speed
• Compromises on decisions
• Domination of group by a select few

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Problems in Group Decision Making

• Groupthink a pressure to move toward group
  agreement and consensus at the expense of
  inter-individual debate and critique (pressure
  toward conformity)
• Group situation often encourages some to lead,
  some to follow
• Inter-member conflict or cooperation?
• Examples juriesTwelve Angry Men Challenger
  disaster student groups

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Symptoms of Groupthink

• Illusion of invulnerability
• Collective rationalization
• Illusion of morality
• Stereotyping the opposition
• Self-censorship
• Illusion of unanimity
• Mind-guarding
• Addressing Groupthink via Devils Advocacy
  approach

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Escalation of Commitment to Decisions

• Escalation of commitment increasing time,
  energy, and support for a previously-determined
  course of action despite evidence that the action
  is wrong, inappropriate, or failed
• Why? (explanations)
• Limitations of information processing errors in
  judgment
• Sunk costs - weve gone too far to turn back
  now
• Prospective rationality of future outcomes
  (value probability)
• Retrospective rationality - justification of
  previous decisions (internal external)
• Maintain consistency (internal external)

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Strategies for Improving Decision Making

• Improving Problem Analysis/Formulation
• Devils advocacy
• Multiple advocacy
• Dialectical inquiry

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Strategies for Improving Decision Making,
contd.

• Improving Problem Solution
• Brainstorming
• Nominal Group Technique
• Delphi Method

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