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Decision Making Process
A set of eight steps that includes identifying a problem, selecting a solution, and evaluating the effectiveness of the solution.
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Steps of decision making process
- 1-Identification of a problem
- 2-Identification of decision criteria
- 3-Allocation of weights to criteria
- 4-Development of Alternatives
- 5-Analysis of alternatives
- 6-Selection of an Alternative
- 7-Implementation of the Alternative
- 8-Evalutation of decision Effectiveness
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Problem
A discrepancy between an existing and a desired state of affairs.
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Decision criteria
Factors that are relevant in a decision
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Decision Implementation
Putting a decision into action
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Heuristics
Judgmental shortcuts or "rules of thumb" used to simplify decision making
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Overconfidence bias
Decision makers think to know more than they do or hold unrealistically positive views of themselves and their performance.
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Immediate Gratification bias
Decision makers who tend to want immediate rewards and to avoid immediate costs.
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Achoring effect
When decision makers fixate on initial information as a starting point and then, once set fail to adequately adjust for subsequent information.
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Selective perception bias
When decision makers selectively organize and interpret events based on their biased perceptions.
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Confirmation bias
Decision makers who seek out information that reaffirms their past choices and discount information that contradicts past judgements.
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Framing bias
When decision makers select and highlight certain aspects of a situation while excluding others
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Availability bias
when decision makers tend to remember events that are the most recent and vivid in their memory.
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Representation bias
when decision makers assess the likelihood of an event based on how closely it resembles other events or sets of events
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Randomness bias
when decision makers try to create meaning out of radom events
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Sunk costs error
when decision makers forget that current choices can't correct the past
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Hindsight bias
tendency for decision makers to falsely believe that they would have accurately predicted the outcome of an event once that outcome is actually known.
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Self-serving bias
decision makers who are quick to take credit for their successes and to blame failure on outside factors
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Rational decision making
Describes choices that are consistent and value-maximizing within specified constraints.
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Bounded rationally
Making decisions that are rational within the limits of a manager's ability to process information.
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Satisfice
Accepting solutions that are "good enough"
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Escalation of commitment
An increased commitment to a previous decision despite evidence that it may have been a poor decision
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Intuitive decision making
Making decisions on the basis of experience, feelings, and accumulated judgment
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How do problems differ?
- -Structured problems
- -Unstructured problems
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Structured problem
A straightforward, familiar, and easily defined problem
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Unstructed problem
A problem that is new or unusual for which information is ambiguous or incomplete
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Programmed decision
A repetitive decision that can be handled using a routine approach
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Procedure
A series of interrelated, sequential steps used to respond to a structured problem
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Rule
An explicit statement that tells employees what can or cannot be done.
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Policy
A guideline for making decision
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Nonprogrammed Decision
A unique and nonrecurring decision that requires a custom-made solution
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Certainty
A situation in which a decision maker can make accurate decisions because off outcomes are known
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Risk
A situation in which a decision maker is able to estimate the likehood of certain outcomes
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Uncertainty
A situation in which a decision maker has neither certainty not reasonable probability estimates available
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What are the disadvantages of group decision making?
- -Time consuming
- -Minority domination
- -Pressures of conform
- -Groupthink
- -Ambiguous responsability
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Groupthink
When a group exerts extensive pressure on an individual to withhold his or her different views in order to appear to be in agreement
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How can you improve group decision making?
- -Brainstorming
- -Nominal group technique
- -Electric meeting
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Brainstorming
An idea-generating process that encourges alternatives while withholding criticism
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Nominal group tecnhique
A decision making technique in which group members are physically present but operate independently
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Electronic Meeting
A type of nominal group technique in which participants are linked by computer
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Ringisei
Japanese consensus-forming group decisions
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creativity
The ability to produce novel and useful ideas
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Model process that individual creativity essentially requires
- -Expertise
- -Creative thinking skills
- -Intrinsic tash motivation
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