D312 Test 2: Questions with 100% correct answers
Rational Decision Making Model
It is a Prescriptive Approach: what managers should do
-Rational model is based on a set of assumptions about how a decision should be made
-Choose optimal choice between alternatives
Suggests people must progress through six steps to optimize an outcome:
1. Problem definition
2. Identify decision criteria
3. Weight the criteria
4. Generate the alternatives
5. Evaluate the alternatives
6. Select the optimal solution
Steps in Rational Decision Making Process
1. Problem definition
2. Identify decision criteria
3. Weight the criteria
4. Generate the alternatives
5. Evaluate the alternatives
6. Select the optimal solution
Culture's effect on the Optimization Model
,Who, What, How, How much time
-Must consider cultural variations in what managers actually do when they try and optimize
(descriptive approaches: what is actually done) (doing culture versus being- might ID problem or
not, amount of info to consider)
-Think about who makes the choice and how long the decision takes (ie: time, vertical
individualist/horizontal collectivist)
-Decision making structures in organizations tend to reflect how their culture views the rational
decision making process
Limits to rationality (decision making)
The optimization model assumes that decision-makers can:
Accurately define the problem, identify all decision criteria, accurately weigh the decision
criteria, be aware of all available alternative, and accurately assess the implications of each
alternative
Individual judgement is restricted (BOUNDED) in its ability to be rational due to incomplete
info
An alternative model is the Satisficing Model: suggests that decision-makers forgo optimal
solutions for ones that are acceptable
AKA Decision-makers do not evaluate all possible alternatives but search for a solution that
meets a minimally satisfactory set of criteria
,Cultural Restraints to Rationality
Rationality of being motivated by self-interest might be defined differently depending on how
individuals from different cultures define themselves as interdependent or independent from
others
Use Conflict Model of decision making
Bounded rationality and satisfying basically say that decisions will rarely follow the rational
model
Conflict Model of Decision Making
decision-makers use one of four decision styles to cope with the psychological stress of decision
making
1) optimal decision style: vigilance, carefully collecting all facts and considering alternatives
2) Maladaptive styles:
-complacency: either ignoring the decision completely or taking the first available course of
action
-defensive avoidance: passing decision off to someone else, putting off decision or devaluing the
importance of the decision
-hypervigilance (panicking): making a hasty decision
Heuristics
, Rules of thumb (cognitive tools) that people use to simplify decision-making
Can result in biases but the increased speed of decision kaking and the omissions of sometimes
unreliable info often outweighs the loss in decision quality
3 general heuristics:
1) availability
2) representativeness
3) anchoring and adjustment
More than one heuristic can be used in a single decision
because managers see the world differently, the way they simplify things will be different
Availability Heuristic
the extent to which instances or occurrences of an event are readily brought to mind
Influences manager's judgements of the frequency, probability, or likely causes of that event
Based on life experiences; cultural differences in judgements that result from availability exist
Representativeness heuristic
manager's assessment of the likelihood that an event will occur is influenced by how similar the
occurrence is to their mental representation (stereotype) of similar experiences
Rational Decision Making Model
It is a Prescriptive Approach: what managers should do
-Rational model is based on a set of assumptions about how a decision should be made
-Choose optimal choice between alternatives
Suggests people must progress through six steps to optimize an outcome:
1. Problem definition
2. Identify decision criteria
3. Weight the criteria
4. Generate the alternatives
5. Evaluate the alternatives
6. Select the optimal solution
Steps in Rational Decision Making Process
1. Problem definition
2. Identify decision criteria
3. Weight the criteria
4. Generate the alternatives
5. Evaluate the alternatives
6. Select the optimal solution
Culture's effect on the Optimization Model
,Who, What, How, How much time
-Must consider cultural variations in what managers actually do when they try and optimize
(descriptive approaches: what is actually done) (doing culture versus being- might ID problem or
not, amount of info to consider)
-Think about who makes the choice and how long the decision takes (ie: time, vertical
individualist/horizontal collectivist)
-Decision making structures in organizations tend to reflect how their culture views the rational
decision making process
Limits to rationality (decision making)
The optimization model assumes that decision-makers can:
Accurately define the problem, identify all decision criteria, accurately weigh the decision
criteria, be aware of all available alternative, and accurately assess the implications of each
alternative
Individual judgement is restricted (BOUNDED) in its ability to be rational due to incomplete
info
An alternative model is the Satisficing Model: suggests that decision-makers forgo optimal
solutions for ones that are acceptable
AKA Decision-makers do not evaluate all possible alternatives but search for a solution that
meets a minimally satisfactory set of criteria
,Cultural Restraints to Rationality
Rationality of being motivated by self-interest might be defined differently depending on how
individuals from different cultures define themselves as interdependent or independent from
others
Use Conflict Model of decision making
Bounded rationality and satisfying basically say that decisions will rarely follow the rational
model
Conflict Model of Decision Making
decision-makers use one of four decision styles to cope with the psychological stress of decision
making
1) optimal decision style: vigilance, carefully collecting all facts and considering alternatives
2) Maladaptive styles:
-complacency: either ignoring the decision completely or taking the first available course of
action
-defensive avoidance: passing decision off to someone else, putting off decision or devaluing the
importance of the decision
-hypervigilance (panicking): making a hasty decision
Heuristics
, Rules of thumb (cognitive tools) that people use to simplify decision-making
Can result in biases but the increased speed of decision kaking and the omissions of sometimes
unreliable info often outweighs the loss in decision quality
3 general heuristics:
1) availability
2) representativeness
3) anchoring and adjustment
More than one heuristic can be used in a single decision
because managers see the world differently, the way they simplify things will be different
Availability Heuristic
the extent to which instances or occurrences of an event are readily brought to mind
Influences manager's judgements of the frequency, probability, or likely causes of that event
Based on life experiences; cultural differences in judgements that result from availability exist
Representativeness heuristic
manager's assessment of the likelihood that an event will occur is influenced by how similar the
occurrence is to their mental representation (stereotype) of similar experiences
