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1、CHAPTER 4Foundations of Decision Making8/25/20221Learning ObjectivesDescribe the decision-making processAnalyze the rational decision-making modelExplain the limits of rationalityLearn how certainty, risk, and uncertainty relate to decision makingDiscuss the bounded-rational decision maker8/25/20222

2、Learning ObjectivesIdentify the two types of decision problems and the two decisions that solve themLearn how heuristics affect decision makingIdentify four decision-making stylesWeigh the pros and cons of group decisionsLearn three ways to improve group decision making8/25/20223The Decision-Making

3、ProcessIdentification of a ProblemIdentification of DecisionCriteriaAllocationof Weightsto CriteriaPriceInterior ComfortDurabilityRepair RecordPerformancePriceInterior ComfortDurabilityRepair RecordPerformance108642I need to buya new car.8/25/20224Developmentof AlternativesAnalysisof Alternatives Fo

4、rd JeepMazdaDodgeAudiIsuzuChevySelection of anAlternativeImplementationof theAlternativeAppraisal of Decision ResultsPriceComfortDurabilityRepair RecordPerformanceThe Dodgeis the best.ToyotaChevyIsuzuAudiDodgeMazdaJeepFordToyota8/25/20225ProblemClaritySingleGoalKnownOptionsClearPreferencesConstantPr

5、eferencesNoConstraintsMaximumPayoffAssumptionsof RationalDecisionMaking8/25/20226A Model of Bounded RationalityAscertainthe Need for a DecisionSimplifythe ProblemSet“Satisfying”CriteriaIdentify aLimited Set of AlternativesCompareAlternativesAgainst CriteriaExpandSearch forAlternativesSelect theFirst

6、 “GoodEnough” ChoiceA “Satisficing”AlternativeExistsYesNo8/25/20227Escalation ofCommitmentRepresentativeHeuristicAvailabilityHeuristicCommon Errorsin Decision Making8/25/20228How Do Problems Differ?Well-StructuredProgrammedDecisionsPoorlyStructuredNon-programmedDecisions8/25/20229MakingProgrammedDec

7、isionsSequentialProceduresSpecificRulesGuidingPolicies8/25/202210Integrating Decision Making Well-StructuredLevel in Organization ProgrammedDecisionsTopPoorly StructuredType of ProblemLowerNon-programmedDecisions8/25/202211AnalyticConceptualBehavioralDirectiveRationalIntuitiveWay of ThinkingHighLowT

8、olerance for AmbiguityDecision-Making Styles8/25/202212Group Decision MakingMore informationMore alternativesIncreased acceptanceLegitimacyTime-consumingMinority dominationPressures to conformUnclear responsibilityAdvantagesDisadvantages8/25/202213Strengths ofIndividualsStrengths ofGroupsConsistent ValuesClear AccountabilitySpeedIndividual Versus GroupDecision MakingIncreased AcceptanceHigher

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