The following will be discussed in this chapter: Cognitive biases, types of cognitive biases, organizational learning & creativity, delphi technique, decision making, types of decision making, models of decision making, devil’s advocacy and dialectical inquiry. | Management Practices Lecture 9 1 Recap Decision Making Types of Decision Making Models of Decision Making Devil’s Advocacy and Dialectical Inquiry 2 Today’s Lecture Cognitive Biases Types of Cognitive Biases Organizational Learning & Creativity Delphi Technique 3 Cognitive Biases Suggests decision makers use heuristics to deal with bounded rationality. A heuristic is a rule of thumb to deal with complex situations. If the heuristic is wrong, however, then poor decisions result from its use. Systematic errors can result from use of an incorrect heuristic. These errors will appear over and over since the rule used to make decision is flawed. 4 Types of Cognitive Biases Prior Hypothesis Representativeness Illusion of Control Escalating Commitment Cognitive Biases 5 Types of Cognitive Biases Prior hypothesis bias: manager allows strong prior beliefs about a relationship between variables and makes decisions based on these beliefs even when evidence shows they are wrong. . | Management Practices Lecture 9 1 Recap Decision Making Types of Decision Making Models of Decision Making Devil’s Advocacy and Dialectical Inquiry 2 Today’s Lecture Cognitive Biases Types of Cognitive Biases Organizational Learning & Creativity Delphi Technique 3 Cognitive Biases Suggests decision makers use heuristics to deal with bounded rationality. A heuristic is a rule of thumb to deal with complex situations. If the heuristic is wrong, however, then poor decisions result from its use. Systematic errors can result from use of an incorrect heuristic. These errors will appear over and over since the rule used to make decision is flawed. 4 Types of Cognitive Biases Prior Hypothesis Representativeness Illusion of Control Escalating Commitment Cognitive Biases 5 Types of Cognitive Biases Prior hypothesis bias: manager allows strong prior beliefs about a relationship between variables and makes decisions based on these beliefs even when evidence shows they are wrong. Representativeness: decision maker incorrectly generalizes a decision from a small sample or one incident. Illusion of control: manager over-estimates their ability to control events. Escalating commitment: manager has already committed considerable resource to project and then commits more even after feedback indicates problems. 6 Group Decision Making Many decisions are made in a group setting. Groups tend to reduce cognitive biases and can call on combined skills, and abilities. There are some disadvantages with groups: Group think: biased decision making resulting from group members striving for agreement. Usually occurs when group members rally around a central manger’s idea (CEO), and become blindly committed without considering alternatives. The group tends to convince each member that the idea must go forward. 7 Improved Group Decision Making Devil’s Advocacy: one member of the group acts as the devil’s advocate and critiques the way the group identified alternatives. Points out problems with .
