© 2013 The McGraw-Hill Companies, Inc. All rights reserved. Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Individual and Group Decision Making Chapter Twelve

12-2 Learning Objectives LO.1 Compare and contrast the rational model of decision making, Simon’s normative model, and the garbage can model. LO.2 Discuss eight decision-making biases. LO.3 Discuss the thrust of evidence-based decision making and its implementation principles. LO.4 Explain the model of decision-making styles. LO.5 Explain the model of intuition and the ethical decision tree.

12-3 Learning Objectives (cont.) LO.6 Summarize the pros and cons of involving groups in the decision-making process. LO.7 Contrast brainstorming, the nominal group technique, the Delphi technique, and computer-aided decision making. LO.8 Describe the stages of the creative process. LO.9 Discuss the practical recommendations for increasing creativity.

12-4 Models of Decision Making Decision making  identifying and choosing alternative solutions that lead to a desired state of affairs

12-5 Models of Decision Making The Rational Model  proposes that managers use a rational four- step approach to decision making.

12-6 Nonrational Models of Decision Making Nonrational models  Attempt to explain how decisions are actually made 1. Decision making is uncertain 2. Decision makers do not possess complete information 3. Difficult for managers to make optimal decisions

12-7 Simon’s Normative Model Bounded rationality  represents the notion that decision makers are “bounded” or restricted by a variety of constraints when making decisions Satisficing  choosing a solution that meets some minimum qualifications, one that is “good enough”.

12-8 Garbage Can Model  decision making is sloppy and haphazard  decisions result from complex interaction of four independent streams of events: problems, solutions, participants and choice opportunities

12-9 Decision-Making Biases Judgmental heuristics  rules of thumb or shortcuts that people use to reduce information processing demands.

12-10 Evidence-Based Decision Making Evidence-based decision making (EBDM)  represents a process of conscientiously using the best available data and evidence when making managerial decisions

12-11 A Model of Evidence-Based Decision Making (EBDM)

12-12 General Decision-Making Styles Value orientation  reflects the extent to which an individual focuses on either task and technical concerns or people and social concerns when making decisions Tolerance for ambiguity  extent to which a person has a high need for structure or control in his life

12-13 Decision-Making Styles

12-14 A Model of Intuition

12-15 An Ethical Decision Tree