MHR 405 Chapter Notes - Chapter 7: Subjective Expected Utility, Bounded Rationality, Clustering Illusion
24 Apr 2015
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Document Summary
Decision making is the conscious process of making choices among alternatives w/ the intention of moving toward some desired state of affairs. The rational choice paradigm is the view that best decisions use pure logic & all info available to choose the alternative w/ the highest value, eg. highest expected profitability, customer satisfaction, employee well-being, etc. The ultimate principle of this paradigm is to choose the alternative w/ the highest subjective expected utility, ie. the probability/expectation of satisfaction/utility resulting from choosing a specific alt/decision. All decisions rely to some degree on the expected value of the outcomes (utility) & the probability of those good/bad outcomes occurring (expectancy). Problems & opportunities are conclusions that we form from ambiguous & conflicting info. 5 major problems w/ problem identification: stakeholder framing they have vested interests so they frame the situation unwittingly to highlight specific causes & raise value of resources they can offer to org to solve problems.
