BUS 272 Chapter Notes - Chapter 12: Group Decision-Making, Decision-Making, Hindsight Bias

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 272
• Professor: Zorana Svedic

Document Summary

Decision: the choice made from two or more alternatives. Rational: refers to choices that are consistent and value-maximizing within specified constraints: the six-step rational model. Describes how individuals should behave in order to maximize some outcome. Identify the criteria (2) by bringing the de(cid:272)isio(cid:374) (cid:373)aker(cid:859)s i(cid:374)terests, (cid:448)alues, a(cid:374)d si(cid:373)ilar personal preferences. The model assumes that the decision maker has complete information, is able to identify all the relevant options in an unbiased manner, and chooses the option with the highest utility. A simple process may frequently be more sensible than the traditional rational mode; An unconscious pro(cid:272)ess (cid:272)reated of a perso(cid:374)(cid:859)s (cid:373)a(cid:374)(cid:455) e(cid:454)perie(cid:374)(cid:272)es. Judgment shortcuts to minimize effort and avoid trade-offs bias and errors distortions of rationality: overconfidence bias. Error in judgment that arises from being far too optimistic a(cid:271)out o(cid:374)e(cid:859)s o(cid:449)(cid:374) performance. Individuals whose intellectual and interpersonal abilities are weakest are most likely to overestimate their performance and ability. The more optimistic, the less successful: anchoring bias.