Descriptive Approaches to Decision Making

1. Descriptive Approaches to Decision Making Chapter 12

2. Overview • Two Approaches to Decision Theories • Optimizing—choose best option after thorough examination of all feasible options. • Satisficing—choose first satisfactory option. • Decision Heuristic Effects • Representativeness Heuristic • Availability Heuristic • Anchoring Heuristic • Framing Effects • Information Utilization • “GROUPTHINK”

3. Theoretical Approachesto Individual Decision Making • Optimizing Decision Theory • Choose the best option after a thorough examination of all feasible options and all relevant information. • Subjective Expected Utility Model (multiplying each option’s probability of occurrence with its “utility” for the decision maker) • Satisficing Decision Theory • Choose the first satisfactory option

4. Decision Heuristic Effects(simplified methods for making judgments about objects and events) • Representativeness Heuristic – use resemblance between different objects or events to estimate their relatedness (usually leads to correct conclusions) • Availability Heuristic – estimate the likelihood of an event based on how easily it comes to mind (leads to satisfactory conclusions) • Anchoring Heuristic – initial value is used as a basis for estimating a whole series of values (leads to insufficient or incorrect conclusions) • Framing Effects– occur when people’s judgments are influenced by the way in which the relevant information is worded

5. Information Utilization • Optimizing theory – presumes that all relevant information has an equal chance of being brought up during discussion • Satisficing theory (information sampling model) – information is more likely to come up when more members are familiar with it • Information that is shared within the group is more likely to be used • Stress = Arousal (too little – not vigilant; too much – panic)

6. Groupthink • Janis argues that groupthink occurs when groups under stress establish the norm that displaying consensus is the group’s number one priority; increased levels of cohesiveness lead to groupthink. • Historical events support groupthink . . . • Task cohesion vs. Maintenance cohesion

7. Summary • Two Approaches to Decision Theories • Optimizing—choose best option after thorough examination of all feasible options. • Satisficing—choose first satisfactory option. • Decision Heuristic Effects • Representativeness Heuristic • Availability Heuristic • Anchoring Heuristic • Framing Effects • Information Utilization • “GROUPTHINK”

8. Conclusions . . . • Group discussion helps individuals overcome the errors that the use of decision heuristics cause. . . BUT • Group discussion also makes these errors more likely . . . AND • Results are contingent upon unique individuals, various heuristics, and specific judgments