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Introduction to Decision Making

Introduction to Decision Making



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    DecisionmakingPortofLA1 DecisionmakingPortofLA1 Presentation Transcript

    • Decision Making A Skill We Can Improve Jim Marteney
    • Population of TurkeyGreater or Less Than35,000,000
    • Population of Turkey78,785,548
    • Mental Trap Unconscious mental routine that leads us to make poor decisions
    • Anchoring TrapInitial impressions,estimates, or dataanchor subsequentthoughts andjudgments.
    • Anchoring TrapMind givesdisproportionate weightto thefirst information itreceives.
    • Status Quo Trap We instinctively stay with what seems familiar.
    • Status Quo Trap We look for decisions that involve the least change
    • Status Quo Trap More alternatives, stronger status quo
    • Status Quo Trap People want to avoid, “rocking the boat”
    • Status Quo Trap Sins of commission punished more than sins of omission
    • Justify PastActions Trap more invested in the past, more difficult to change Don’t cultivate a fear of failure culture
    • Framing Trap The way a problem is worded or “framed” can profoundly influence the choices one makes
    • Framing Trap People are: risk averse when a problem is posed in terms of gains risk seeking when a problem is posed in terms of avoiding losses
    • Framing Trap Which would you choose? A sure gain of $3,000 80% chance of winning $4,000 and a 20% chance of winning nothing
    • Framing Trap Which would you choose? A sure loss of $3,000 80% chance of losing $4,000 and a 20% chance of losing nothing
    • Framing Trap “Bird in the hand, worth two in the bush.”
    • Decision Making How much isinfluenced by actual thought?
    • Two Types of Decisions Voluntary Decision Making Involuntary Decision Making
    • The Critical Thinker One who refuses to complacently accept conclusions, one who analyzes and evaluates eviencd in order to distinguish strong reasoning
    • The Critical Thinker unlike the uncritical thinker who accepts or rejects conclusions, often on the basis of egocentric attachment or unassessed bias.
    • DanielKahneman
    • DanielKahneman
    • AmosTversky
    • Try Their Test You are at a Would you go store in one down to the end of the other end of mall about to the mall to purchase a purchase thecalculator for same calculator $25 for $20
    • Try Their TestYou are at a Would you gostore in one down to the end of the other end ofmall about to the mall to purchase a purchase thecomputer for same computer $2000 for $1995
    • We Don’t Notice Everything
    • LateralThinking Edward de Bono
    • LateralThinkingStory of evil money lender, debtor and his beautiful daughter
    • LateralThinkingEngine IntelligenceFuel KnowledgeTuned Thinking Smart = the integration of all three
    • Identify the Problem“A problem well statedis a problem halfsolved.” Charles Kettering
    • Identify the Problem“The only differencebetween a problem anda solution is thatpeople understand thesolution.” Charles Kettering
    • Identify the Problem“If I had only one hour to save the world I would spend fifty-five minutes defining theproblem and only five minutes finding the solution.” Albert Einstein
    • Identify the ProblemDifference Between Cause of a Problem Effect of a Problem
    • Identify the ProblemFishbone Analysis Dr. Kaoru Ishikawa
    • Identify the ProblemFishbone Analysis
    • Making a Decision Gut Feeling Positive, Negative, Interesting Cost/Benefit Analysis
    • Gut Feeling“It is a feeling that youknow, but still have ahard time to explain it”MalcolmGladwell
    • Gut Feeling“It is a feeling that youknow, but still have ahard time to explain it”MalcolmGladwell
    • Positive/Negative/Interesti A good way of weighing the pros, cons and implications of a decision. Peter Ueberroth
    • Positive/Negative/Interesti Positive What’s good? Negative What’s bad? What would you be Interesting curious about?
    • “Should we charge forthe privilege of carrying the Olympic Torch?”
    • Positive/Negative/Interesti All marriages are no longer “Till Death do you part.” Marriages now only last 5 years.
    • Cost/Benefit AnalysisEverythinghas a CostMoneyTimePersonnelConfusionBad Feelings
    • Cost/Benefit AnalysisEverythinghas a CostDoes the Benefitoutweigh thatCost?
    • Cost/Benefit Analysis
    • Cost/Benefit Analysis Benefit
    • Cost/Benefit Analysis Cost Benefit
    • Cost/Benefit Analysis Text Text Text Text Text Text Text Text Text Cost Benefit
    • Cost/Benefit AnalysisSelect LowHanging Fruit“Targets or goals whichare easily achievableand which do notrequire a lot of effort.”
    • Asking the Right Questions  Is there a Problem?  How Significant is the Problem?  Structural or Attitudinal?  Is there a Solution? Will the Solution Solve the Problem?  What are the negative effects? Negative aspects outweigh the benefits?
    • Asking the Key Questions Failed to ask Key Question Did Japanese households have conventional western ovens?
    • Now, forthe CaseStudies
    • Your Turn to Decide