interpersonal,
organizational
and group
decisions


                  Sharif University of Technology
          Graduate S...
Decision making is
a social activity


Possible effects of decisions On Others

    Anticipate how they might React

   ...
Interpersonal
Decisions
Behavioral Game Research

Prisoner's Dilemma

 Both prisoners care about the other player and
 try to anticipate what the...
Behavioral Game Research

Prisoner's Dilemma

                                                           B
               ...
Behavioral Game Research

The Centipede Game




 Game theory : Player A must stop on the first leg

Interpersonal decisio...
Behavioral Game Research

The Centipede Game


  By contrast, players do not stop early!



  The point: Trust long enou...
Behavioral Game Research

Game Theory

 Mathematical approach to decision making

 Decision making takes place in Social...
Behavioral Game Research

Behavioral Game Theory

  Behavioral Game Research determines how
   human beings react

  Att...
Behavioral Game Research

Fairness
      Players take into account
      fairness (as opposed to Game
      Theory Assumpt...
Behavioral Game Research

Fairness

   The Theoretical Solution:
   Player A chooses the largest total payoff (4, 10)
   a...
Behavioral Game Research

Ultimatum Game

    No Negotiation for side payment

    The Theoretical Solution:
    Player B...
Behavioral Game Research

Dilemma of the Commons

   a village has a common
   pasture that can support only
   n cows


 ...
Behavioral Game Research

Cooperation

  In Reality:
  People tend to avoid taking the
  self-interested position of a fre...
Behavioral
Negotiation Research
  Negotiation: A process in which two or more players decide
  what they give & take in an...
Behavioral Negotiation Research

  Negotiations can be about:
  Distributive Bargaining: Dividing some
  fixed amount of a...
Behavioral Negotiation Research
  Integrative Bargaining: Adding to the resource




  Takes place when players have at l...
Behavioral Negotiation Research

  Integrative Bargaining
  Two people negotiating over the distribution of a
  basket of ...
Behavioral Negotiation Research

 Cooperation

 Cooperation is generally necessary in
  integrative bargaining

 THEREFOR...
Organizational
decisions
Organizational
decisions


   Complexities of studying
   organizational decisions:

 organization’s personnel
  perceiv...
ORGANIZATIONAL
MODELS

• Rational Model

• Information Model

• Structural Model

• Garbage Can Model

• Participation Mod...
ORGANIZATIONAL MODELS

 The Rational Model

 One paramount Goal
 Ultimate Information & Enough Cognitive Ability
 The o...
ORGANIZATIONAL MODELS

 The Information Model


                     Handling
   Limited
                      Limited    ...
ORGANIZATIONAL MODELS

 The Structural Model




  Limited Information Processing and                 Properly
    Analysi...
ORGANIZATIONAL MODELS

 The Structural Model

 disadvantages

 Problems with Agreement about the organization’s goals
 ...
ORGANIZATIONAL MODELS

 The Structural Model
 disadvantages:

                               Limited View


             ...
ORGANIZATIONAL MODELS

 The Garbage Can Model

                                          Participants




                ...
ORGANIZATIONAL MODELS

 The Participation Model

 Member Participation
  Better Decisions?
  The pool of resources?
  G...
ORGANIZATIONAL MODELS

 The Participation Model

 Not better decisions in quality
 Reduced productivity
 Greater confid...
Group
decisions
Group decisions


Three areas in decision research:

   Participation

   Option Generation

   Consensus and confidenc...
ORGANIZATIONAL MODELS

 participation
• The organization’s members can participate to different
  degrees in managerial de...
Group decisions

 participation
Problem characteristics
1. The quality of the decision is important
2. The leader possesse...
Group decisions

 participation

Five More Situational Factors
1. Members have sufficient information to make a quality
  ...
Group decisions

 Option generation
              1957, A.F.Osborn published his book about
                          “Bra...
Group decisions

 Option generation

Rules of brainstorming
1. Criticism must be withheld during the generation stage
   s...
Group decisions

 Option generation
  What else in brainstorming…
• Usual measure of brainstorming effectiveness :
   – Nu...
Group decisions

 Consensus and confidence
Two areas of interest :
 The risky shift phenomenon
 The procedural effects

...
Group decisions

 Risky shift

 Groups tend to be more extreme than individuals in their
  willingness or unwillingness t...
Group decisions

 Procedural effects
What may influence the outcomes of group decision making :
• Majority rule (straw vot...
Group decisions

 Groupthink

• Examination of group consensus in decision making done
  by Irving Janis (1972)

• Groupth...
Group decisions

 Groupthink

   Symptoms                       Stereotyping of
                                  oppositi...
Group decisions

 Consensus and confidence


• Consensus is one thing, but actually believing (confidence)
  in the correc...
Ways of looking at
confidence…

                                            The confidence of
                            ...
Be careful !!!


               • Using groups in organizational decision making
                 permits pooling of infor...
Interpersonal, Organizational, And Group Decisions D1
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Interpersonal, Organizational, And Group Decisions D1

  1. 1. interpersonal, organizational and group decisions Sharif University of Technology Graduate School of Management and Economics
  2. 2. Decision making is a social activity Possible effects of decisions On Others Anticipate how they might React Sense of Fairness You must Cooperate with others to reach your own ends Interpersonal decisions Organizational decisions Group decisions
  3. 3. Interpersonal Decisions
  4. 4. Behavioral Game Research Prisoner's Dilemma Both prisoners care about the other player and try to anticipate what the other prisoner will do. Interpersonal decisions Organizational decisions Group decisions
  5. 5. Behavioral Game Research Prisoner's Dilemma B Silent Confess A 6 months A 10 Years Silent B 6 months B goes free A A goes free A 5 Years Confess B 10 years B 5 Years Making decisions in Light of Assumptions about other player decision Interpersonal decisions Organizational decisions Group decisions
  6. 6. Behavioral Game Research The Centipede Game Game theory : Player A must stop on the first leg Interpersonal decisions Organizational decisions Group decisions
  7. 7. Behavioral Game Research The Centipede Game By contrast, players do not stop early! The point: Trust long enough to build up the pay offs, but not so long that the other player stops first Interpersonal decisions Organizational decisions Group decisions
  8. 8. Behavioral Game Research Game Theory Mathematical approach to decision making Decision making takes place in Social Environment Players are  Rational  strictly Self-interested whose behavior solely determined by the Pay-offs Tempered by judgments about what the other player(s) might do Interpersonal decisions Organizational decisions Group decisions
  9. 9. Behavioral Game Research Behavioral Game Theory Behavioral Game Research determines how human beings react Attention is directed toward two non-economic factors: fairness & cooperation Interpersonal decisions Organizational decisions Group decisions
  10. 10. Behavioral Game Research Fairness Players take into account fairness (as opposed to Game Theory Assumptions) Example: Distribution of a Resource A: 4 A: 5 A: 12 B: 10 B: 5 B: 0 Player A chooses one distribution and negotiates with B If player B doesn't agree, neither player receive anything Interpersonal decisions Organizational decisions Group decisions
  11. 11. Behavioral Game Research Fairness The Theoretical Solution: Player A chooses the largest total payoff (4, 10) and negotiates with B to increase it In Reality: Players go for what they perceive to be the fair distribution Interpersonal decisions Organizational decisions Group decisions
  12. 12. Behavioral Game Research Ultimatum Game No Negotiation for side payment The Theoretical Solution: Player B accepts any amount greater than zero In Reality: Players pursue fairness B doesn't accept less than 20% of the payoff A doesn't offer less than 40% Interpersonal decisions Organizational decisions Group decisions
  13. 13. Behavioral Game Research Dilemma of the Commons a village has a common pasture that can support only n cows If a villager adds one cow, he has 2 slightly unhealthy cows rather than 1 healthy cow Interpersonal decisions Organizational decisions Group decisions
  14. 14. Behavioral Game Research Cooperation In Reality: People tend to avoid taking the self-interested position of a free rider People are sensitive to economic factors but impose their own standers of fairness and cooperation Interpersonal decisions Organizational decisions Group decisions
  15. 15. Behavioral Negotiation Research Negotiation: A process in which two or more players decide what they give & take in an exchange between them. Assumptions: Players presume they have conflicting interests Communication is possible Compromise is possible Players may make provisional offers & counteroffers Offers & counteroffers do not result in outcomes until accepted by both players Interpersonal decisions Organizational decisions Group decisions
  16. 16. Behavioral Negotiation Research Negotiations can be about: Distributive Bargaining: Dividing some fixed amount of a resource Takes place when players do not have compatible interests Each player tries to maximize his/her gains at the expense of the other player Interpersonal decisions Organizational decisions Group decisions
  17. 17. Behavioral Negotiation Research Integrative Bargaining: Adding to the resource Takes place when players have at least some compatible interests Each player tries to maximize the joint profit Interpersonal decisions Organizational decisions Group decisions
  18. 18. Behavioral Negotiation Research Integrative Bargaining Two people negotiating over the distribution of a basket of oranges One wants the juice and the other wants the peels The integrative agreement is the optimal solution Interpersonal decisions Organizational decisions Group decisions
  19. 19. Behavioral Negotiation Research Cooperation Cooperation is generally necessary in integrative bargaining THEREFORE if fairness & cooperation are ignored, negotiations often reach an impasse. Interpersonal decisions Organizational decisions Group decisions
  20. 20. Organizational decisions
  21. 21. Organizational decisions Complexities of studying organizational decisions:  organization’s personnel perceives problems differently  Coalition and power differentiation between units Interpersonal decisions Organizational decisions Group decisions
  22. 22. ORGANIZATIONAL MODELS • Rational Model • Information Model • Structural Model • Garbage Can Model • Participation Model Interpersonal decisions Organizational decisions Group decisions
  23. 23. ORGANIZATIONAL MODELS The Rational Model  One paramount Goal  Ultimate Information & Enough Cognitive Ability  The optimal course of action using appropriate normative analysis Rationality Analysis Orderliness Maximization Interpersonal decisions Organizational decisions Group decisions
  24. 24. ORGANIZATIONAL MODELS The Information Model Handling Limited Limited Resource Cognitive Information Constraints SATICFICING Ability at a Time option Using only part of the information that is potentially available to reach a solution Only 20% of the time are new options sought Interpersonal decisions Organizational decisions Group decisions
  25. 25. ORGANIZATIONAL MODELS The Structural Model Limited Information Processing and Properly Analysis Capacities of Individuals structuring the organization Interpersonal decisions Organizational decisions Group decisions
  26. 26. ORGANIZATIONAL MODELS The Structural Model  disadvantages  Problems with Agreement about the organization’s goals  Lack of concentrated control over Implementation  Instrumentalism  Changes cannot quikly be made  The process become unduly conservative Interpersonal decisions Organizational decisions Group decisions
  27. 27. ORGANIZATIONAL MODELS The Structural Model  disadvantages: Limited View Diversity of Power interests conflicts issues  Solution:  Meta decision making Interpersonal decisions Organizational decisions Group decisions
  28. 28. ORGANIZATIONAL MODELS The Garbage Can Model Participants Solutions Problems Choice Opportunities Organization = Organized Anarchy Interpersonal decisions Organizational decisions Group decisions
  29. 29. ORGANIZATIONAL MODELS The Participation Model Member Participation  Better Decisions?  The pool of resources?  Greater confidence in result?  Greater satisfaction? Interpersonal decisions Organizational decisions Group decisions
  30. 30. ORGANIZATIONAL MODELS The Participation Model  Not better decisions in quality  Reduced productivity  Greater confidence in results  Greater acceptance on the part of participants  Greater commitment to the implementation Interpersonal decisions Organizational decisions Group decisions
  31. 31. Group decisions
  32. 32. Group decisions Three areas in decision research:  Participation  Option Generation  Consensus and confidence Interpersonal decisions Organizational decisions Group decisions
  33. 33. ORGANIZATIONAL MODELS participation • The organization’s members can participate to different degrees in managerial decision making A1 More Participation A2 C1 C2 G Interpersonal decisions Organizational decisions Group decisions
  34. 34. Group decisions participation Problem characteristics 1. The quality of the decision is important 2. The leader possesses the expertise and information necessary to make the decision alone 3. The problem is clearly structured 4. Member acceptance and commitment is critical to successful implementation of the decision 5. An autocratic decision by the leader will be accepted by members 6. Members are motivated by organization’s goals rather than their own agendas 7. Members are likely to be able to reach consensus Interpersonal decisions Organizational decisions Group decisions
  35. 35. Group decisions participation Five More Situational Factors 1. Members have sufficient information to make a quality decision 2. Time constraints preclude involvement of members in the decision 3. It is prohibitive to bring together geographically dispersed members for group participation 4. The decision must be made quickly 5. It is important to foster member development through participation Interpersonal decisions Organizational decisions Group decisions
  36. 36. Group decisions Option generation 1957, A.F.Osborn published his book about “Brainstorming” Free discussion and exchange Idea More cautious and Generation Evaluation of ideas less imaginative Interpersonal decisions Organizational decisions Group decisions
  37. 37. Group decisions Option generation Rules of brainstorming 1. Criticism must be withheld during the generation stage so participants are not discouraged from contributing novel ideas 2. Odd, even crazy, ideas are encouraged so that unique, unapparent options can be discovered 3. The more ideas, the better because quantity increases the chances that a good option will appear 4. Using others’ suggestions as a source of ideas about options is acceptable (Piggybacking) Interpersonal decisions Organizational decisions Group decisions
  38. 38. Group decisions Option generation What else in brainstorming… • Usual measure of brainstorming effectiveness : – Number of generated ideas (Group vs. independently) – Creativity of the ideas • An extensive body of research shows that evaluative groups are more productive than supportive groups Brainstorming is seldom more effective than individuals Interpersonal decisions Organizational decisions Group decisions
  39. 39. Group decisions Consensus and confidence Two areas of interest :  The risky shift phenomenon  The procedural effects Interpersonal decisions Organizational decisions Group decisions
  40. 40. Group decisions Risky shift  Groups tend to be more extreme than individuals in their willingness or unwillingness to endorse risky decisions  Explanations :  Diffusing responsibility  Evoking Social Values  Majority Rule Interpersonal decisions Organizational decisions Group decisions
  41. 41. Group decisions Procedural effects What may influence the outcomes of group decision making : • Majority rule (straw votes) • Using explicit agenda for meetings • Rules for speaking (recognition by the chair, turn talking) • Voting procedures (secret ballot, show of hands) • Criteria for arriving at a decision Interpersonal decisions Organizational decisions Group decisions
  42. 42. Group decisions Groupthink • Examination of group consensus in decision making done by Irving Janis (1972) • Groupthink : an overemphasis on consensus and a consequent failure to critically evaluate assumptions and options when the group is highly cohesive Interpersonal decisions Organizational decisions Group decisions
  43. 43. Group decisions Groupthink Symptoms Stereotyping of oppositions as : Self-censorship enemy, weak, evil or stupid Censorship of Unanimity and others Group Morality Illusions of Direct pressure invulnerability, unanimity and groupthink to keep errant members in line morality Interpersonal decisions Organizational decisions Group decisions
  44. 44. Group decisions Consensus and confidence • Consensus is one thing, but actually believing (confidence) in the correctness of the decision is another thing because subsequent support of the decision implementation is dependant upon it Interpersonal decisions Organizational decisions Group decisions
  45. 45. Ways of looking at confidence… The confidence of individual decision makers in their group’s decision the confidence in that decision arrived at by the group as a whole Interpersonal decisions Organizational decisions Group decisions
  46. 46. Be careful !!! • Using groups in organizational decision making permits pooling of information and contributes to more informed and better decisions But • Examinations of information sharing in groups shows that group discussion tends to focus on what is known by everyone, and uniquely held information tends to be ignored Interpersonal decisions Organizational decisions Group decisions

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