The document discusses several key aspects of decision making including: 1) The rational decision making model involves identifying problems, criteria, alternatives, and selecting the optimal alternative. 2) Decision making involves varying degrees of certainty, risk, and uncertainty depending on how much is known about outcomes. 3) Bounded rationality recognizes that people have limited cognitive abilities and use heuristics and "satisficing" to make feasible rather than optimal decisions. 4) Well-structured problems have clear solutions while poorly structured problems are complex with ambiguity.

1. Foundations of Decision Making

6. Criteria and Weight in Car-Buying Decision (Scale of 1 to 10) CRITERION WEIGHT Price 10 Interior comfort 8 Durability 5 Repair record 5 Performance 3 Handling 1

7. Assessment of Car Alternatives INITIAL INTERIOR DURA- REPAIR ALTERNATIVES PRICE COMFORT BILITY RECORD PERFORMANCE HANDLING TOTAL Jeep Cherokee 2 10 8 7 5 5 37 Ford Mustang 9 6 5 6 8 6 40 Mercedes C230 8 5 6 6 4 6 35 Pontiac Grand Am 9 5 6 7 6 5 38 Mazda Tribute 5 6 9 10 7 7 44 Dodge Durango 10 5 6 4 3 3 31 Volvo S60 4 8 7 6 8 9 42 Isuzu Axiom 7 6 8 6 5 6 38 BMW 325 9 7 6 4 4 7 37 Audi A6 5 8 5 4 10 10 42 Toyota Camry 6 5 10 10 6 6 43 Volkswagen Passat 8 6 6 5 7 8 40

8. Weighting of Vehicles (Assessment Criteria X Criteria Weight)

12. Rational Decision Making Problem Clarity Single Goal Known Options Clear Preferences Constant Preferences No Constraints Maximum Payoff Assumptions of Rational Decision Making

15. Three Elements of Creativity Creativity The ability to produce novel and useful ideas Exhibit 4.7 Source: T. M. Amabile. “Motivating Creativity in Organizations,” Califormia Management Review (Fall 1997), p. 43. Copyright © 1997, by The Regents of the University of California. Reprinted by permission of the Regents.

18. A Model of Bounded Rationality Ascertain the Need for a Decision Simplify the Problem Set “ Satisficing ” Criteria Identify a Limited Set of Alternatives Compare Alternatives Against Criteria Expand Search for Alternatives Select the First “Good Enough” Choice A “ Satisficing ” Alternative Exists Yes No

19. Escalation of Commitment Representative Heuristic Availability Heuristic Common Errors in Decision Making

24. How Do Problems Differ? Well- Structured Programmed Decisions Poorly Structured Nonprogrammed Decisions

27. Making Programmed Decisions Guiding Policies Specific Rules Sequential Procedures

31. Integrating Decision Making Well-Structured Level in Organization Top Poorly Structured Type of Problem Lower Programmed Decisions Nonprogrammed Decisions

33. Analytic Conceptual Behavioral Directive Rational Intuitive Way of Thinking High Low Tolerance for Ambiguity Decision-Making Styles (I)

40. Strengths of Individuals Strengths of Groups Consistent Values Clear Accountability Speed Individual Versus Group Decision Making Increased Acceptance Higher Quality Decisions Input and Diversity

41. How to Improve Group Decision Making Brainstorming Nominal Group Technique Electronic Meetings

43. National Culture and Decision Making Degree of Risk Decision Style