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Managerial Decision Making

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The textbook used for this course is: Judgement in Managerial Decision Making; 6th Edition, Max H. Bazerman.

Apply decision analysis to the truck drivers' negotiation problem (file attached) and advise the participants on their decision problem. Your analysis should be more than a number crunching exercise. You will also want to include a discussion of how negotiator cognition colors (or could color) this issue.

1. Clearly state any assumptions you have made.

2. Discuss in detail the strengths and limitation of your analysis in the context of the truck drivers' dispute.

The purpose of this assignment is to write a memo with any supporting details (such as a model of the negotiation problem) as an attachment.

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The numbers that have been given can be reduced to a common denominator for the purpose of calculation.
For the government it is assumed that if imposing the fuel tax is as important as 60%, the reduction of the number of driving hours is as important as 100%.

We take 100 to be 1.0.


For the government imposing the fuel tax is 60% important that is 0.6. In addition avoiding reduction of charges is important to the extent of 40%. That is 0.4. In case serious charges are made the number will be 1.00 and if that is multiplied by 0.4 we get the value 0.4. In addition, if there are minor charges made the value to the government is 0.9 if we multiply it by 0.4 we get. 0.36.

For the truck drivers avoiding fuel tax is 10% of the value of avoiding reduction of working hours. The avoiding of reduction of working hours is taken to be 1. Then allowing 11 hours of work will be 100 that is 1.0 X 1.0 = 1.0. ...

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Managerial Decision Making: Example Problems

Sources need to be referenced at the end of the written response.

1. Discuss your most recent decision to purchase a major item i.e. entertainment center, automobile, home, etc. In what way did the acquisition utility or the transactional utility come into play for you?

2. Explain the availability, representativeness, and affect heuristics. In your answer, compare the three and discuss the positive and negative aspects of each.

3. Lately, the stock market has experienced unprecedented volatility - wild ups and downs. Discuss how stock trading has created a lot of this volatility and the decisions for stock traders to buy and sell wildly in terms of hyperbolic discounting.

4. Bernard Madoff, a once highly regarded member of the Wall Street community, recently pleaded guilty of running a $50 billion ponzi scheme. Research the driving forces behind his seemingly unethical behavior and discuss your findings. How did favoritism and bounded ethicality come into play in this case?

5. Read the case Fairness in Punishment from the link: http://www.solutionlibrary.com/business/management/managerial-decision-making-fairness-in-punishment_7nel. Discuss the Decatur School Board's decision to adopt a "no tolerance on school violence" in terms of fairness. How did implicit attitudes, perhaps, influence the school board's decision to punish such a disproportionate number of African-American students?

6. Recently, the American International Group (AIG), a global insurance and financial services organization, accepted billions of dollars from the United States Government in order to remain solvent and in operation. After receiving this money, the organization decided to pay over $160 million in bonuses. Discuss the ethical problems associated with this decision. Could in-group favoritism play a role in this decision? If you were the CEO, what decision would you have made?

7. Research the subject of the Enron and Arthur Andersen relationship. Discuss your findings in terms of the application of ethics in the various decisions made by the Enron and Arthur Andersen teams. How did bounded ethicality play a role in these decisions?

8. Eventually, the United States and Iran will have to sit down and negotiate the use of nuclear power. Discuss the issues that could be involved in such a negotiation. What cognitive mistakes might be made by the negotiators in this case? How could these mistakes be overcome in order to reach an acceptable agreement?

9. Assume that you are part of a mediation team that has been brought in to help overcome an impasse between negotiators who are deliberating the use of embryonic stem cells for a research project. The decision makers are polarized along ethical and religious lines. Since this is a potentially emotional issue, what would you do in order to break this impasse? How could the fixed pie concept come into play in this situation?

10. Recently, General Motors and the United Auto Workers had to sit down and negotiate a change in the labor agreement, in order to keep the company from going bankrupt. Consider what might have gone on during these negotiations and discuss how framing might have been used, and what issues might have been discussed, in order to reach an acceptable agreement.

11. Research Kurt Lewin's model for change. Then, discuss the three-staged de-biasing process (unfreezing, change, and refreezing) and explain the mechanisms that make each of them hard to implement. In your discussion, include how you believe such a process can help you, personally, to improve your decision-making.

12. Describe the concept of analogical reasoning. Then, considering your last purchase decision, discuss how analogical reasoning could have helped you to improve your decision and increase your satisfaction with the product or service that you purchased.

13. Bazerman and Moore suggest that we should understand the biases of others. Discuss this concept in terms of why it is important for us to understand other peoples' biases. In your discussion, focus on how you might be able to improve your decision-making in a group setting.

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