Purchase Solution

Decision-Making, Heuristics and Biases in Business

Not what you're looking for?

Ask Custom Question

Think about a recent business decision you have made that was either a success or a failure. Your supervisor asked you to email him/her a self-evaluation of this decision as part of your yearly evaluation. You are to be as objective and open minded as possible. Analyze your decision using Bazerman's six steps as a guide: define the problem, identify the criteria, weigh the criteria, generate alternatives, rate each alternative on each criterion, compute the optimal decision. Make sure your email addresses the following issues:
Were there any discrepancies between the calculated "optimal" decision and your actual (or favored) decision? If so, what might account for the discrepancies?
What problems, if any, did you encounter when completing the steps? (For example, were you able to compute an optimal decision? If not, why not?)
Are there any weaknesses in the "fully rational" model of decision-making? If so, what are they?
Source:

Bazerman, M. H. (2006). Judgment in Managerial Decision Making (6th ed.). New York: Wiley.

Problem: Think up an important business decision. Your supervisor had asked that you expand on your self-evaluation by identifying at least two judgment issues that you had to address. Write a memo to your supervisor describing these issues. Explain how you addressed them and the degree to which your decision was based on expedience and/or reflection. Potential issues include: bias, or ethical issues related to the availability heuristic, bias related to the representative heuristic, bias related to anchoring and adjustment, avoiding uncertainty, framing effects, positive illusions, egocentrism, and regret avoidance.

Note: Just address the "potential issues.

Purchase this Solution
Solution Summary

This solution invents two important business decisions and evaluates them by identifying judgment issues (e.g. availability heuristic, biases, uncertainty, framing effects, illusions, egocentrism, and regret). It then looks at how to facilitate discussion of these issues in a company and checks that can be performed to avoid them next time. 1397 words total with references.

Solution Preview

Please see response attached (also presented below). I hope this helps and take care.

RESPONSE:

1. Explain how you addressed them and the degree to which your decision was based on expedience and/or reflection. Potential issues include: bias, or ethical issues related to the availability heuristic, bias related to the representative heuristic, bias related to anchoring and adjustment, avoiding uncertainty, framing effects, positive illusions, egocentrism, and regret avoidance.

I choose the following two examples from the steering committees potential solutions to analyze in terms of these above-mentioned concepts, followed by one possible way to address these issues and judgments made by the steering committee group. I also attached an example, from which I drew which you might find as a useful resource:

a. Agri director disagrees that wages are not adequate - "after all we're using migrant workers" Also argued that JRT provides housing for workers, so that should count as compensation (Cultural and racial bias toward migrant workers: ethical issues of discrimination in the workplace potentially related to the availability heuristic; framing effects).
b. IT manager commented he's been fighting for budget to improve communications but has been denied funding (Bias towards IT importance - bias related to anchoring and adjustment)
Explain how you addressed them and the degree to which your decision was based on expedience and/or reflection:

This is one way you could address the two biased judgments of the steering committee (and your judgments of them) based on a reflective problem-solving model. You might have to tweak to fit you're your scenario for you final copy. Because biases are involved in the steering committee remarks, you could form a group and use the following problem-solving steps to explore the above biases through brainstorming other possibilities and solutions to the problems:

Problem Solving Tasks:

From this perspective, there are five key subtasks involved in problem solving:

1. Define the problem: Make a list of resources -- people, books, web sites, etc. -- that have some connection to and information about the problem you are trying to solve. Use these resources to clarify any unfamiliar terms or concepts ...

Purchase this Solution
Free BrainMass Quizzes
Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

View More Free Quizzes
Related BrainMass Solutions

  • Judgement Heuristics

    Explain and counter the likely judgment heuristics and biases that might come into play when evaluating alternative solutions to a business problem.

  • Business Systems Development

    Heuristics are experience based techniques that are used for decision making. These heuristics fail because of biases. These are hidden traps. When the technical leader uses heuristics biases creep in and the project is likely to fail.

  • Overcoming Biases and Heuristic

    Biases have blocked my ability to make a rational decision in regard to whether or not to invest into a company.

  • Biases in Decision Making

    546368 Biases in Decision Making - Discuss common biases in decision making. - Explain the roles of emotion and fairness in decision making. - Compare reflective and expedient decision making.

  • Three primary types of heuristics

    In this series, the first part of the discussion is including the explanation of the term 'Heuristic' and its relation with decision making process.// Introduction Heuristics is an important tool that helps in decision making and problem solving

  • Polwalski Manufacturing

    This decision making model identifies three major biases, which lead to a relatively irrational decision making process i.e. availability heuristics, representative heuristic and affect heuristics.

  • Social Psychology: Heuristics and/or biases

    Heuristics is a way for making decisions in a quick and relatively effortless manner.

  • Rational Choice

    Here, we would discuss the one best decision-making model, which is chosen as per the group's consensus.// There are a number of business procedures, decision-making models and heuristics, which are available for any business firm.

  • Heuristics and Bias in Applicant Selection

    There are both legal and ethical implications from making a hiring decision based on a cultural bias, mainly Hispanic in this case.

  • Decision Making

    The senior manager and co-workers' decision making criteria were not in accordance with the ethical norms of business as well as humanity.

View More Related Solutions