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Decision making process
Decision making process in management
Decision making process
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ZAPS 2.0
The final ZAPS 2.0 assignment for this class is the decision making experiment, focusing on what influences us when picking one option out of many. The experiment opens up that as simple as this process may seem, there are many processes and influential factors that go along with decision making. Up until recently, psychologists and economists theorized that most people utilized expected utility reasoning, which is taking in a form of “expected gain” and making simple decisions based on projected gains weighed against the possible costs, and simply choosing what results in the highest expected gain. Completing this experiment included answering a series of questions that strived to prove our fallible decision making--where under
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In general, cognitive psychology zeroes in on the processes at work between sensation and behavior. The decision making module in ZAPS is a great example supporting the notion that humans are not rational thinkers. Statistically we were asked the same questions and given the same options and statistical outcomes. However, as a class we gave different answers to the same scenarios. Decision making is the in-between transition converting sense into action, and it is this in-between that produced the changes in our answers to essentially the same questions. Cognitive psychology is used day to day, hence this ZAPS experiment applies to ordinary life as well. As discussed in class, surveys can take advantage of principles of framing and anchoring to bias answers, whether on purpose or inadvertently. As scientists it is our responsibility to use this knowledge and make our bias-free experiments. Overall the decision making ZAPS exercise was extremely useful in connecting what we learned in class regarding phenomenon to raw data, and demonstrating how relevant these phenomenons are in day to day
In the course of writing this paper I learned about the way the human mind can be manipulated by very simple things, and when it is discovered it is often too late. There are smart gamblers who do win, but the majority don’t think and wind up spending incredible amounts of money.
In order to prove that snap-decisions can actually be helpful in everyday situations, Gladwell includes a variety of studies and statistics. He describes an experiment in which participants were asked to gamble and choose between either a red or blue card. The game was designed in such a way that picking blue cards would be the only way to consistently win money. Although participants were consciously oblivious to this fact until around the fiftieth card, Gladwell explains how “Iowa scientists found that the gamblers started generating stress responses to the red decks by the tenth card, forty cards before they were able to say that they had a hunch about what was wrong with those two decks” (15). The study is a perfect example of what one’s unconscious- in this case demonstrated through a person’s sweat glands- can pick up on before our mind is consciously aware of it. Gladwell includes a variety of studies throughout his book, ranging from the effects of asking a student to identify their race before an exam, to how quickly a person walks down a hall after being “primed” with words associated with being old. Each further backs up his claim and proves how much power the unconscious holds, as well as what can come when society puts that power to
benefits. When we make a decision we weigh up the costs and benefits and choose
The development of expertise in avoiding preference reversal, then, would have to involve the circumvention of the compatibility effect. One possible way in which this could occur would involve subjects consistently selecting either payoff or probability as the critical factor in both choice and pricing conditions. By adopting a strategy of maximizing the chance of any payoff in both the choice and pricing condition and giving that option the higher rating on both scales, preference reversal would be avoided. Conversely, considering only the greatest potential for gain in each condition would have the same effect.
Economics is the social science that studies the behavior of individuals, households, and organizations, when they manage or use scarce resources, which have alternative uses, to achieve desired ends1. Economic reasoning is the process by which analysts study people. It has been concluded that people are molded by characteristic decisions. People choose. They seek by their choices to obtain the best possible combination of costs and benefits. All choices involve costs. In any decision, there is a cost. The opportunity cost is the most desirable alternative we don’t choose. People respond to incentives in predictable ways. People can be expected to pursue rewards. If there is a two for one sale more people will come in the store.
Rational choice theory, developed by Ronald Clarke and Derek Cornish in 1985, is a revival of Cesare Becca...
Psychology is the scientific study of the mind, brain, and behavior. In psychology, and all of the other sciences, relying on opinions is abandoned in order to find out which explanations best fit the evidence or data given. Science continually forces us to question our findings and conclusions. Over time, psychology has advanced greatly and a main reason for such progressiveness is because of the change in the research model used.
The Paradox of Choice has multiple points that can be considered the big take aways. First, choosing is not an easy procedure in daily life. The consumer must learn to be careful and choose strategically. Second, when making decisions, one cannot expect to get maximum results. Sometimes settling for less is necessary. Finally, the decision maker must account for loss, and be prepared to experience negative results from some decisions.
In Dr. Spencer Johnson’s book, “Yes” or “No”; The Guide to Better Decisions, a young man embarks on a hike with a group of other people. During their journey, they learn to make better and more effective decisions using a system called the “Yes” or “No” system. This seemingly effective system focuses on the need to “focus on the real need” rather than focusing on one’s immediate desire. Dr. Johnson’s method via the anecdotes of the people in the story assist in creating better decisions by demonstrating how the decisions you make will affect you long term rather than the immediate gratification of choosing what seems to be right without any complex analysis of the outcome. This book helps one realize that you can make effective decisions, sooner
Almost everyone in our society engages in economic decision making at some point. Budget constraints influence us all and our economic decision making. In a perfect world, the sum of all our expenses should never exceed the availability of our money. The basis of economic decision making is one’s desire to maximize benefits while minimizing costs. “Economist reason that the optimal decision is to continue any activity up to the point where the marginal benefit equals the marginal cost – in symbols, where MB=MC.” Hubbard, R.G. & O’Brien, A.P. (2013).
Individuals make economic decision based on a variety of reasons. The rational is based on each individual’s need or desire for a commodity. People go through several decision-making processes before making the final decision and are often not conscious of the process. Obviously, decision- making covers a wide area, involving virtually the whole of human action. Often people are not conscious of the process.
What is subjective expected utility (SEU)? Subjective expected utility (SEU) is the choices we make in everyday that can benefits us to a greater or positive position in life. This theory is basically saying that we do not merely become a criminal because we want to; it is the choices of everyday life we make. Criminals choose a different path and don’t think the after action or what will happen to them after the crime is committed. It’s like when a person is going to a grocery store and he does not have money to feed his children and wife he has a chose of either to let his family starve or shop lift and endure all the consequence if he gets caught. Subjective expected utility (SEU) is the choices we make or the understanding why make these bad choices just to have a more money or better life despite the consequence or the probability of being caught, as well as the cost of the expected level of penalty have to be considered.
People tend to prefer certainty when considering gains and taking risks when considering loses (Rothman, Salovey, Antone, Keough & Martin, 1992). The underlying assumption that people respond differently to positively and negatively framed information has been applied to a broad range of decision problems ranging from health to food to saving lives. For instance, Meyerowitz & Chaiken (1987) demonstrated that exposure to negatively framed information promotes breast
In simplistic form, Expected Utility Theory (EUT) is a mathematical decision making process. Conventionally defined, it is a process where “a decision maker (DM) chooses between risky or uncertain prospects by comparing their expected utility values, i.e., the weighted sums obtained by adding the utility values of outcomes multiplied by their respective probabilities” (Mongin,2007, p.1). Simply put, a decision maker correlates the relative of risk or probability versus reward or potential outcome across multiple scenarios. The result, called the expected utility (U), is always represented as relative numerical score which can be used by managers use the resulting in a rational decision making process. Most often, scores are compared under the theory of maximization, with the highest relative U being the most correct decision (Lengwiler, 2008).
Langdon, K. (2001). Smart things to know about decision making. Retrieved December 9, 2007, from eResourse.