Decision-Making, Heuristics and Biases in Business
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.