OWT 222 Group Decision Making

Group Decision Making - The Rational Model
1. Define Problem
  1. Set Goals
    1. Generate Comprehensive list of Alternatives
      1. Gather relevant info
        Evaluate alternatives
        Choose Best
        IMPLEMENT - MONITOR - EVALUATE
Latent Functions of 'Rational' Decision Making & 'Systematic Planning'
1. Symbolic Functions
2. Sidetracking
3. Fulfills 'Serendipitious' Functions (Keeps analysts occupied)
  1. Serendipitious = Occurring by chance in a beneficial way
Thinking Fast & Slow - D. Kahneman (2011)
1. System 1 & System 2
  1. The central thesis is a dichotomy between two modes of thought: "System 1" is fast, instinctive and emotional cant be switched off but it's the "secret author of many of the choices and judgments you make"inking;
    1. System 1 - logical assumptions of economic rationality that do not reflect people’s actual choices, and does not take into account behavioral biases.
      1. jumps wildly to conclusions and it's subject to a fantastic suite of irrational biases and interference effects (the halo effect, the "Florida effect", framing effects, anchoring effects, the confirmation bias,
        The general point about the size of our self-ignorance extends beyond the details of Systems 1 and 2. We're astonishingly susceptible to being influenced – puppeted – by features of our surroundings in ways we don't suspect. One famous (pre-mobile phone) experiment centred on a New York City phone booth. Each time a person came out of the booth after having made a call, an accident was staged – someone dropped all her papers on the pavement. Sometimes a dime had been placed in the phone booth, sometimes not (a dime was then enough to make a call). If there was no dime in the phone booth, only 4% of the exiting callers helped to pick up the papers. If there was a dime, no fewer than 88% helped.
  2. System 2 takes over, rather unwillingly, when things get difficult. It's "the conscious being you call 'I'", and one of Kahneman's main points is that this is a mistake. You're wrong to identify with System 2,
    1. "System 2" is slower, more deliberative, and more logical.
  3. 2 systems of decision making which need to be balanced Poor decision making is lead from in proper balance of the two
2. People do not follow the difficult and bounded rational model- we strive to be rational when decision making but we aren’t always
3. Key Biases & Illusions
  1. Illusion of Validity
  2. Focusing Illusion
  3. Endowment Effect
    1. In behavioral economics, the endowment effect is the hypothesis that people ascribe more value to things merely because they own them
  4. Confirmation bias
  5. Framing Effect
    1. The framing effect is an example of cognitive bias, in which people react to a particular choice in different ways depending on whether it is presented as a loss or as a gain
Hidden Traps in Decision Making - J. Hammond (1998)
1. The Anchoring Trap - The anchoring trap leads us to give disproportionate weight to the first information we receive.
2. The Status Quo Trap - The statusquo trap biases us toward maintaining the current situation--even when better alternatives exist.
3. The Sunk Cost Trap - The sunk-cost trap inclines us to perpetuate the mistakes of the past.
4. The Framing Trap - The framing trap occurs when we misstate a problem, undermining the entire decision-making process
5. at every stage of the decision-making process, misperceptions, biases, and other tricks of the mind can influence the choices we make. The traps can work in isolation or in concert. The best protection against all psychological traps is awareness. They advise taking action to understand and avoid psychological traps.
  1. sometimes the fault lies not in the decision-making process but rather in the mind of the decision maker. The way the human brain works can sabotage the choices we make
Framing Bias - Bazerman 1988 (47-48)
1. PLAN A
  1. THIS PLAN WILL SAVE ONE OF THREE PLANTS AND 2000 JOBS
2. PLAN C
  1. THIS PLAN WILL RESULT IN THE LOSS OF TWO OF THE THREE PLANTS AND 4000 JOBS
Climate Change as Predictable Suprise - Bazerman (2006)
1. Positive illusion: Optimism, Control - We can sort it out when problems arise
2. Egocentrism (Veil of Ignorance)
3. Overly Discounting Future
Heuristics - Kuhnberger (2002)
1. Heuristic refers to experience-based techniques for problem solving, learning, and discovery that give a solution which is not guaranteed to be optimal
2. 1) Heuristcs
  1. Cognitive Shortcuts
    1. Quick & dirty tricks that may achieve efficiency by risking failure
3. 2) Heuristcs as Biases
  1. Avoidance by normative education
  2. World is too complicated, mind simplifies it so frequent errors in results
4. 3) Fast & Frugal Heuristics
  1. Adaptive Rationality
  2. World is too complicated, leads to correct solutions at lower costs
  3. Recognition Principle
  4. Do 'no harm'
  5. Framing Bias
5. Cognitive shortcuts: not going through the rational model Risking failure more but if it pays off it can be effective The rational model is an ‘ALGORITHM’(step by step procedure for calculations to solve a problem) “Quick and dirty tricks”
Symbols of Defective Decision Making
1. Incomplete survey of Objectives & alternatives
2. Failure to examine Risks of prefered choice
  1. Selective Bias in information search & processing
    1. Failure to work out contingency plans
Symptoms of Groupthink - Jannis & Mann 1977
1. Stereotyping of outsiders
  1. Illusions of invunerablility
    1. Individual self-centreship
Computer Mediated Group Decision Making
1. Longer time Periods
2. More equal Participation
3. Riskier Decision

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