Presenters of Chapter 5

David, Jeanne Mae B. Gomez, Mariella Lei Rivera, Melody L.

E.
BSOA 1B BSOA 1B
BSOA 1B
Chapter 5 :

Decision
Making
 Why decision making
matters?
Decision making is important because it is the process
of creating choices by identifying a decision, gathering
information, and evaluating different alternatives.

Decision making matters because it facilitates goal

achievement, problem solving and managing
uncertainty. It also enhances productivity, personal
growth, confidence, and resilient. By honing decision -
making skills, individuals can lead more fulfilling and
successful lives.
 Barriers to individual Decision
Making And Styles of Decision-
Making

Decision-making is challenging due to barriers like

information quality, time, cognitive biases, and common
styles like satisfying, optimizing, intuitive, rational,
combinatorial, and positional.
 Barriers to individual Decision Making

Information- Ralated Barriers

Decision-making is challenging due to barriers like information quality, time, cognitive biases, and common styles like
satisfying, optimizing, intuitive, rational, combinatorial, and positional.

Circumstance and Time-Ralated Barriers

Decision makers face various challenges, including stress from personal or work sources, which can lead to poor
decisions and less objectivity. Recognizing high stress levels can help protect against these tendencies. Time-
restricting factors, such as feeling rushed for time, can also contribute to poor decisions.

Cognitive Biases
Decision makers can be influenced by distorted perceptions, even in favorable circumstances and accurate
information. Managers must understand this to make daily decisions and manage multiple individuals making
assessments and judgements.

Confirmation Bias
Confirmation bias is the tendency to favor information that confirms our judgment, paying more attention to information
that supports our preconceived views. We often accept information at face value, disregarding or diminishing the
significance of contradictory information
Framing Bias
Framing bias is the tendency to present a situation or problem positively, with studies showing that framing a positive
outcome is more influential than a negative outcome, as seen in public health messages.

Hindsight Bias

is the tendency to believe we would have accurately predicted an event's outcome after it is known. This bias is due to our
difficulty recalling the appearance of an uncertain event before realizing its outcomes. We tend to overestimate our
knowledge before reconstructing the past, preferring information that supports our judgment and ignoring or diminishing the
significance of information that contradicts it.

Anchoring Bias
is the tendency to fixate on initial information and fail to adjust for subsequent information, leading to a fixed opinion.

Halo Effect

The halo effect refers to the preference we have towards certain individuals or organizations due to their expertise in a
specific area, often giving their opinions special credence in other areas, such as sports stars' political opinions.
Overconfidence Bias
is when an individual's intuition overrides evidence, leading to overconfidence in decisions. This bias is more prevalent in
organizations where managers and employees are more knowledgeable about an issue, especially when considering issues
outside their area of expertise.

Status-Quo Bias
Decision makers often avoid change, favoring ideas that don't lead to significant changes, neglecting evidence and ideas
that support.

Pro-Innovation Bias
Pro-innovative bias favors new, innovative ideas over status-quo ones, believing they are superior, even if no evidence
supports them as useful or helpful, despite the absence of objective evidence.
 Styles of Decision Making

Optimizing vs. Satisfying

The "fog of war" in business refers to uncertainty, making it difficult for decision makers to analyze complex
issues. Two ends of the spectrum are satisficing and optimizing, with satisficing settling for less-than-perfect
solutions and optimizing collecting data for optimal choices. Management science offers methods for solving
complex problems.

Intuitive vs. Rational

According to Daniel Kahneman, who you’ll read more about in the next section, each of us has two separate minds that
compete for influence. One way to describe this is a conscious and a subconscious perspective. The subconscious mind
is automatic and intuitive, rapidly consolidating data and producing a decision almost immediately. The subconscious
mind works best with repeated experiences. The conscious, rational mind requires more effort, using logic and reason to
make a choice.

Combinatorial vs. Positional

Aron Katsenelinboigen's concept of combinatorial strategy, based on chess, suggests that a player links initial positions
with final outcomes through a series of moves. This approach increases flexibility and adaptability, similar to how a
dominant market share strategy can provide negotiating power even with lesser products.
 Rational Decision Making
vs.
Other Types of Decision Making
Decision-making styles vary among individuals and groups, with a common rational model being widely accepted.
However, contrasting ideas balance the rational aspects of the process, highlighting the importance of
understanding and adapting to different decision-making styles.

The rational decision-making process involves careful, methodical steps :

Step 1: Identify the Problem
Failing to identify the problem can derail the process. It may require serious thought to find the central issue, like finding a reliable
car for commuting to and from work.

Step 2: Involves establishing decision criteria

Considering stakeholder interests, values, and preferences, such as budget, safety, functionality, and reliability, to make a
relevant decision.

Step 3: Weigh Decision Criteria

To prioritize decisions, weight the identified criteria, such as budget, safety, and reliability, alongside other less critical ones, to
ensure the correct decision is made.

Step 4: Generate Alternatives

After identifying the issue, list potential solutions, including common and creative options like car types, public transportation, car
pooling, and ride-hailing services, to decide on the best course of action.

Step 5: Evaluate alternatives

by identifying the most desirable and feasible options, assessing the merits and challenges of each solution.

Step 6: Choose the Best Alternative

After evaluating alternatives, clearly state your decision to avoid confusion. The solution may be a specific option, an adaptation,
or a combination of multiple suggestions.
Data, logic, and facts

Rational decision making involves careful, logical, and data-driven processes, often time-consuming and costly. It's useful
for big decisions with multiple criteria. Evaluation stages require numeric values, and final analysis leans towards the easiest
measure. Executives typically make decisions based on the analysis, ensuring the decision is trustworthy and effective.
Evidence Based Decision Making
Evidence-based decision-making is a method used by HR professionals,
managers, and leaders to make decisions that impact the organization. It
relies on professional opinions, historical da reliable research, and
stakeholder opinions.

Evidence-based decision making (EBDM) is a method that uses research findings

to guide decisions in the justice system.

The NIC's EBDM initiative has three phases: Framework Development, Planning
Process, Implementation, Expansion to Statewide Structure, and Building EBDM
Capacity at the Individual, Agency, and System Levels.
Proof of Success

The emphasis of evidence-based thinking is relying on actual experimentation to demonstrate that a plan does indeed
provide a likelihood of success. By relying on actual evidence of this sort, much of the uncertainty about treatment
practices can be removed.
Data Collection, Sharing, and Analytics

One of the main reasons people have not relied on evidence-based decision making as strongly over the years is
that the evidence simply did not exist or was not accessible. Today, however, the advance of technology has
resulted in previously unparalleled amounts of data that can be collected, shared, organized, and analyzed in ways
never before imaginable.

Descriptive Analytics

This dramatic increase in the availability of data has led to the rapid development and maturation of the field of data
analytics.
Predictive Analytics

This work of projecting future trends is known as predictive analytics, and although it still obviously remains only a best
guess about the future, it is grounded in objective facts and trends and can provide a greater degree of likelihood as a
result.
Thank You!