Understanding Behaviors and Decision Making in Management
Classified in Psychology and Sociology
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Understand Behaviors > Predict Performance > Enhance Effectiveness
*Replacing Intuition with Systematic Study (Attribute Causes & Effects, Draw Conclusions Based on Scientific Evidence): Provide a Mean to Predict Behaviors
EBM Evidence-Based Management: Managerial Decisions Based on Scientific Evidence
Psychology (Human Behaviors), Social Psychology (People's Influence on One Another in Groups), Sociology (Social Environment & Culture/Group Behaviors), Anthropology (Study of Societies)
Planning (Goals Strategy), Controlling (Organizing Leading)
Group Development: 1. Forming (Purpose, Structure, Leadership) 2. Storming (Conflict) 3. Norming (Expectation of Each Other) 4. Performing (Functional, Working) 5. Adjourning (Temporary Group: Breakup)
Group Think: Group Pressure, Rationalize Away Resistance to Previous Assumptions, Pressure Doubters, Silence = Yes
Group Shift: Change of Group Decision & a Decision Made by a Member (Due to Diffused Responsibility)
Avoid: Minimize Groupthink (Limit Group Size), Actively Seek Input from All Members, Appoint a 'Devil's Advocate', Brainstorming: Conformity Pressure, X Criticism, Nominal Group Technique: Members Operate Independently, Restrict Discussion/Interpersonal Communication
Common Bias on Decision Making
1. Overconfidence Bias (Overestimation of Ability/Performance)
2. Anchoring Bias (Fixate on Initial Info. and Fail to Adjust for Subsequent Info.)
3. Confirmation Bias (Seeking Out Info. That Reaffirms Our Past Choices & Discounting Info. That Contradicts Past Judgments)
4. Availability Bias (Base Judgment in Info. That Is Readily Available)
5. Escalation of Commitment (Staying with a Decision Even When There's Clear Evidence That It's Wrong)
6. Randomness Error Individuals Believe That They Can Predict the Outcome of Random Events)
7. Risk Aversion (Prefer a Sure Gain, Rather Than a Riskier Outcome)
8. Hindsight Bias (Believe Falsely That We Could Have Accurately Predicted the Outcome of an Event After That Outcome Is Already Known)
2. Anchoring Bias (Fixate on Initial Info. and Fail to Adjust for Subsequent Info.)
3. Confirmation Bias (Seeking Out Info. That Reaffirms Our Past Choices & Discounting Info. That Contradicts Past Judgments)
4. Availability Bias (Base Judgment in Info. That Is Readily Available)
5. Escalation of Commitment (Staying with a Decision Even When There's Clear Evidence That It's Wrong)
6. Randomness Error Individuals Believe That They Can Predict the Outcome of Random Events)
7. Risk Aversion (Prefer a Sure Gain, Rather Than a Riskier Outcome)
8. Hindsight Bias (Believe Falsely That We Could Have Accurately Predicted the Outcome of an Event After That Outcome Is Already Known)