Individual Decision Making
Making a Decision
Leaders face two tasks in dealing with threats & opportunities: Make & Implement decisions
Making a decision is about selecting the best possible option to get to your goals it involves:
- Goals (Outcomes) you want to achieve
- Options (Actions) for getting you there
Decision analysis is a systematic framework for selecting actions for getting to goals. Uncertainty makes decision-making difficult
It consists of:
- Action Options i.e. what are the choices
- Uncertainty (associated with each action outcome) & Probability
- Outcomes of actions
Heuristics allow us to makes decisions. Many times we either have to fill in the blanks when there is no information or limit considerations when there is too much information.
In process of using heuristics, our subjectivity can create bias i.e. anything based on tendencies or something that influences without us realizing it.
One such heuristic is Anchoring. It is being influenced by a reference number when estimating. For example, a person looking to buy a used car may focus excessively on the odometer reading and the year of the car, and use those criteria as a basis for evaluating the value, rather than considering how well the engine or the transmission is maintained.