Objectives:

After today's session, you should be able to:

1. Describe the general analytical model of decision making

2. Distinguish between programmed and non-programmed decisions, certain and uncertain decisions.

3. Explain the differences among rational-economic, administrative, and image theory as approaches to decision making.

4. Describe how the following lead to distortions in decision making: framing, availability heuristic, representative heuristic, anchoring, overconfidence, confirmation bias.

I The general analytical model of decision making: Conception of decision making as a series of analytical steps

A. Problem identification

B. Define objectives

C. Make a pre-decision

D. Generate alternatives

E. Evaluate alternatives

F. Make a choice

G. Implement choice

H. Monitor and evaluate choice

II. Types of decisions

A. Programmed vs. non-programmed decisions

B. Certain vs. uncertain decisions

III. Models of decision making

A. Rational - economic model

B. Bounded rationality model

C. Image theory

IV. Imperfect decisions

A. Framing effects

B. Availability heuristic

C. Representative heuristic

D. Anchoring

E. Confirmation bias

F. Overconfidence