improving decision making

Marketing Management

Improving Decision Making

Decision Making

ارائه دهندگان:

احسان مدرسعلی صنعتی

Graduate School of Management and Economics 1/26

Graduate School of Management and Economics

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Con.

Introduction

Solution to previous biases

Case (baseball)

Case (Iran’s football)

Case (politics)

Why it takes this amount of time?

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3Graduate School of Management and Economics

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Acquiring Experience and Expertise

Debiasing Judgment

Analogical Reasoning

Taking an Outsider’s View

Using Linear Models and Other Statistical Techniques

Understanding Biases in Others

Strategies forImprovingDecision making

Introduction

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Strategy 1: Acquiring Experience and Expertise

Graduate School of Management and Economics

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Experience (feedback)

Feedback not helps always because1.Delay of outcomes

2.Variability of environment

3.No info of alternatives

4.Uniqueness of decisions

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Strategy 1: Acquiring Experience and Expertise

Graduate School of Management and Economics

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Con.

All conditions must satisfied for using experience

HintCase

• acquiring a company

Conclusion

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Graduate School of Management and Economics

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Strategy 1: Acquiring Experience and Expertise

Expertise

Transferability (compare)

• complementary of experience

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Strategy 2: Debiasing Judgment

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Unfreezing

Change

Refreezing

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Strategy 2: Debiasing Judgment

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Unfreezing

Change

Refreezing

Resistance Against The

Change

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Some ways to unfreeze decision making process

Question current strategy (Quiz and Feedback)

Ready to learn where they went

wrong

Ready to learn how they could have performed

better

Become Receptive to alternatives

Vivid examples

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Strategy 2: Debiasing Judgment

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Unfreezing

Change

Freezing

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Change

Clarifying

Explanation

Reassurance

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Strategy 2: Debiasing Judgment

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Unfreezing

Change

Refreezing

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Revert

back

New comer

Practice and

Frequent

application

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Strategy 2: Debiasing Judgment

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Unfreezing

Change

Freezing

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THOMPSON :

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Strategy 3: Analogical Reasoning

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People learn far more from cases, simulations, and real-world experiences when they are able to take away an abstract form of the learning message.

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Strategy 3: Analogical Reasoning

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•More generalized insight

How the two simulations

related?

•Focus on surface-level characteristics•Apply the message on specific context

Explain the lesson of each one.

Two exercise whit same

lesson

Comparison

Focus on

similarities

Less Sensitiv

e to irrelevant context features

Transferred to new

situations

(different context)

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IDSON:

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Strategy 3: Analogical Reasoning

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Understanding differences ,as well as similarities, across problems may also be a very useful means of transferring knowledge.

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Two version of Monty Hall problem and Two version of Dividing a Pie Problem

Understand the

differences

Generalize the importance of focusing on

others decisions

Generalize the

importance of games role

Without training on Monty Hall problem and Dividing a Pie problem

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Strategy 3: Analogical Reasoning

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Strategy 3: Analogical Reasoning

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What is the optimal level of abstraction that should occur to help people from analogies across problems ?

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Strategy 4: Taking an Outsider’s View

Graduate School of Management and Economics

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Different views to problemsInsider’s view :

the biased decision maker who looks at each situation as unique.

Outsider’s view :more capable of generalizing across situations and identifying similarities.

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Strategy 4: Taking an Outsider’s View

Graduate School of Management and Economics

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Entrepreneurs

Member of consulting team

Kahneman

case

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Strategy 4: Taking an Outsider’s View

Graduate School of Management and Economics

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Why we use

insider?

optimism

overconfidence

Consider all

details

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Strategy 5: Using Linear Models

Graduate School of Management and Economics

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4 above strategies are debiasing our decisions

directly

Linear model is an alternative for human

decisionsWhy we need an alternative?Humans

don’t debiased

completely

always have a rational decision takes big amount of

time

faced with the problem of creating a

decision making

environment

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Strategy 5: Using Linear Models

Graduate School of Management and Economics

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Successful example of using Linear Model

why do linear models work

so well?

• People are much better at selecting and coding information than integrating

• Humans are unreliable in judgments• Additional data (case)

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Strategy 6:Understanding Biases in Others

22Graduate School of Management and Economics

How can we systemically detect

bias in our own decision and those

of others ?

Director of marketing for a retail chain

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Strategy 6:Understanding Biases in Others

Step1 •Select a comparison group

Step2 •Assess the distribution of the comparison group

Step3 •Incorporate intuitive estimation

Step4 •Assess the predicted result of the decision

Step5 •Adjust the intuitive estimate

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Adjusted estimate =Group mean +

Correlation x (Initial estimate –Group

mean)

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Strategy 6:Understanding Biases in Others

We now have a model for adjusting biased decisions in both individual and multiparty context that involves three parts.

Perceive and analyze the context

Distinguish the potential biases

Identify and make the adjustment

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Conclusion

Strategies for improving decision making

Change

Acquiring Experience and Expertise

Debiasing Judgment

Analogical Reasoning

Techniques

Taking an Outsider’s View

Using Linear Models and Other Statistical Techniques

Understanding Biases in Others

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Thank You For Your Attention