Unit Assessment

Unit Assessment

1. Decision making can be described as the process of selecting between a set of alternatives to achieve the best outcome. Decision making can also be described as a cognitive process since it involves perception, reasoning, and thinking (Mauboussin, 2010). Boundaries establish the approach in which the criteria of the decision should follow. They also elaborate on the various aspects affected by the decision on the decision-makers and how the realms will be affected.
2. System 1 thinking is associated with an individual’s intuitive thinking. It can be described as quick, emotional, and automatic. Most of the choices we make on our day to day basis; therefore, use system one thinking (Mauboussin, 2010). System 2 thinking, on the other hand, is based on logic. Unlike system one thinking, system two thinking is slower and requires more effort. A prototype of system two thinking is defined in the logical steps pone takes in rational decision making.
3. Alternatives in decision making are the options available for the decision-maker to pick from. Each of these alternatives provides a different implication on the given situation; hence, there are good and bad alternatives (Mauboussin, 2010). It is the decision maker’s duty, therefore, to evaluate among all the alternatives or options available and come up with the one that will have the best implication that will help in achieving the organization’s objective.

Three forms of Overconfidence

Overconfidence can be defined as an excessive belief in one’s abilities judgment.  An individual tends to overestimate their ability to project or regulate future outcomes. Overconfidence is the cause of the biases and a significant factor that results in poor decision making. Most of the counterintuitive consequences in fields such as economics have been ascribed to the decision maker’s overconfidence. According to Bazerman & Moore (2018), the three main forms of overconfidence are an overestimation, over placement, and precision.

To overestimate someone or something is to think that they or it is bigger in relevance or amount than it is. Overestimating can be described as a form of overconfidence in the sense that the person exhibits a higher sense of regard on something than it merits. Through the overestimation of one’s ability, they may end up under preparing for a particular event and thus resulting in poor performance. An instance of overestimation in real life is when an individual overestimates their skill on a particular task and end up underperforming due to their inadequacy to deliver.

The second form of overconfidence is over placement, which can be defined as the perception that one is better than other people. Over placement in our day to day life can be seen when a team member assumes to undertake an assignment in the belief that they are best suited over their team members. In the event that they underperform in their assigned task, the poor decision making results from over placement, which is, by definition, a form of overconfidence. The third form of overconfidence, as defined by Bazerman & Moore (2008), is over-precision, which is the excessive conviction that one knows the truth. Through overprecision, an individual can anticipate a scenario that may not be precisely as projected. In business, for example, the manager may not anticipate future problems on the assumption that everything will be fine.

Rational Decision Making

The word rationality refers to the process of decision making that results in the best outcome, and that is in accordance with the values of the decision-maker and the risks that they may take. A rational decision-making process is an approach defined by six steps for making sound decisions. The first step of the rational decision-making model involves defining or detailing the problem. At this step, the exact problem is identified and described in detail. It is the most crucial step of the process since if a problem is not accurately identified and defined, the entire decision making will be compromised.

The second step involves the generation of every possible solution. At this step, the decision-maker is supposed to expand their pool of alternatives through the gathering of information relevant to the problem. It is a brainstorming step where every stakeholder’s contribution should be put into consideration. The third step involves the establishment of standards that will define the failure or success of the alternatives. At this stage, the threshold should be clarified that will enable the decision-maker to determine which of the solutions can address the problem. The fourth step of the decision-making process entails the selection of the best alternative. The answer is generated based on the developed criteria of evaluation of each outcome.

The fifth stage involves the actual implementation of the generated solution and the preliminary overseeing of the results. This step can also be described as the construction part of the rational decision-making process. The last step entails the monitoring and evaluation of the outcomes of the implemented solution. This step is the longest in the decision-making process as it consists of both secondary and final overseeing of the results of the site. After the favorable results have been realized, future decisions are modified based on the assessment of the outcomes of the process.