Interpersonal, Organizational, And Group Decisions D1

Sharif University of TechnologyGraduate School of Management and Economics

interpersonal,organizational and groupdecisions

Possible effects of decisions On Others

Anticipate how they might React

Sense of Fairness

You must Cooperate with others to reach your own

ends

Interpersonal decisions Organizational decisions Group decisions

Decision making is

a social activity

Interpersonal Decisions

Both prisoners care about the other player and try to anticipate what the other prisoner will do.

Behavioral Game Research

Prisoner's Dilemma



Prisoner's Dilemma

BSilent Confess

ASilent

A 6 monthsB 6 months

A 10 YearsB goes free

ConfessA goes freeB 10 years

A 5 YearsB 5 Years


Making decisions in Light of Assumptions about other player decision



The Centipede Game

Game theory : Player A must stop on the first leg

By contrast, players do not stop early!

The point: Trust long enough to build up the pay offs, but not so long that the other player stops first


The Centipede Game


Mathematical approach to decision making

Decision making takes place in Social Environment

Players are Rational strictly Self-interested whose behavior solely

determined by the Pay-offsTempered by judgments about what the other

player(s) might do


Game Theory


Behavioral Game Research determines how human beings react

Attention is directed toward two non-economic factors: fairness & cooperation


Behavioral Game Theory



Fairness

Players take into account fairness (as opposed to Game Theory Assumptions)

Player A chooses one distribution and negotiates with BIf player B doesn't agree, neither player receive anything


Example: Distribution of a Resource A: 4 A: 5 A: 12 B: 10 B: 5 B: 0

The Theoretical Solution: Player A chooses the largest total payoff (4, 10) and negotiates with B to increase it

In Reality:

Players go for what they perceive to be the fair distribution


Fairness


No Negotiation for side payment

The Theoretical Solution: Player B accepts any amount greater than zero

In Reality: Players pursue fairnessB doesn't accept less than 20% of the payoffA doesn't offer less than 40%


Ultimatum Game


a village has a common pasture that can support only n cows

If a villager adds one cow, he has 2 slightly unhealthy cows rather than 1 healthy cow


Dilemma of the Commons


In Reality:

People tend to avoid taking the self-interested position of a free rider

People are sensitive to economic factors but impose their own standers of fairness and cooperation


Cooperation


Behavioral Negotiation Research

Negotiation: A process in which two or more players decide what they give & take in an exchange between them.

Assumptions:

Players presume they have conflicting interests Communication is possibleCompromise is possiblePlayers may make provisional offers & counteroffersOffers & counteroffers do not result in outcomes until accepted by both players



Negotiations can be about:

Distributive Bargaining: Dividing some fixed amount of a resource

Takes place when players do not have compatible interests

Each player tries to maximize his/her gains at the expense of the other player



Integrative Bargaining: Adding to the resource

Takes place when players have at least some compatible interestsEach player tries to maximize the joint profit


Two people negotiating over the distribution of a basket of oranges

One wants the juice and the other wants the peels

The integrative agreement is the optimal solution


Integrative Bargaining


Cooperation is generally necessary in integrative bargaining


Cooperation

THEREFOREif fairness & cooperation are ignored, negotiations often reach an impasse.


Organizational decisions

Organizational decisions

organization’s personnel perceives problems differently

Coalition and power differentiation between units


Complexities of studying organizational decisions:

ORGANIZATIONAL MODELS

• Rational Model

• Information Model

• Structural Model

• Garbage Can Model

• Participation Model


One paramount Goal Ultimate Information & Enough Cognitive Ability The optimal course of action using appropriate

normative analysisRationality

Analysis

Orderliness

Maximization


The Rational Model


Limited Cognitive

Ability

Handling Limited

Information at a Time

Resource Constraints SATICFICING

option

Only 20% of the time are new options sought


The Information Model

Using only part of the information that is potentially available to reach a solution


Limited Information

Processing and Analysis Capacities

of Individuals

Properly structuring the organization


The Structural Model


disadvantages

Problems with Agreement about the organization’s goals

Lack of concentrated control over Implementation

Instrumentalism

Changes cannot quikly be made The process become unduly conservative




disadvantages:



Diversity of

interestsconflicts Power issues

Limited View


Solution:

Meta decision making

Problems

Solutions

Participants

Choice Opportunities

Organization = Organized Anarchy


The Garbage Can Model


Member Participation

Better Decisions?

The pool of resources?

Greater confidence in result?

Greater satisfaction?


The Participation Model



The Participation Model


Not better decisions in quality

Reduced productivity

Greater confidence in results

Greater acceptance on the part of participants

Greater commitment to the implementation

Groupdecisions

Group decisions

Three areas in decision research:

Participation

Option Generation

Consensus and confidence


• The organization’s members can participate to different degrees in managerial decision making

A1

A2C

1C2

GMor

e P

arti

cip

atio

n


participation


1. The quality of the decision is important2. The leader possesses the expertise and information

necessary to make the decision alone3. The problem is clearly structured4. Member acceptance and commitment is critical to

successful implementation of the decision5. An autocratic decision by the leader will be accepted by

members6. Members are motivated by organization’s goals rather than

their own agendas7. Members are likely to be able to reach consensus

Group decisions

participation

Problem characteristics


1. Members have sufficient information to make a quality decision

2. Time constraints preclude involvement of members in the decision

3. It is prohibitive to bring together geographically dispersed members for group participation

4. The decision must be made quickly5. It is important to foster member development through

participation

Five More Situational Factors

Group decisions

participation


Idea Generation

Idea Evaluation

Free discussion and exchange of ideasMore cautious and less imaginative

1957, A.F.Osborn published his book about

“Brainstorming”

Group decisions

Option generation


1. Criticism must be withheld during the generation stage so participants are not discouraged from contributing novel ideas

2. Odd, even crazy, ideas are encouraged so that unique, unapparent options can be discovered

3. The more ideas, the better because quantity increases the chances that a good option will appear

4. Using others’ suggestions as a source of ideas about options is acceptable (Piggybacking)

Group decisions

Option generation

Rules of brainstorming


• Usual measure of brainstorming effectiveness :– Number of generated ideas (Group vs. independently)

– Creativity of the ideas

• An extensive body of research shows that evaluative groups are more productive than supportive groups

Brainstorming is seldom more effective than individuals

What else in brainstorming…

Group decisions

Option generation


Two areas of interest : The risky shift phenomenon The procedural effects

Group decisions



Groups tend to be more extreme than individuals in their willingness or unwillingness to endorse risky decisions

Explanations :Diffusing responsibilityEvoking Social ValuesMajority Rule

Group decisions

Risky shift


What may influence the outcomes of group decision making :• Majority rule (straw votes)• Using explicit agenda for meetings• Rules for speaking (recognition by the chair, turn talking)• Voting procedures (secret ballot, show of hands)• Criteria for arriving at a decision

Group decisions

Procedural effects


• Examination of group consensus in decision making done by Irving Janis (1972)

• Groupthink : an overemphasis on consensus and a consequent failure to critically evaluate assumptions and options when the group is highly cohesive

Group decisions

Groupthink


groupthink

Stereotyping of oppositions as : enemy, weak, evil or stupid

Illusions of invulnerability, unanimity and

morality

Self-censorshipCensorship of othersDirect pressure

to keep errant members in line

Unanimity and Group Morality

Symptoms

Group decisions

Groupthink


• Consensus is one thing, but actually believing (confidence) in the correctness of the decision is another thing because subsequent support of the decision implementation is dependant upon it

Group decisions



Ways of looking at confidence…

The confidence of individual decision

makers in their group’s decision

the confidence in that decision arrived at by the

group as a whole


Be careful !!!

•Using groups in organizational decision making permits pooling of information and contributes to more informed and better decisions

But


Interpersonal, Organizational, And Group Decisions D1

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