MNO2705 CONCEPTS SUMMARY

Table of contents

WEEK 1 (Ethics, Consequentialism, Deontology) 2

WEEK 2 (Moral Disengagement & Persuasion) 5
WEEK 3 Individual-Level Negotiation (Lily) 7
WEEK 4: Multi-party Negotiation 8
WEEK 6 Group Decision Making (Ryssa) 8
WEEK 7: Models of Judgment & Decision-Making I 16
WEEK 8 Models of Judgment & Decision Making II 19
Exam Format 21
WEEK 1: Ethics

Summary: 3 ways to think about ethics - Intuition + Consequentialism (the total

good, LT perspective) + Deontology (categorical imperative + pratical
imperative + golden rule)

1. Basic definitions
● Business Ethics: The study of good and evil, right and wrong, just and unjust
actions in business (etc. Leaders use of moral justifications increases policy support)

● Morality is dyadic (requires 2 parties, 1 causes harm while the other receives harm)

● Rational model of ethical decision making

● Mind Perceptions
- Ambiguous, subjective, and subject to disagreement
- People perceive others’ minds on 2 main dimensions: agency mindset vs experience
mindset
- AGENCY: the capacity to act, plan, and exert self-control
- EXPERIENCE: the capacity to feel pain, pleasure, and emotions
- Stereotypes: creative jobs (etc. painters) are perceived to have high
experience (E) but low agency (A) while management roles are perceived to
have high agency A but low experience E
- Individual differences:
- Psychopathy/Narcissism: If experience is indeed linked to moral
rights, and these individuals ignore moral rights, it could imply that
they don't perceive or understand the experiences of others who
possess moral rights. As a result, their own experiences, particularly
empathy or moral consideration for others, may be lower or absent
altogether.
- Political Ideology:
+ Liberal ideologies value individual experiences, emphasizing
the importance of individual rights and dignity
+ Conservative ideologies also recognize the significance of
individual experiences but may place greater emphasis on
collective traditions and values

2. Intuition Ethics: What is good/right is felt by intuition, embedded in codes of

conduct at many organizations
 - Etc. “Do I feel uncomfortable with this course of action? If yes, don't do it”, “What
feels right or wrong?”, “If you do it, will you feel bad?”
- 2 thinking modes based on intuition ethics:
+ Automatic mode: identify decision alternatives → make a decision → choose
moral arguments to justify choice (Identify → Decide → Justify)
+ Manual mode: Identify decision alternatives → use moral framework to
evaluate alternatives → make a decision (Identify → Evaluate → Decide)

Pros Cons

Intuition - Easy - Doesn’t always provide a

- Quick clear answer
- Doesn’t help to justify
your opinion of others

3. Consequentialism (Utilitarianism/Teleology) vs Deontology

Consequentialism: the end justifies the Deontology

means

Definitions - Focuses on outcomes or consequences of Emphasizes the inherent rightness or

actions to maximize overall goodness or wrongness of actions themselves.
minimize overall harm.

Moral Justifies actions based on their Justifies actions based on their

justification consequences conformity to moral rules or principles

Flexibility Offers more flexibility in decision-making, as Might be more rigid, as it emphasizes

vs. Rigidity actions can be judged based on their adherence to moral rules or duties
expected consequences regardless of the situation

How to i. Identify Identify the ethical dilemma i. Identify the ethical dilemma
structure ii. Identify the benefits and the harms ii. Consider 3 ideologies
your associated with the action a. Categorical imperative:
answer iii. Explain from a consequentialist general
perspective: emphasizing the evaluation of universal law/rule, you expect
outcomes and the principle of maximizing everyone to do the same under same
overall goodness or minimizing overall harm situation
(By sacrificing one life to save five, the b. Practical imperative: treat
action maximizes the total well-being or humanity always as an end and never
happiness in the scenario) as a means.
c. Golden rule: Treat others the
way
you want to be treated
Examples - Categorical imperative: “Do not
harm others” is a rule, so even if u
harm others for self-defense, still
unethical under categorical imperative
deontology
- Practical imperative: It’s unethical to
use sweatshop workers as mere
means/exploit employees as tools for
achieving organizational goals
- Golden rule: I would not want to be
treated like a sweatshop worker

Questions Consequentialist Deontologist

to ask as a - What are the consequences for each - Is the action “universalizable”?
stakeholder group? If it’s net positive, then What basic code of conduct applies
go for it! here?
- How do the short-term consequences - Does it value humanity?
compare against LT consequences? → - Would I be willing to have it
Prefer LT applied to me?
WEEK 2: Moral Disengagement (Ethics) & Persuasion
Summary: if they do something unethical, go to week 2 and find the justification

1. Basic concepts
- Rationalization: We like to think of ourselves as good people. But MOST of us feel
comfortable engaging in a certain degree of unethicality.
But how do we rationalize? → MORAL DISENGAGEMENT

- Moral disengagement: A set of strategies help us rationalize or justify unethical

behavior:
+ Restructuring behavior to appear less wrong
+ Minimizing victims’ distress
+ Obscuring moral agency

a. Restructuring behaviour to appear less wrong

Strategy Definition Example

Moral - Reframing unethical acts as in the - “It's ok to spread rumours to

Justification service of a greater good. defend those you care about”
- Justify their behavior by - Workplace Exploitation:
convincing themselves that the Employer justifies - "building
ends justify the means. (kinda idea character" in their employees, harsh
of consequentialism) treatment will benefit the employees'
growth and the company's success.
- Rationalizing Tax Evasion:
justifies → the government wastes
taxpayers' money on unnecessary
projects or that their individual
contribution wouldn't make a
difference to public services.

Euphemistic Use of language to obscure the - “Taking something without the

Labeling true nature of unethical actions, owner’s permission is ok as long
making them appear less morally you’re just borrowing it”
wrong - Compromising ethical standards to
meet business goals or deadlines →
Ethical adjustments
- Describe employee layoffs or
terminations → personnel
downsizing

Advantageo Making a behavior seem “Considering the ways people

us objectionable by comparing it to an grossly misrepresent themselves, its
Comparison even worse behaviour hardly a sin to inflate your own
credentials a bit”
 Compare corporate tax evasion
"What I'm doing is nothing
compared to those big companies
avoiding millions in taxes. They're
the real culprits. My actions are just
a drop in the ocean compared to
what they're getting away with."

b. Minimising victims’ distress

Strategy Definition Example

Distortion of Minimize the seriousness of the An individual involved in harmful

consequences effects of one’s actions (focus on gossip may minimize the
consequences) consequences by arguing that
their words were not severe and
didn't really harm anyone
emotionally.

Dehumanization Arguing that the victims of an “Some people have to be treated

unethical action don’t deserve roughly because they lack
basic human consideration feelings that can be hurt”

Sexual Violence/ Exploitation/

Discrimination: dehumanize
victims by objectifying them,
considering them as mere tools
for their satisfaction rather than
recognizing their autonomy and
rights.

c. Obscuring moral agency (shifting the responsibility to the higher-up/entire

group/victim)

Strategy Definition Example

Displacement of Shift responsibility for unethical “People shouldn’t be held accountable

responsibility behaviour to an authority figure or for doing questionable things when
external party (justify their behavior they were just doing what an authority
as following orders of the figure told them to do”
higher-up).

Diffusion of Shift responsibility for unethical Bystander effect: “People can't be

responsibility behaviour to an entire blamed for doing things that are
group/community technically wrong when all their friends
are doing it”
“No one does this, why do I have
 to?” Mob Violence and Property Damage:
In a large group, participants may
“Everyone does it, why can’t I?” diffuse responsibility by thinking their
actions won't be singled out in the crowd

Attribution of Shift responsibility for their unethical “People who get mistreated have
blame behavior onto the victims of their usually done something to bring it on
actions (victim blaming) / the ones themselves”
(be careful with negatively affected by the
displacement of decision An employee engages in unethical
responsibility) behavior at work, but blames the
organization's lax policies or lack of
oversight for allowing such behavior
to happen, absolving themselves of
personal accountability. [he is not
following orders from anyone]

d. EXAMPLE: FORD PINTO (company charged with murder)

- Consequentialism: Inaccurate calculation
- Did not take all stakeholders into account (etc. future customers)
- Underestimated the cost of lawsuits
- Defined “consequence” purely based on profitability
- Violated Deontology
- Moral Disengagement
- We have a “condition”, not a “problem” (euphemistic labeling)
- Cost and benefit analysis (Dehumanisation)
- We are not in violation of the law at that time (Displacement of responsibility)
- With the oil crisis, layoffs were imminent for many (Moral justification)

2. PREVENT Moral disengagement

- Signature Placement: Asking individuals to sign a statement affirming their
commitment to honesty and ethical behavior, such as "I promise that the
information I am providing is true," can serve as a reminder of their moral
obligations and increase accountability for their actions.
- Moral Decoupling: Encouraging individuals to engage in moral reasoning that
separates judgments of performance from judgments of morality can help
prevent moral disengagement.
- Hot-Cold Empathy Gap: People in a cold, rational state may fail to appreciate the
impact of actions driven by a hot, aroused state, whether it's their own emotional
state or that of others. Recognizing the influence of emotional states on
decision-making can help individuals avoid moral disengagement

3. Principles of Persuasion
Liking - Ppl like those who like them: We like At tupperware parties, guests’
ppl who are similar to us + We like to finesse for their host
receive compliments + We like ppl who influences purchase decisions
cooperate with us twice as much as regard for
the products
→ “Criticism is not good because it puts
a person on the defensive and usually
makes him strive to justify himself” →
Uncover real similarities and offer
genuine praises

Reciprocity Ppl feel that they are obligated to give When the Disabled American
when they receive Veterans enclosed free
→ Lesson: Give what you want to personalised address labels
receive and be personalised and in donation-request envelopes,
unexpected the response rate doubled

Social Proof People follow the leads of others to More NYC residents tried
determine their own returning a lost wallet after
→ Lesson: Use peer power learning that other New
(especially similar peer) whenever its Yorkers had tried.
possible

Consistency People align with their clear 92% of residents of an

commitments apartment complex who
- Ask for early commitments, Ask signed a petition supporting a
for easy commitments, aka new recreational centre later
“foot-in-the-door” in psychology donated money to the cause
→ Lesson: Voluntary, easy, active,
and public commitment

Authority People defer to experts A single New York Times

→ Lesson: Expose your expertise, don't expert-opinion news story
assume its self-evident aired on TV generates a 4%
shift in US Public Opinion

Scarcity People want more of what they can have Wholesale beef buyers’ orders
less of jumped 600% when they alone
→ Lesson: Highlight unique benefits received information on a
and exclusive information possible beef shortage
 Charisma - The ability to communicate a clear, - Leader: influential,
visionary, and inspirational message that trustworthy, & “leader-like”
captivates and motivates an audience. (able to tap into the hopes and
- Charisma is needed for most ideals of followers, uniting
situations, and is a win-win scenario for followers around a vision)
both the leader and the follower - Follower: Develops a sense
of purpose, emotional
connection, inspired

● Note: Dilution Effect: Your arguments don't add up (as u think), they average out.
Weak arguments dilute strong arguments.
- If u have a single strong argument, then don't add other weak arguments
+ Candidate A: 5 top-tier publications
+ Candidate B: 5 top-tier publications plus 5 B-level publications
- Can also be used to weaken undesirable things!!
+ Option A: Side effects include heart attack, stroke, and dry mouth
+ Option B: Side effects include heart attack and stroke

WEEK 3: Individual-Level Negotiation

Summary key words: BATNA, reservation point, aspiration point, ZOPA

Answer framework for 1-1 negotiation:

- Step 1: Identify each party’s position (what they want) and interest (why they want)
+ Self: My own target point, reservation point, BATNA
+ Others: Who are they? Their interests, positions, target point, reservation
point, BATNA
+ Situation: What are the sacred issues (shared unnegotiable points)? Time
constraints?
+ If ZOPA identifies → go for it. Otherwise, dig more into the conditions (must
be met)

[A’s position is … Her interest lies in. Whereas B’s position is …. and interest is … .
Currently, neither A nor B can reach a common ground based on their initial positions and
interests. In this situation, it becomes imperative to explore options to expand the pie and
identify the Best Alternative to a Negotiated Agreement (BATNA).

- Step 2: Expand the pie (Or to find BATNA) (under integrative issues)
+ Bring in new issues (Use if-then language)
 + Focus on priority (Trade what they want least for what they want most) - why
interest is really important (mention fixed pie bias if necessary)

[While initially, it may appear that there is no overlap between A's and B's positions, there is
potential for exploration. By delving deeper into each party's interests and considering
alternative solutions, opportunities for finding common ground or creative compromises may
arise]

For compatible issues: you will immediately find their common ground after anlyzing
For distributive issues: you anchoring and give reasonings afterwards to justify (mention
anchoring bias if necessary)

1. Decision-making in a negotiation context

- Definition: Negotiation is any effort to influence or persuade someone else to a
particular course of action
- BATNA (best alternative to a negotiated agreement): what you will do if no
agreement is reached, your alternative option
ZOPA “Zone Of Potential Agreement.” It is the overlap between the seller’s and buyer’s
settlement range.

If: Buyer’s bid < Seller’s Worst Case → Find alternative

Seller’s ask > Buyer’s worst case → Find alternative

- Reservation price: The highest price that a buyer is WTP vs. the lowest price at
which a seller is WTS → the worst deal you will accept without walking away
- Aspiration Point → the deal you aspire to achieve, an ideal outcome that is within
the bounds of reality
- Dangerous assumptions:
+ Our interests must be opposed
+ Fixed pie bias: The value in front of us is all that there is
+ Their intentions must be hostile

⇒ The potential and optimal result of a negotiation is to reach ZOPA

2. Creating more value for yourself means understanding and working with others

a. Moving from Positions to Interests

- Positions: The specific options each person wants
- Interests: Why the two counterparts want something, their underlying goals and
concerns

Next step

b. Bringing in More Issues to Expand the Pie

- Single-issue negotiations (price) are inherently about claiming value
→ Bringing in new issues creates opportunities for creative trade-offs
+ Each side trades what they want least for what they want most
+ Both side’s interests are satisfied
Examples: White-collar jobs have so many issues to be negotiated for beyond just salary
(allowances, paid days off, telecommute, etc)
3. The first offer

SHOULD YOU MAKE THE FIRST OFFER?

No YES

Counterpart’s first offer may reveal Power of anchoring

information

Counterpart may value the issue very How much should you ask for in your 1st
differently than you offer?
- High but reasonable
Counterpart may make a mistake - The final result is usually about halfway
(anchoring) or can hurt you between the two opening offers
- The higher the opening you can get away
with, the better
- Just below “crazy” (from the counterpart’s
perspective)
- How can you move your counterpart’s
“crazy line”?

Application: If you have bad/no info, you Application: If you have at least some
should not make the first offer; you need reasonable information, make the first offer
information to anchor them

How to provide reasons when you make the first offer?

- RULES:
+ **Your anchors will be more powerful if you provide a reason**
+ **Your reason will be more powerful if they seem objective**

- Reasonings (prof’s own suggestions)

1. Field-weighted citation impact: Average = 1.0; 1.1 = 10% above average; Sam =
4.0 (300% above average)
2. Benchmarking
+ State the methods/metrics
+ State your performance: In the most recent five-year ranking period (from
2014 to 2018), I have published 12 articles in these journals.
+ Compare/contrast: Both of these numbers from Wharton’s and MSU are
significantly lower than my productivity (I had 12 publications in this five-year
period).

If you make the first offer, what do you want your counterpart to do?

Reject your offer Accept your offer Make a counter-offer

BAD BAD GOOD

 Winner’s curse: If counterpart accepts
your first offer, it’s a strong signal that
you could have done better if you had
made a more extreme first offer

A quick summary
• Always negotiate. If you are afraid, try rejection therapy.
• Try to set a first offer (homework needed): Anchor the first offer just below the crazy line
(Anchoring bias) → Provide reasons, but remember the dilution effect
• Establish liking → moving from positions to interest → expand the pie to create additional
values (If, Then language to suggest bundle different issues)

3. Types of issues

Distributive (difficult) Compatible (easy but not Integrative (potentially

automatic) difficult, expand the pie)

All parties fight for the same Both want the same thing Typical multiple issues
thing/want opposite outcomes for
the same issue

− Typically single issue - Win-win likely Win-win possible

− Zero-sum - People don’t realize this often by
assuming all negotiations to be a → Creating values
→ Claiming values zero-sum game

Key lessons: Look for the Pareto optimal solution in 1v1 negotiation
WEEK 4: Multi-party Negotiation

I. Team negotiations

● Teams have an advantage over individuals in both creating and claiming value.
- Creating value: because they talk more, exchange more information, and get
at interests better.
- Claiming value: human tendency to conform to groups, there is psychological
strength in numbers
● But this team advantage only occurs if the team’s roles and strategies are well
coordinated. You need to be on the same page as your teammates or negotiating as
part of a team could even be worse than working alone ⇒ It’s critical to actively
prepare together before the negotiation to reduce chances of conflict within the team
during the final negotiation.

● Good cop and Bad cop strategy - used to leverage psychological dynamics to
influence the counterpart
- Imagine a team negotiating the terms of a business partnership with another
company. Team A consists of two members: Alice and Bob. Alice takes on the
role of the "good cop" aka friendly, empathetic approach while Bob plays the
"bad cop” aka assertive, conservative
- The counterpart may feel more inclined to align with good cop, viewing her as
a reasonable and accommodating partner compared to the more aggressive
stance of bad cop.
- Result: By strategically alternating between these roles and coordinating their
actions, Team A can effectively manage the negotiation process and increase
their chances of achieving favorable outcomes.
- How to defend against this tactic?
+ Try asking the good cop for his or her response to what bad cop is
saying. If they are truly not on the same page, this could cause conflict
within their team.
+ If it is a dirty trick, just a ploy, it could reduce their ability to coordinate
their strategy. Either way, their team coordination goes down.

II. Team Coordination

- Teams have an advantage over individuals in both creating and claiming value but
only if the team is well coordinated.
- Different members of the same team often have different interests and incentives
+ Positions vs Interests: Specific options each person wants vs Why they want
certain things
+ Single-issue negotiations: are inherently about claiming value
+ Bringing in new issues creates opportunities for creative tradeoffs
 - The importance of active participation among team members to align conflicting
interests and implement a disciplined strategy at the bargaining table. And different
members of the same team may need to watch out for each other.

III. Agent - Principal Problems

- When one person (the agent) can make decisions on behalf of another (the
principal), but has different incentive structures. And more than often, the agent often
has better information than the principal and can exploit this information asymmetry
“Your interests and the interests of those who represent you may not always
be aligned so watch out for this!”
- This kind of situation happens all the time, it is rare for different individuals’ incentive
structures to be perfectly aligned, even when they work for the same organization
and seemingly have the same objectives.
+ Real estate agents leave their own house on the market much longer than
their clients’ ⇒ Because they earn more, faster commissions that way, turning
over deals quickly.
+ CEOs inflate their own pay when governance is weak
- How to address?
+ Commissions, Profit sharing, Performance evaluation, Threat of termination
AND AWARENESS (think about what your teammate or agent’s incentives
really are to help you anticipate moves by them whichs may undermine your
interests)

IV. Value of trustworthiness

- Deception and non-cooperation in social dilemmas tends to be an ineffective
long-term strategy. Inspiring trust in those around you is critical to your own long term
personal success.
WEEK 6: Group Decision Making

I. Wisdom of the crowd

Wisdom of crowds is the idea that large groups of people are collectively smarter than
individual experts when it comes to problem-solving, decision-making, innovating, and
predicting. The idea is that the viewpoint of an individual can inherently be biased, whereas
taking the average knowledge of a crowd can result in eliminating the bias or noise to
produce a clearer and more coherent result.

● Characteristics of a Wise Crowd

- The crowd should be able to have a diversity of opinions.
- One person’s opinion should remain independent of those around them (and should
not be influenced by anyone else).
- Anyone taking part in the crowd should be able to make their own opinion based on
their individual knowledge.
- The crowd should be able to aggregate individual opinions into one collective
decision.

● Advantages and Disadvantages of Wisdom of Crowds

○ Pros: Wisdom of crowds allows for diversity and a broad range of thinking.
This provides more color and experience in problem-solving than that of an
individual, which may often be biased. It also allows for the integration of
information, whereby the vast knowledge of separate individuals
creates a larger knowledge pool.
○ Cons: One of the main criticisms of the wisdom of crowds is that humans tend
to conform, leading to "groupthink," which defeats the purpose of the
diversity needed in wisdom of crowds. In addition, if many individuals are
aiming to reach a decision and consensus, it can lead to disagreements and
in-fighting.

Two examples that show how the concept works:

1. By averaging together the individual guesses of a large group about the weight of an
object, the answer may be more accurate than the guesses of experts most familiar
with that object.
2. The collective judgment of a diverse group can compensate for the bias of a small
group. In trying to guess the outcome of a World Series game, fans may be
irrationally biased toward their preferred teams, but a large group that includes
plenty of non-fans and individuals who dislike both World Series teams may be able
to more accurately predict the winner.

II. Group decision making

Advantages of Group Decision Making
 - Averages of group estimates tend to be close to the actual answer
- Groups often make decisions that are superior to those made by individuals
- Increased pool of available resources
- Process gain (Discussion and debate can lead to new, better ideas)
+ Group discussion can enhance the quality of reasoning and creativity
- Higher motivations to achieve/succeed (through group accountability)
+ Increases commitment to decision implementation

→ Key: Group decision making is only effective if the team is well-cordinated. What makes
groups ineffective?
1. Motivation loss
2. Barriers to speaking up
3. Barriers to change your mind
4. Biased information processing

III. Great team decision making process

• Inquiry rather than advocacy

Advocacy Inquiry

Underlying Contest Collaboration

concept Rooted in a contest-like mentality, Fosters collaboration by
where individuals advocate for their encouraging participants to
own ideas and viewpoints, often engage in critical thinking and
leading to competition and a win-lose work together to explore different
outcome. viewpoints, leading to collective
ownership of decisions.

Purpose Persuading & lobbying Testing & evaluating

Aimed at persuading and lobbying Focuses on testing and
others to accept a particular evaluating ideas through open
viewpoint or proposal. dialogue and examination,
leading to a more thorough
understanding of the issue.

Participants’ Spokespeople Critical thinkers

role Participants act as spokespeople for Encourages participants to be
their own viewpoints, often leading to critical thinkers who value diverse
the suppression or dismissal of perspectives, cultivating an
minority views. environment where minority views
are considered and valued.

Minority Discouraged/dismissed Cultivated/valued

views In an advocacy-based approach, In an inquiry-based approach,
minority views may be discouraged minority views are cultivated and
or dismissed, as the focus is often on valued. The emphasis on critical
persuading others to accept the thinking and collaboration
majority viewpoint. encourages team members to
consider diverse perspectives,
leading to a more comprehensive
 evaluation of options and a
deeper understanding of the issue
at hand.

Outcomes Winners/losers Collective ownership

Often results in winners and losers, Emphasizes collective ownership
with one viewpoint prevailing over of decisions, where the team
others. works together to reach a
consensus based on multiple
alternatives, well-defined criteria,
dissent and debate, fairness, and
consideration of all viewpoints.
This helps to suppress biases and
ensures a more robust
decision-making process.

- Multiple Alternatives: This aspect emphasizes the importance of considering

various options or solutions to a problem rather than settling for the first idea that
comes to mind.

- Well-Defined Criteria: Having well-defined criteria involves establishing clear and

specific standards or metrics by which alternatives will be evaluated. Well-defined
criteria help teams make objective and consistent decisions, ensuring that all relevant
factors are taken into account.

- Dissent and Debate: Dissent refers to the expression of differing opinions or

viewpoints within the team, while debate involves the discussion and analysis of
these differing perspectives.

- Fairness and Consideration: Fairness and consideration involve treating all team
members with respect and ensuring that their voices are heard and valued during the
decision-making process.

- Suppression of Biases: Suppressing biases involves being aware of these cognitive

biases and actively mitigating their impact on the decision-making process.

IV. Group Decision Making Traps

1) Group Polarization: tendency for teams to make more extreme/risker decisions
when working together
2) Social Loafing: individuals exert less effort to a group task when they are working
collectively compared to when they are working alone
→ Solution: Individual performance indicators (Setting Clear Expectations, Have Measurable
Goals, Timely Feedback) + Freedom to choose (Task Allocation and Role Assignment align
with their skills, Autonomy and Empowerment able to choose how to approach the problem)
3) Group Think
- Tendency for cohesive groups to value consensus over decision quality
+ People just want to agree, not come to the best decision
- Caused by conformity pressure, overconfidence in the group, and
close-mindedness
 → Groups with individually competent members may come to an incompetent decision
4) The Abilene Paradox
- Tendency of groups to make decisions that individual members do not truly support,
so they make collective decisions that are contrary to what individual members want
as they think that it is in the group’s greater good
- Symptoms
+ i. Results counterproductive to the organisation’s purpose
+ ii. Dissatisfaction in organisation
+ iii. Creation of subgroups to “vent” dissatisfaction and blame of other
subgroups or authority figures
- As compared to groupthink where members agree with the decisions, individuals
disagree or have negative feelings about the decisions/outcomes
- Fear of speaking up: The fear of conflict. Individuals may worry about being seen as
disruptive, causing tension within the group, or risking their relationships with other
members → avoid discomfort or maintain harmony within the group.

Why are people so scared of speaking up?

1. I’m the newest member of the group. I haven’t earned my voice yet.
2. I don’t care enough about the issue under discussion to risk offending anyone. It’s more
important to me to avoid making waves.
3. I care a lot about this issue, but I care more about keeping my job. I’m going to keep my
mouth shut!

V. Biases in Group decision-making

- Biases that prevent us from speaking up
- Biases that prevent us from changing our mind
- Group dynamics taht hinder comprehensive information processing

a. Biases that prevent us from speaking up (Abilene bias)

● Conformity
- Change our views to conform with the majority/views of the group
- Self-censorship if views don’t conform with the rest
● False Consensus
- Overestimation of the extent to which others share the same view
+ No point in sharing my views if I think that everyone most likely came
to the same conclusion
- Illusion of unanimity: members mistakenly believe that everyone in the group
agrees with a decision or course of action, even if this is not the case
b. Biases that prevent us from changing our minds (Group polarization bias)
- Egocentrism / Closed-mindedness
+ My view of the world is correct, and most likely others will share the
same view
+ If others don’t share the same view they: don’t know the truth, are
lazy/stupid, or are wrongly biased by their own self-interest, dogma, or
ideology
 c. Group dynamics that hinder comprehensive information processing (Group
Think Bias)
- Confirmation bias
+ Discuss shared information but not the unshared information
+ If I share the same views with the group, we must be correct
- Overconfidence
+ Overt optimism that nothing can go wrong due to us being in a group

VI. Research on voice

- Leader perceptions of followers’ voice
+ Supportive Voice → Loyalty → Increased Performance Ratings
+ Constructive Voice → Threat → Decreased Performance Ratings
- The effects of voice on organizational performance:
+ Only upward constructive voice increases unit performance, supportive voice
does not
+ Lateral/Outboundconstructive voice hurts unit performance

- Summary of voice
+ Speaking up constructively can help organizational performance
+ BUT, it may also be costly for the speaker Unless you are a) perceived liking
is high and/or b) perceived expertise is high

VII. Reducing these biases/SOLUTIONS

1)Nominal group technique
- Meeting begins with silent reflection/idea generation.
- Group members take turns to present ideas, which are recorded for later discussion.
- Group members may ‘pass’ on any given round, but cannot raise issues out of turn.
Discussion is focused on clarifying ideas, which is followed by voting.
→ Evidence shows that NGT generates more high quality ideas than unstructured
brainstorming.
2) Second-chance meeting: Meeting after an initial agreement to express remaining
doubts and concerns
3) Pre-mortem session: Ask members to imagine that the decision turns into a disaster
and explain why as detailed as possible (Prospective hindsight)
4) Inquiry approach rather than advocacy approach

VIII. Tasks
1. Additive task: A task or project that a group can complete by aggregating
individual members’ efforts or contributions.
→ Groups usually outperform individuals on such tasks, but overall group productivity rarely
reaches its maximum potential owing to social loafing
2. Disjunctive task: A group task or project, such as solving a complex problem, that is
completed when a single best objective solution is adopted by the group.
→ Group’s performance tends to be determined by the most skilled member.
3. Conjunctive task: A group task or project that cannot be completed successfully
until all members of the group have completed their portion of the job.
→ The speed and quality of the work are determined by the least skilled member.
 WEEK 7: Models of Judgment & Decision-Making I
Process: Rational Decision Making (Optimizing) → Bounded Rationality → Normative Model
(Satisfying) → Intuition and Heuristics

I. Rational decision-making (Optimizing)

● Step 1: Define the problem
● Step 2: Set decision criteria
● Step 3: Allocate objective weights to criteria
● Step 4: Develop sets of alternatives/choices
● Step 5: Evaluate alternatives/choices simultaneously
● Step 6: Choose the best alternatives/choices
→ Recognition that individuals have access to only a subset of all available information, often
due to time and resource constraints, thus, we have BOUNDED RATIONALITY

II. Bounded rationality

- Respond to a complex problem by reducing the problem to a level at which it can be readily
understood
- Trade-off compared to rational decision:
+ We focus on a narrower set of criteria
+ Evaluate smaller set of options
+ Inexact estimation in evaluation
+ Select first acceptable solution, even if it is not optimal
+ Maybe use previous solution
- Key logic of bounded rationality:
+ Rules of thumb/Heuristics: Use of simplified decision rules or heuristics to quickly
evaluate alternatives and make satisfactory choices.
+ Satisficing: Accepting a solution that is good enough or satisfactory, rather than
searching for the best possible outcome.
→ The goal of bounded rationality is to select the first “GOOD ENOUGH” choice based on
simplifying strategies, heuristics, and satisficing

III. System 1 vs System 2 Thinking (Think Fast vs Think Slow)

System 1: Think Fast - quick judgment System 2: Think Slow - deliberate, analytical
and effortful mental process

- Fast - Slow
- Unconscious, often laden with affect - Conscious
(mood/emotion) - Effortful
- Automatic - Complex decisions
- Everyday decisions - Reliable
- Holistic, often based on experience ⇒ A necessary counterbalance to check on
- Error prone System 1
⇒ Effective when experience is high and
situation matches experience; much less
 effective otherwise

IV. Cognitive biases in decision-making

Thinking stage Biases Definition Example

Pre-commitment Framing - Words matter: meaning has to - “90% success rate” vs “10%
be the same, but the way it was failure rate”
phrased makes it seem different
- 80% Lean vs 20% Fat
+ Individuals tend to be
risk-averse when faced with a (note if the 2 don’t have the
gain frame (they are more likely to same meaning, it’s lying not
choose a safer option to secure framing)
the potential gain)
+ In a loss frame, individuals tend
to be more risk-seeking (willing to
take a chance to avoid a
perceived loss)

Sunk - People take unprofitable risks in + A small biz owner invested

cost/Escalation of the hope that sunk costs will be all his savings into starting a
commitment recovered. café, but the café is
→ may become more risk-seeking struggling. However, due to
to avoid accepting loss → lead to the attachment the owner has
a continuation of the project or with his initial investment he
decision, even when it's not will continue to invest in the
rational from an objective hope that it will eventually turn
standpoint. profitable.

Endowment effect We value an item more when we Give the same object:
possess it so Mine: $6
Not mine: $2

Information Anchoring Get anchored by an initial Price: 500 vs

processing concept/data point (our Price: 1000 - 500 (better)
decision/guess is usually around
the anchored number)

Overconfidence Overestimates one’s ability, Usually happen with very

overestimates the accuracy or experienced individuals
validity of their conclusions/
overoptimistic about sth

Confirmation & - The tendency to search for, Sarah, strongly believes that
​Polarization of recall, and favor information that eating organic food leads to
Views confirms their preexisting beliefs, better health outcomes.
whereas to downplay or avoid Whenever Sarah hears about
information that disconfirms prior a study supporting the benefits
 views or positions. of organic food, she readily
- The tendency to interpret accepts it as true. However,
information as supportive of when she encounters
existing views. evidence or arguments
⇒ This bias can reinforce our suggesting otherwise, she
existing beliefs and make it tends to dismiss them or
difficult for to objectively evaluate downplay their significance.
the merits of different
perspectives on the topic.

Evaluating Decoy Introduce an inferior third option Option A: Basic laptop with
choice (decoy) in a set of choice, making limited features at $500
one of the other options more Option B: Advanced laptop
attractive in comparison with better features at $1000
Option C (decoy): Overpriced
Logic: Even though Option C is laptop with features similar to
clearly inferior to Option B in B at $150
terms of value for money, its
presence makes Option B appear
more attractive in comparison to
Option A.

Present Tendency to prioritize short-term Present bias can manifest in

benefits, often at the expense of various aspects of life, such as
long-term gains procrastination, unhealthy
lifestyle choices, and
financial decisions where
individuals may opt for
immediate happiness over
long-term goals like saving for
retirement or investing in
education.

Status Quo Preference for maintaining the A manager refuses to change

current situation or resisting the new software system even
changes, even if those changes though it can help the
could be beneficial in the long run. company improve efficiency →
reflect status quo bias where
→ This bias can hinder individuals prefer to maintain
innovation, prevent necessary their current situation or
adaptations to changing decision
circumstances, and limit progress
by anchoring individuals to
familiar but suboptimal choices.

Others:
- Availability bias
● Individuals overestimate the importance of information that is readily available to
them, often because it's more recent, vivid, or memorable.
● ​Sarah is asked to recall the number of times she's seen advertisements for a new
smartphone brand. She immediately recalls seeing numerous ads for this brand
recently, even though she's only seen one or two → Sarah's overestimation of the
 frequency of ads for the new smartphone brand is due to availability bias, where the
ease with which instances or examples come to mind affects judgment.
- Randomness error
● The tendency to find patterns and meaning in seemingly random information or data.
● Eg: Mike's belief that past outcomes influence future coin flips represents a
randomness error, as each coin flip is independent, and previous outcomes do not
affect the probabilities of subsequent flips.
- Loss aversion (prospect theory)
● Where individuals weigh potential losses more heavily than equivalent gains
● Eg: When offered a choice between a $100 cash reward or a 50% chance of winning
$200, most participants choose the guaranteed reward.
- Fundamental attribution error
● Tendency of individuals to attribute other people's behavior to internal characteristics
or personality traits and underestimating the influence of situational factors.
● Eg: When explaining a coworker's mistake, Mark attributes it solely to the coworker's
lack of competence rather than considering situational factors.

WEEK 8 Models of Judgment & Decision Making II

1. Judgment in a crisis
- When we observe others make very poor decisions, we attribute those
people/decisions to: Be low in IQ, Lack expertise, Have personality flaws, Have faulty
motives
- Smart, well-intentioned people make flaws decisions too!
- Four main biases: Confirmation, sunk cost, anchoring, framing

2. How to mitigate these biases

- Begins with awareness - do you understand and can you recognize these biases in
yourself and others?
- Do you have an outside, unbiased adviser to serve as a sounding board during a
critical decision-making process, someone without vested interests in this situation?
- Disagreements and conflicts are not only healthy but essential for relationship

3. Choice Architecture: Encourages the design of systems that account for

error-prone thinking and aid users in making beneficial decisions.

Toolbox

Default - The default option is the choice that individuals will end up with if they
do not actively make a selection
- Example: Opt-in vs Opt-out (People often stick to pre-selected option)
- Being heavy-handed with default options can sometimes backfire, as it
may lead to resentment or pushback from individuals (Auto renew gym
membership without asking customers)

Feedback - Feedback mechanisms provide individuals with information about the

Toolbox

consequences of their choices

- Feedback needs to be: meaningful, timely (live feedback - show you
have used electricity continuously 10 hours, please turn off if you don’t
need it), specific (social comparison - compare with neighborhood(, allow
for corrective behaviour

Incentives - Incentives are rewards or penalties designed to motivate specific

behaviors. Positive incentives (discounts or rewards) encourage
desired behaviors, while negative incentives (fines or taxes) discourage
undesirable behaviors.
- To affect behaviours, incentives need:
+ Salient
+ Short time horizon (because of hyperbolic discounting: valuations
fall relatively rapidly for earlier delay periods but then fall more
slowly for longer delay periods)
+ Valuable
+ Consider stakeholders (Users - who uses, Choosers - who
chooses, Payees - who pays, Profiteers - who profits)
Exam Format

For 3 essay questions: 20 minutes each

For 5 short answer: 10 minutes each

For 3 essay: 25 minutes each

For 4 short questions: 10 minutes each

Ethics: Week 1,2

Group Decision Making: Week 6
Nego: Week 3,4

Judgement & Decision Making: Week 7,8

Multi-party nego: Week 4