Tutorial 2 Decision Makers

Discussion for today topic:
Practice exercise on decision making and biases:
1. Which would you choose?
a. A sure gain of $240 (immediate gratification bias)
b. A 25 percent chance of winning $1,000 and a 75 percent chance of winning nothing.
a. A sure loss of $750
b. A 75 percent chance of losing $1,000 and a 25 percent chance of losing nothing
a. A sure loss of $3,000
b. An 80 percent chance of losing $4,000 and a 20 percent chance of losing nothing
Explain your choices. Identify each bias if any in your choice.
Section 1: Short answer questions
1. Why is decision making often described as the essence of a manager’s job?
 The business environment is changing day by day, so managers always have to make
decisions which contribute to the success or failure of the entire company. Adapting to these
changes by making rational and appropriate decisions is a vital key to come to success.
2. Describe the eight steps in the decision-making process.
 Identify a problem, a discrepancy between an existing and a desired condition
 Identify decision criteria (consider which factors are important or relevant to
solve problem)
 Allocate weights to the criteria (we can give the most important criterion a weight
of 10 and then assign weights to the rest using that standard)
 Develop alternatives (list viable alternatives that could resolve the problem)
 Analyze alternatives (give scores for each alternative in terms of each criterion)
 Select an alternative (choose the best alternative or the one that generated the
highest total in Step 5)
 Implement an alternative (put the decision into action)
 Evaluate the decision effectiveness (whether the problem was resolved)
3. Compare and contrast the four ways? managers make decisions.
 Rationality: the problem is clear and unambiguous; a single, well-defined goal is
to be achieved; all alternatives and consequences are known; and the final choice
will maximize the payoff
 Bounded rationality: make decisions rationally, but are limited (bounded) by their
ability to process information  final choice: satisfice > maximize.
 Intuition: making decisions on the basis of experience, feelings, and accumulated
judgment
4. Most managers adopt particular styles to simplify their decision making. This helps them
make sense of information. Why do you think these styles are unreliable?
 It’s like a “representation bias” or “selective perception bias”
5. How can managers blend the guidelines for making effective decisions in today’s world
with the rationality and bounded rationality models of decision making, or can they?
Explain.
 In some case, if managers don’t have enough time and ability to consider or follow all
8 steps of decision-making process  need to choose the first alternative encountered
that satisfactorily solves the problem. (still help to handle the problem)  bounded
rationality. But the best is to apply the rationality model to maximize the payoff.
Section 2: Case study: Manchester City: Football Big Data Champions (pg.105-106)
2-15. What types of decisions are made by football managers? Would you
characterize these decisions as structured or unstructured problems? Explain.
 It is a nonprogrammed decision and these decisions would be characterized as
structured problems. The reason is: although it is a common problem with many football
teams (a few set-piece goal scored over the matches), instead of providing last minute
tips and delivers a motivational speech to the players as other teams, Manchester City
spends 15 minutes before each match meeting the club’s performance analyst team,
discussing things they had done well or wrong in previous matches  gain experience
from the failures.
2-16. Describe how big data can help football managers to make better decisions and
how this has an effect on the decision-making process.
 Data (in particular is “analyze data”) help the managers to provide specific and real
evidences of each person’s performance in each match  understanding their strengths
and weaknesses within the different formation plays and what aspects they need to focus
on to develop their talent  gain success.
2-17. What type(s) of conditions are more likely to influence the performance analyst
team’s work: certainty, uncertainty, or risks? Explain.
 Certainty. Because when we analyze any circumstance or problem, we need to base on
the sureness to give the rational comments  help others realize the nature of problems
and then know how to fix, improve it.
2-18. Do you think it is appropriate for football managers to use only quantitative
information to evaluate their players’ performance during a season? Why or why not?
 Of course not. Everything can change and when the players enter a competition,
nobody can know what will happen. In this situation, he has to deal with problem like
this, in other situation, he doesn’t have any other ways to solve except this one 
managers need to observe the whole season to evaluate their players’ performance.
2-19. How can big data transform football decisions in the future?
 Analyze data helps the football teams know more about yourselves. They can learn
from experience so that in the future we can promote our strengths or work together
better, futher more they can make more accurate decisions base on those things.
Section 3: Self - study
Activity 1: Matching game

1. Immediate Gratification Bias a. Selecting organizing and interpreting
events based on the decision maker’s
biased perceptions
2. Selective Perception Bias b. Mistakenly believing that an event

could have been predicted accurately
once the actual outcome is known
3. Self-Serving Bias c. Seeking out information that

reaffirms past choices and discounting
contradictory information
4. Randomness Bias d. Losing decision-making objectivity

by focusing on the most recent events
5. Overconfidence Bias e. Choosing alternatives that offer

immediate rewards and that to avoid
immediate costs
6. Hindsight Bias f. Creating unfounded meaning out of

random events
7. Availability Bias g. Selecting and highlighting certain

aspects of a situation while ignoring
other aspects
8. Confirmation Bias h. Holding unrealistically positive

views of one’s self and one’s
performance
9. Representation Bias i. Taking quick credit for successes

and blaming outside factors for failures
10. Framing Bias k. Drawing analogies and seeing

identical situations when none exist
Activity 2: Fill in the blank
1. The four ways managers make decisions:

The assumptions of rationality are as follows: the problem is clear and unambiguous; a
single, well-defined goal is to be achieved; all alternatives and consequences are known;
and the final choice will maximize the payoff. Bounded rationality says that managers
make rational decisions but are bounded (limited) by their ability to process information.
Satisficing happens when decision makers accept solutions that are good enough. With
escalation of commitment, managers increase commitment to a decision even when they
have evidence it may have been a wrong decision. (4) Intuitive decision making means
making decisions on the basis of experience, feelings, and accumulated judgment. Using
evidence-based management, a manager makes decisions based on the best available
evidence.
2. Decisions and decision-making conditions:
- Nonprogrammed decisions are unique decisions that require a custom-made solution
and are used when the problems are new or unusual (unstructured) and for which
information is ambiguous or incomplete.
- Programmed decisions are repetitive decisions that can be handled by a routine
approach and are used when the problem being resolved is straightforward, familiar,
and easily defined (structured).
3. Decision-making biases and errors:
When managers make decisions, they not only use their own particular style, they may
use “rules of thumb,” or heuristic, to simplify their decision making.
Activity 3: True or False
1. Risk is a situation in which a manager can estimate the likelihood of certain

outcomes
 True
2. Unstructured problems are unique decisions that require a custom-made
solution and are used when the problems are new or unusual (unstructured) and
for which information is ambiguous or incomplete.
 False – “Nonprogrammed decisions”
3. Uncertainty is a situation in which a manager can make accurate decisions
because all outcomes are known.
 False – “Certainty”
4. Programmed decisions are repetitive decisions that can be handled by a routine
approach and are used when the problem being resolved is straightforward,
familiar, and easily defined (structured).
 True
5. Certainty is a situation in which a manager is not certain about the outcomes and
can’t even make reasonable probability estimates.
 False – “Uncertainty”
6. The fourth step of the decision-making process requires the decision maker to list
viable alternatives that could resolve the problem.
 True
7. The second step in the decision-making process is identifying a problem.
 False – “first”
8. The solution to nonprogrammed decision making relies on procedures, rules,
and policies.
 False – “programmed”

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Discussion for today topic:

Practice exercise on decision making and biases:

1. Which would you choose?

a. A sure gain of $240 (immediate gratification bias)

b. A 25 percent chance of winning $1,000 and a 75 percent chance of winning nothing.

2. Which would you choose?

a. A sure loss of $750

b. A 75 percent chance of losing $1,000 and a 25 percent chance of losing nothing

3. Which would you choose?

a. A sure loss of $3,000

b. An 80 percent chance of losing $4,000 and a 20 percent chance of losing nothing

Explain your choices. Identify each bias if any in your choice.

Section 1: Short answer questions

1. Why is decision making often described as the essence of a manager’s job?

characterize these decisions as structured or unstructured problems? Explain.

 It is a nonprogrammed decision and these decisions would be characterized as

Activity 1: Matching game

2. Selective Perception Bias b. Mistakenly believing that an event

3. Self-Serving Bias c. Seeking out information that

4. Randomness Bias d. Losing decision-making objectivity

5. Overconfidence Bias e. Choosing alternatives that offer

6. Hindsight Bias f. Creating unfounded meaning out of

7. Availability Bias g. Selecting and highlighting certain

8. Confirmation Bias h. Holding unrealistically positive

9. Representation Bias i. Taking quick credit for successes

10. Framing Bias k. Drawing analogies and seeing

Activity 2: Fill in the blank

1. The four ways managers make decisions:

Activity 3: True or False

1. Risk is a situation in which a manager can estimate the likelihood of certain

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