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235 Announcements 2nd midterm
Date: December 17, Friday Time: 13:30 Location: D14, D15, DZ09
Changes in location may be announced later. 12 Angry Men Movie
Date: December 10, Friday Time: 13:30 Location: D14
Changes in location may be announced later.
Decision-making
Selecting one course of action from various alternatives
Can’t be divorced from the planning processes Better Data Better Decision-Making Batter Planning
Steps of Decision-Making
Four steps in decision-making Identify the problem or opportunity Gather facts Make the decision Implement and evaluate the decision
Problem Type: Pressing or Dispensable?
When does the problem require a decision? Must the problem be decided upon
immediately? Can the decision be deferred until:
New information Unexpected developments Better ideas to occur?
Is the problem pressing or dispensable? Global Warming? Dealing with terrorism?
Problem Type: Generic or Unique?
Is it a generic problem? Very few problems or events are
isolated Generic problems occur over and over
Problem Type: Generic or Unique?
Is it a unique (sui generis) problem? Latin word for “of its own kind” A problem that constitutes a class alone
Examples Giving handguns to pilots against
terrorists Building an international space station
Problem Type: Symptom or Root Cause?
Symptoms or root causes? Symptom
Is the problem part of a pattern of problems stemming from one underlying cause?
Tendency to view symptoms as problems
Examples School violence? Increase in crime?
Characteristics of an Effective Manager
Effective managers Make few decisions
Like a good doctor, deals with the root causes, not the symptoms
What is the problem that causes these symptoms?
Solve pressing problems first Use similar solutions for similar (generic)
problems No quick fixes, no cosmetic solutions
Framing a Decision: Upper Limit
Establishing an upper limit The ever present limitations that
determine how far the administrator can go
Limits of permissibility Is it legal? Will others accept it?
Limits of available resources (time, money, information)
Past mistakes and accomplishments
Framing a Decision: Lower Limit
Establishing a lower limit What, at least, must occur for the
problem to be solved? Example: Germany in WW1 could win
the war if two conditions are met at minimum
Put up weak resistance against Russia Concentrate forces to win war with
France
Framing a Decision: Limiting (Strategic) Factor
Limiting/ Strategic factor Quite similar idea to the lower limit The factor, whose control, in the right
form, at the right place and time, will establish a new system of conditions which meets the purpose.
Lack of potash in a grain field Nuclear power in WW2
Permissibility
Resources
Time
Commitments
Information
Strategic Factor 1
Strategic Factor 2
Strategic Factor 3
Zone of feasible, potentially successful solutions
These factors drastically reduce the number of possible solutions that a manager has to consider.
Source: Starling, 2002: 235.
Gathering Facts: Consulting Effective Planning and decision-
making requires a multiplicity of inputs
Consulting people Expert advice
Advisory groups Consult those who will be most effected
by the decisions Stakeholders Proactively seek citizens’ comments
Analytical Techniques for Decision-making
Cost-benefit analysis (one objective) Multiobjective models Decision analysis Systems analysis Operations research Nominal group technique
Cost-Benefit Analysis (CBA)
Comparing costs and benefits Real (direct, indirect, tangible, and
intangible); Pecuniary (monetary) Decision rules
NB=B-C
Example Building a new opera house in Ankara
Cost-Benefit Analysis-2 Opportunity Cost
What could have been produced if resources had been used in the best alternative way?
Distributional impacts of public programs How will the costs and benefits of a
public program be distributed among the citizenry?
Multi-objective Models Multiple objectives (criteria)
Choosing a shopping mall site Criteria
Local transportation Land-use planning Neighborhood impact Community economy Tax base
A weighting scheme => a weighted score What about moral goals that can not be
quantified?
Decision Analysis Payoff Matrices
Expected Value Use of decision tree to factor in
probability Example:
Should the US drop the atom bomb to Japan or not in WW2?
Would they Japanese surrender?
Systems Analysis Interdependency of things Four basic steps in systems analysis
Problem formulation Modeling Analysis and optimization Implementation
Example What about we put 100,000 more police to
the streets?
Operations Research Operations research
Using mathematics for solving problems (optimization) in WW2
What is the optimal formation of bomber planes as a function of a target shape?
When to fuse a bomb dropped from an aircraft onto a submarine?
What is the optimal location of radar stations? Sensitivity Analysis
Making very small changes in the model so as to see the impact on the whole model
Group Decision-Making: When?
Prerequisites Do the group members have the required
knowledge and skills? Are the members overloaded?
Group decision-making can be preferred when the problem Is uncertain, complex and conflict-laden Requires cooperation of persons or
organizations Has significant, but not immediate deadlines Requires widespread acceptance and
commitment in implementation
Group Decision-Making: Pros Strengths and weaknesses of groups as
decision-makers Strengths:
+ Broader perspective for defining the problem
+ Diversity of experience and thinking styles + Offer more knowledge and information
than individuals can +Easier to implement because people
participated
Group Decision-Making: Cons
Weaknesses - Time consuming and expensive - Should not be used for routine
decisions - May lead to compromise solutions
that satisfy no one - There is no clear focus for
responsibility if things go wrong
Nominal Group Technique
In the nominal group technique Goal: ensure every group member
has equal input in the process No evaluative discussions when the
ideas are presented Secret voting for preferred solutions Raking of alternatives in terms of
priority
Roles and Issues in Groups Devil’s advocate
Someone is assigned the role of challenging the assumptions and assertions made by the group
Brainstorming Generation of solutions by prohibiting criticism The wilder or more radical the idea, the better
Groupthink The pressure to conform to the group norms and
decisions, rather than to state one`s honest opinion.
Limitations to analytical approach
Source: biases in human decision-making Simon & Lindblom
Bounded rationality Too much information, limited mental capacity
Satisficing Not the best solution, but good enough solutions
Some pitfalls Personal biases enter when structuring the
problem Letting the method supplant the problem