Multi-Alternative Decision Making

What choices are driven

In a decision-making problem, anchoring effects occur when
a seemingly trivial factor serves as a starting point for estimations

• Alternatives – There may be various alternatives, each with its own set of uncertainties and

Provide a description of a scenario in which this kind of decision between two choices, based on weighing their underlying attributes, applies in the “real-world” business setting. Furthermore, what are the benefits and drawbacks, if any, to this method of decision making?

However, it’s unknown exactly what kinds of situations will cause ambiguity to be avoided or preferred. The literature is also unclear as to whether the reaction is from the, “missing probability parameter itself, or (2) motivational or attributional factors…” (Rode et al. 1999) associated with comparing opitions. The authors hypothesized that, “people associate ambiguous probabilities with highly variable outcomes” (Rode et al. 1999). If the outcome that the person needs is higher than the average payoff of each option, then the person should actually default to the ambiguous option because it would have more variability, which could have a greater chance

A decision is “a conscious choice of an alternative from a set of several others”. A person has the option to choose from different alternatives when making a decision. After a person makes a decision, he/she needs to evaluate it, analyses it and sees the outcomes. There are two types of decision making process; first, no-programmed decision making that refers to things a person has not done before, such as buying a car or a house. The second decision making process is programmed that involves things that we do on a daily basis such as eating or showering. In addition, group decision making involves brainstorming which is a way of collecting different ideas in order to take the best alternative to make a decision; then, consensus is

In today’s economy, decision-making skills vary for each household; however, the bottom-line goal for every individual is to get the most for their money. In order to do this, there are 4 principles of individual decision-making: facing trade-offs, evaluating what one is giving up to obtain their goal, thinking at the margin, and responding to incentives.

Q3. Please describe a specific occasion when you have considered a number of options before making a decision.

This is a two stage process. Tiffany first lists each option and gives a value to each in the criteria categories after doing research on each one Tiffany’s chart can be seen below:

Ariely uses studies to demonstrate how subtle forces affect the decision making process. In order to prove how decoys make one option appear with more value than it has, a study on an economist

The following explanation is structured based on the decision making model: Define the problem (A), Analyze Alternatives (B), Make a Choice (C), Take Action (D), Evaluate Result (E). For each of the steps in the decision-making process, I will list each situation in order (1-4) stated in Case 9, W-115.

Prospect theory is an important alternative descriptive theory for decision-making under unreliable situation (Kahneman and Tversky 1979), which includes real life selection and psychological analysis between choices that involve risk. Prospect theory, which efforts to explain individual make decisions between risky replacements based on the value of potential gains and losses (Wakker 2010), advanced from expected utility theory, which explains that investors want to maximize expected utility of wealth when unclearly situations (Blavatskyy 2007). According to Kahneman and Tversky (1992), more recent researches perceived nonlinear preferences in choices that do not involve definite events in prospective theory. The concept of framing effect refers description invariances (Kahneman and Tversky 1992). To be specific, individual always makes the same decision in identical choice conditions. Also, decision makers have tendency to

The importance of decision making in individual daily life and in organization level was demonstrated by two scientists, Arkes and Hammond (1992), in ‘Judgment and Decision making’ indentified the four types of information which decision maker requires constructing a decision tree.

Many methods have been developed to simplify the decision making process. In this paper, the rational model of decision making will be discussed first. Then, some of the factors that cause deviation in the rational

Applying the utility theory seems a rational choice as it can reflect the decision maker’s attitude toward risk. Still problems arise when the decision is made by more than one person. Based on their experiences within General Motors, Michael W. Kusnic and Daniel Owen have found that when there were more than one decision makers, it was less