decision making under risk to decision making with certainty –Build the large plant if you know for sure that a favorable market will prevail –Do nothing if you know for sure that an unfavorable market will prevail States of Nature Favorable Unfavorable Decision p = 0.5 p = 0.5 Large plant $200,000 -$180,000 Small plant $100,000 -$20,000 • Heuristics are chosen on the basis of the nature of the task problem. Management applies economic principles. Management is dynamic not rigid. Nonetheless, the themes reveal rapid progress in mapping the psychology of emotion and decision making. Decision Making at the Top, depicts some important constraints on strategic decision-making. Management is getting things done through others. Management involves decision making. It is included here as a convenient way of drawing attention to issues that might warrant consideration when making strategic decisions. Decision making is becoming the basis of competitive advantage and value creation for organisations. Management co-ordinates all activities and resources. Decision making … Improving decision making could be the key to superior business performance if global markets give all organisations access to similar resources and competition causes many business processes to converge on world-class standards. 2. Example: A decision that depends on states of nature • Options: – Plan picnic outdoors – Plan picnic indoors • Possible states of nature – Rain – No rain • Choice depends on likelihood of rain, relative quality of picnic indoors/outdoors with and without rain Management is an integrating process. Nature of Management / 3 4. mental questions about the nature of emotion and decision making rather than reﬁnements about known phenomena. 7. Definition(Models!of!decision!making!attempt!to!describe,!using!stochastic!differential!equations! 5. Management is a universal activity. ! The four positions on the scale are certainty, risk, uncertainty, and ambiguity. Decision(Making,Models(! 1. Decision making under different states of nature: Every decision situation can be organized on a scale according to the availability of information and the possibility of failure. October 1994; Applied Psychology 43(4):433 ... Download full-text PDF Read full-text. Errors in Planning and Decision‐making and the Nature of Human Information Processing. 6. • Beliefs and preferences are often constructed/generated through the process of decision-making, as opposed to individuals having known, well-defined preferences which they bring to a decision-making situation. 8.