How we really decide
Decision making theory and prospect theory.
Two and a half hours on how we really decide: separating diagnosis from decision, bounded rationality and satisficing, and how loss aversion and sunk costs distort choices.
- Level
- Focus
- Learning time
- 2 hours 30 minutes
- Where
- Solving Complex Problems and Decision Making
- Price
- £69
When you step up to a higher level, what you paid in the last 12 months for lower-level courses inside the bigger course comes off its price, in proportion to how much of each is inside it, whichever topic it's from. Courses at the same or a lower level don't give credit against each other. A Focus course or above always costs at least £15. Read the full terms
Certificate of Completion, or Certificate of Completion and Assessment with a short assessment
Overview and Outcomes.
Who It's For
Managers and leaders wanting to understand their own decision making
Overview
Problem solving asks what is true; decision making asks what to do about it, and leaders often blur the two. How we really decide begins by separating them, then builds a shared vocabulary: programmed and non programmed decisions, conditions from certainty to ambiguity, and the classical six step model as a benchmark. It then explores why intelligent people still do not optimise, through Herbert Simon's bounded rationality and satisficing, Mintzberg's model and the Kodak case. Finally, Kahneman and Tversky's prospect theory shows how loss aversion, framing and sunk cost reasoning, seen in Concorde, quietly shape choices.
Aims
This programme aims to help leaders see how decisions really get made, in themselves and their organisations, so they can keep diagnosis and decision in sequence, test whether good enough is still good enough, and notice when a choice is protecting a loss rather than weighing a future.
In summary, you will be able to:
- Distinguish problem solving from decision making and classify a decision by type and by its conditions of certainty, risk, uncertainty or ambiguity.
- Explain how bounded rationality, satisficing and prospect theory depart from the classical rational model, using the Kodak and Concorde cases.
- Apply practical questions to a live decision to check for loss aversion, framing effects and sunk cost reasoning before committing.
What you'll develop
Through this Focus course, you will build the ability to:
- Distinguish problem solving as diagnostic and generative work from decision making as evaluative and committal work.
- Identify whether a team's weakness lies in deciding or in diagnosis, and name the different fix each one needs.
- Distinguish programmed from non programmed decisions and identify the cost of handling each one the wrong way.
- Identify whether a decision sits under certainty, risk, uncertainty or ambiguity, and explain what each condition asks of you.
- Explain Simon's bounded rationality and distinguish satisficing from optimising by their stopping rules.
- Explain loss aversion, reference dependence and diminishing sensitivity, and how they depart from the classical rational model.
Built from 2 parts.
2 hours 30 minutes of learning.
- 01Solving is not decidingProblem solving and decision making basicsBitesize2 modules
- 02The minds behind our choicesBounded rationality and prospect theoryBitesize2 modules
Keep going.
Part of the Solving Complex Problems and Decision Making topic, also sold whole as Clear calls in complex times.
Go deeper, and pay only the difference
- You are hereFocus, 2 hours 30 minutes, £69
- Next stepExplore, How decisions really get made, 6 hours 30 minutes, £129. Already own the Focus? You pay £60.
- The whole topicImmerse, Clear calls in complex times, 13 hours 30 minutes, £249. Already own the Focus? You pay £180.
When you step up to a higher level, what you paid in the last 12 months for lower-level courses inside the bigger course comes off its price, in proportion to how much of each is inside it, whichever topic it's from. Courses at the same or a lower level don't give credit against each other. A Focus course or above always costs at least £15. Prices per person. Read the full terms
Other Focus in the Solving Complex Problems and Decision Making topic
- Structure before solutionsGroupthink, Kepner Tregoe and decision rights2 hours 30 minutes£69
- Evidence and instinctCost benefit, data and problem solving styles2 hours 30 minutes£69
- Deciding togetherRoot cause analysis and group decision making2 hours 30 minutes£69
- Under pressure, with integrityDecision making under pressure and ethics3 hours£69