About This Chapter
Decision Making, Biases & Risk - Chapter Summary
In making business decisions, it's important to be able to identify both risk and bias. This chapter offers a handful of engaging and informative lessons that discuss methods for decision making when risk and bias are involved. Progress through the chapter to study the applications of judgment errors, framing, and uncertainty. To make sure you understand these concepts, we've included lesson quizzes and a chapter exam. You can revisit the lessons as many times as needed, and the Ask the Expert feature lets you submit any questions you may have about these topics. The chapter is also available to study any time that fits your schedule. When you're finished with the chapter's resources, you should be able to:
- Identify common bias and judgement errors in decisions
- Apply framing to business decisions
- Understand dealing with uncertainty when making business decisions
1. Dealing with Risk & Uncertainty During Decision Making
Though every person has some experience making decisions, decision making can get more complex at high levels of thinking. This lesson discusses what it means to deal with risk and uncertainty during decision making.
2. Common Biases and Judgment Errors in Decision Making
In order for companies to be successful they have to be able to learn from their mistakes. One way they can do that is to identify biases and errors that might occur during decision making.
3. Impact of the Utility Theory on Risk Management
This lesson looks at how consumers and businesses make big decisions based on utility theory, as well as on strictly monetary values. The method chosen can have a big impact on the decision and the risk profile of a business.
4. How Framing Influences Leadership Effectiveness
We all have our own views and opinions; however, many leaders use special techniques to influence these views and opinions. In this lesson, we will learn about one technique called framing and how it can be an effective tool for many companies.
5. Framing Effect: Definition & Examples
This lesson goes over a well-known cognitive bias known as the framing effect. We'll first go over what it is using common examples and then dive into how it applies to the world of risk management.
6. Business Case Study: Risk Management at Nokia vs. Ericsson
The supply chain disruption that affected Nokia and Ericsson in 2000, top competitors in the booming cellphone industry, is a classic example of the applications of enterprise risk management. Let's see how their futures changed by the way they handled this disruption.
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