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MGT 3303, Managerial Decision Making 1 Course Learning Outcomes for Unit IV Upon completion of this unit, students should be able to: 3. Explore the psychological aspects of decision-making. 3.1 Describe the competitive escalation paradigm. 3.2 Explain how to avoid escalation of commitment in a decision-making scenario. 5. Explain how motivation and emotion impact managerial decision-making. 5.1 Analyze how motivation and emotion influence decision-making. 5.2 Illustrate how to minimize the effects of motivation and emotion on the decision-making process of a current company. 5.3 Exemplify what happens when emotions collide with cognition. Reading Assignment Chapter 6: Motivational and Emotional Influences on Decision Making Chapter 7: The Escalation of Commitment Unit Lesson Nonrational Decision-Making The emotional aspects of decision-making have been left out of the discussion so far. These aspects are not rational in the sense that they do not rely on logic or objectivity, but emotions are still important influences in the choices we make. One common element is risk tolerance or how well you handle uncertainty. For example, choosing to join a start-up may promise a big upside reward when compensation comes in the form of stock options that become valuable when the company is acquired. However, that comes at the cost of lower cash compensation with no certainty of higher reward; there is the risk that the company will fail to find a market for its goods or services and go out of business, rendering the stock options worthless. Your willingness to take on some risk will shape your decision. Other emotions can come into play. For instance, you may want to be close to friends and family or work for a company that gives you a sense of status or prestige. There may even be an emotional component to the criteria you have used (e.g., how you will feel about yourself if you accept a job at a company that pays more than the others even though you do not agree with some of its business practices). You also have to approach decisions knowing that you do not always have full and accurate information. That does not mean you should choose based on assumptions or instinct but, rather, that it is not possible to have confidence that you have perfect information—only the best that is available at the time of the decision. You cannot fully know what it is like to work at a job until you have actually done so. People can tell you what it is like, but you may perceive it differently. In that sense, the information you based your analysis on was limited by what was knowable; some things are only learned through experience. The ability to make decisions can improve as you are given more opportunities to make decisions. Stating goals, identifying alternatives and criteria, analyzing those alternatives, and finally making a choice all rely on a mix of skills, aptitudes, and heuristics that enable us to make sense of the options. These can be developed over time to improve your judgment Read More …