Objectives

In this course, we will:

• Identify the different phases in the decision making process and learn about the traps in each of these phases,
• Learn about tools, strategies and techniques for making sound and rational decisions under conditions of risk and uncertainty,
• Learn about the cognitive biases and environmental constraints that undermine and limit our decisions,
• Learn about intuition and when to use it,
• Comprehend the complexity of decision making in a social world and learn how to minimize unwanted consequences,
• Learn about types of negotiations, and how to increase the chances for making a good deal in a negotiation, and
• Systematize and improve your decisions both in a personal and an organizational context.

Contents

Business revolves around making decisions, often risky decisions, usually with incomplete information and too often in less time than desirable. Decision-making is a business skill that managers often take for granted in themselves and others, but it is not as easy as some might think. In fact, just like with breathing, walking, and eating, we all do it, but some people do it better than others; some are experts while others harm themselves and others in the process.

This course will familiarize students with important theoretical approaches to decision making, aiming at providing them with a clear understanding of the field, while at the same time training them at becoming better and more conscious decision makers.

For many decision problems it is hard or even impossible to determine what the optimal process and decision would be. As a consequence, this course involves not only lecturing and theory, but also discussion, arguments and controversies. Several examples, case-studies and in-class activities will illustrate how various tools can be applied to improve managerial decision making and to what extent various theoretical approaches are useful to understand what managers are actually doing.

We will also have a number of distinguished guest speakers who are experts in their field and who will offer us insights from the perspective of an experienced professional decision maker.

Summary of sessions:

1. Introduction: Course overview, history of Judgment and Decision Making.
2. Decision-making basics: process, types & strategies, risk vs ambiguity vs uncertainty.
3. Decisions under risk, pt.1: Expected Value, framing & decision trees.
4. Decisions under risk, pt.2: Expected Utility & Prospect Theory.
5. Decisions under ambiguity: magic quadrants, checklists, signal detection, fast and frugal trees.
6. Heuristics and Biases: cognitive biases, dual-process theories, Behavioral Economics.
7. Fast and Frugal Heuristics: bias-variance dilemma, overfitting, less-is-more, ecological rationality.
8. Group decision making: accountability, ethics, leadership, groupthink, culture.
9. Decision making in the digital world: misinformation, debunking & digital heuristics, piracy & cybersecurity.
10. Intuition and experts (guest: Ulrich Hoffrage): experience, expertise and intuition.
11. Decision making under uncertainty, luck, and consulting: black swans & fat tails, tools (scenario planning, thresholds, resilience, cognitive mapping), luck - freedom of choice - happiness, and consulting.
12. Negotiation, pt.1: Inside Risk case.
13. Negotiation, pt.2: distributive and integrative types.
14. Negotiation, pt.3: Summary of negotiation principles, Sum up of course.

Organization of the course:

(1) Registration for course. Before session 1, students have to:

• register on moodle
• submit a registration file (.pdf) with: a recent photo of themselves, a paragraph where they present a recent decision they made, and a sentence with the name of their favorite movie, series, and book.
• The course will have an upper limit of students (80), and it will be on a first-come-first-served basis based on the registration file submission. Thus, students who are really interested in the topic are strongly encouraged to register as soon as possible.

(2) Presence in campus and contribution. The course is planned to take place in campus (first session on Tuesday, September 20th 2022) in the classroom Anthropole 2013. The current plan is to have physical classroom sessions every week, though uncertainty about future developments related to Covid-19 may impose some constraints on us and force us to be flexible. Students are expected to be actively present in class, ask and answer questions, participate in in-class activities and discussions.

(3) Recordings. The sessions will be recorded and the recordings will be made available on the moodle.

(4) Weekly assignments. Throughout the semester, students will have to submit nine weekly assignments.

(5) Final assignment. There will be no sit-in exam at the end, but a final project, to be completed in January 2023, that will be centered around a decision-making case of your choice.

Assignments have to be done either individually or in groups that you choose. All weekly assignments will be discussed in class during the next session after the deadline. More information about session plans, assignments, group formation will be available in the extended syllabus (available on moodle).

References

The course is largely (but not exclusively) based on the following literature. Some parts are required, others are recommended, more detailed information will be provided in the class.

• Ariely, D., & Jones, S. (2008). Predictably irrational (pp. 278-9). New York: HarperCollins.
• Bazerman, M. H. (2006). Judgment in managerial decision making (6th ed.). New York: Wiley.
• Christakis, N. A., & Fowler, J. H. (2009). Connected: The surprising power of our social networks and how they shape our lives. Little, Brown Spark.
• Dobelli, R. (2013). The art of thinking clearly: better thinking, better decisions. Hachette UK.
• Fisher, R., Ury, W. L., & Patton, B. (2011). Getting to yes: Negotiating agreement without giving in. Penguin.
• Galotti, K. M. (2002). Making decisions that matter: How people face important life choices. Mahwah, NJ: Erlbaum.
• Gigerenzer, G., & Todd, P. M. (1999). Simple heuristics that make us smart. Oxford University Press, USA.
• Gigerenzer, G. (2007). Gut feelings: The intelligence of the unconscious. New York: Viking Press.
• Gigerenzer, G. (2015). Risk savvy: How to make good decisions. Penguin.
• Gilbert, D. (2009). Stumbling on happiness. Vintage Canada.
• Gladwell, M. (2006). Blink: The power of thinking without thinking.
• Halpern, D. F. (2002). Thought and Knowledge: An introduction to critical thinking. Lawrence Erlbaum Assoc. Inc.
• Hammond, J. S., Keeney, R. L., & Raiffa, H. (1999). Smart choices: A practical guide to making better decisions. New York: Broadway Books.
• Hoffrage, U., & Marewski, J. (2015). Unveiling the Lady in Black: Modeling and aiding intuition. Journal of Applied Research in Memory and Cognition, 4, 145–163.
• Hogarth, R., (2001). Educating Intuition. Chicago: University of Chicago Press.
• # Inside Risk. A documentary of a kidnapping case, with a focus on the negotiation with the kidnappers, (not publicly available).
• Kahneman, D. (2011). Thinking, fast and slow. Macmillan.
• Klein, G. (2004). The power of intuition: How to use your gut feelings to make better decisions at work. New York: Currency/Doubleday.
• Nutt, P.C. (1989) Making tough decisions: tactics for improving managerial decision making. San Francisco: Jossey-Bass Publishers.
• Russo, J. E. & Schoemaker, P. J. H. (2002). Winning decisions: Getting it right the first time. New York: Currency/Doubleday.
• Schwartz, Barry. The paradox of choice: Why more is less. New York (2004).
• Taleb, N. N. (2007). The black swan: The impact of the highly improbable. Random house.
• Thaler, R. H., & Sunstein, C. R. (2009). Nudge: Improving decisions about health, wealth, and happiness. Penguin.

Pre-requisites

(A) Very good use of English

(B) Registration on moodle & Submission of registration file before the first session

(C) Limitation of students: 80 (first come – first served basis)

Evaluation

First attempt

Exam:

Without exam (cf. terms)  

Evaluation:

There is no exam for this course. The grade is determined by the following three components.

(1) In-class contribution (15%). Physical presence during sessions is a necessary but not sufficient condition to receive a good grade for contribution. Students are expected to actively participate during the sessions, express opinions, ask and answer questions, and participate in in-class activities.

(2) Weekly assignments (altogether 60%). There will be nine assignments throughout the semester. In general, late submissions will be penalized as long as they are still uploaded before the session in which they will be discussed (thereafter, the grade will be “1”). The grade for this component will be calculated as the average of the eight highest grades the student received. Students have to achieve a passing grade for the average of the weekly assignments but not for each individual weekly assignment. [Note that the deadline for Assignment 1 is on September 25]

(3) Final assignment (25%). The final assignment is the presentation of a decision making case, consisting of slides and a recording, to be submitted on moodle in January 2023.

Retake

Exam:

Without exam (cf. terms)  

Evaluation:

• If component 1 (contribution) received a grade below 4, the student will have to watch the recordings of the course and then do a zoom meeting with the instructor in which s/he will discuss the points s/he found most interesting, and answer to some content questions taken from the sessions.
• If component 2 (weekly assignments) received a grade below 4, it will be replaced by a set of questions on the content of the weekly assignments. The student will have to submit the answers on moodle during the retake period.
• If component 3 (final assignment) received a grade below 4, the group will have to present a new decision making case.