2022/23 Taught Postgraduate Module Catalogue
LUBS5221M Effective Decision Making
15 creditsClass Size: 445
Module manager: Nicola Bown
Taught: Semester 1 (Sep to Jan) View Timetable
Year running 2022/23
This module is not approved as an Elective
ObjectivesThis module aims to teach effective management decision making on the basis of evidence-based approaches from risk management, cognitive psychology, and behavioural economics. Participants will obtain an understanding of the thinking processes that underlie their own and others’ judgement and decision making, the judgmental errors and decision biases that commonly arise, and strategies for improving decisions. The module does not assume any prior knowledge and will give insight into effective decision making that is useful in both personal and professional contexts.
Upon completion of this module students will be able to critically evaluate:
- different types of decisions and the theories used to explain how they are and should be made
- the thinking processes which underlie participants own and others’ judgement and decision making, including the distinction between System 1 and System 2 thinking
- different types of errors / biases in human judgement/decision making and how these can be overcome
- the influence of motivation, stress and emotion on judgement and decision making
Upon completion of this module students will be able to:
- Reflect on their own thinking processes and those of others, including the ways in which such processes can be improved
- Assess the relevance of the issues presented above for personal and managerial decision making, as appropriate.
- Analyse and think critically
- Communicate in writing to an advanced level
- Make advanced and effective decisions
The normative theory of decision making, which focuses on maximisation of subjective expected utility (SEU) is presented as a starting point, and its validity as a description of how people make decisions is considered.
We then consider the impact of peoples’ limited processing capacity on the way they make decisions, leading to a discussion of two kinds of thinking (quick intuitive System 1 thinking and slow analytical System 2 thinking), what each is, and the implications of using each when making judgements and decisions
Prospect Theory is introduced as a theory which can explain some anomalies in human decision making, such as framing (where changing the description of a problem affects the decisions people make, even though the facts of the problem are unchanged). This leads into a discussion of mental accounting (how people categorise and evaluate financial activities), its influence on individuals’ financial decisions and its link to behavioural finance. We then consider situations where people are poor judges when gathering and interpreting decision information about risk and uncertainty, and the ways in which System 1 thinking can lead to biases in judgement and decision making.
Although Prospect Theory is based around putting a value on each potential choice the decision maker might make, and then comparing these, there are other theories of judgement and decision making which look at other bases for decision making and thus give fresh insights. We cover two of these; naturalistic decision making (NDM) which considers the way in which expertise can support decision making in dynamic environments, and reason based choice, which looks at the way in which reasons and arguments for a particular choice are used in decision making. We then consider the role of motivational biases and the effects of emotion, stress and time pressure on judgement and decision making.
In all topics there is a focus on the implications of the theory considered for personal and managerial decision making; this material is applicable in all areas of life, and participants can use their knowledge to understand the potential pitfalls they face and to try to address them.
|Private study hours
|Total Contact hours
|Total hours (100hr per 10 credits)
Private studyThis could include a variety of activities, such as reading, watching videos, question practice and exam preparation.
Opportunities for Formative FeedbackYour teaching methods could include a variety of delivery models, such as face-to-face teaching, live webinars, discussion boards and other interactive activities. There will be opportunities for formative feedback throughout the module.
Methods of assessment
|% of formal assessment
|Online Time-Limited assessment
|Total percentage (Assessment Exams)
The resit for this module will be 100% by examination
Reading listThe reading list is available from the Library website
Last updated: 02/08/2022
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