MGT 6400 - Managerial Decision Making

Managerial success and failure — and for that matter, the quality of our lives — are determined by the decisions that we make. Yet most of us, when pressed, admit to having some difficulty with decisions. Whether it is because we fear taking risks, worry about making a “wrong” choice, feel overwhelmed by data and options, or have difficulty making tradeoffs, most of us find the process of making decisions challenging. This course's primary aim is to make you a more skilled and confident decision-maker in both your professional activities and personal life. In the process, you will also learn to design smarter “choice architecture” — decision environments that nudge customers and your organization members to make better decisions. The first part of the course will explore the foundations of managerial decision-making. In particular, we will examine how to structure decisions, think more clearly about chance processes, improve the accuracy of judgments, and make better decisions in the face of risk and uncertainty. The second half of the course will extend managerial decision-making to settings where you have conflicting objectives. You must allocate limited resources over a set of options, outcomes are distributed over time, and decisions are made in an organizational context. By the end of the semester, you should have greater confidence in managing your own decision-making processes and have new insight into how you can help others improve their decisions. At the heart of the course is an important distinction between normative, descriptive, and prescriptive approaches to decision making. The normative approach focuses on how rational people ought to choose and is central to traditional economics classes. The descriptive approach focuses on the imperfect ways in which we actually go about making judgments and decisions, and this analysis draws on experimental psychology and the young science of behavioral economics. Finally, the prescriptive approach entails tools and procedures for improving our decision-making. In this course, we will examine all three approaches, developing tools for making better decisions by first understanding what optimal decisions look like and how we are likely to fall short of these standards when left to our own devices.