Instructor: Konstantinos Hadjchristidis, k.hadjichristidis [at] unitn.it
Class hours: 48 (8 ECTS)
Throughout their personal and professional lives, managers have to take many decisions. The purpose of this course is to familiarize you with problems associated with unaided managerial decision making, but also with decision aiding tools aiming to overcome these problems. Students will also obtain an understanding of the thinking processes that underlie judgment and decision making, and its systematic errors and biases.
This module is self-contained. No previous knowledge in psychology is required. For students that are eager to learn about the psychology of judgment and decision-making, an excellent book is: Kahneman, D. (2011). Thinking, fast and slow. New York: Farrar, Straus and Giroux.
The course will be organized in two parts. (1) The first part will focus on the psychology of judgment and decision-making. You will be familiarized with psychological research demonstrating that humans have bounded rationality and are susceptible to systematic errors and biases. We will briefly cover the heuristics and biases approach and prospect theory. (2) The second, more substantial, part concerns decision aiding tools. You will be presented with structured decision aiding techniques that aim to improve the quality of managerial decisions. Their core concept is simplification, breaking a complex problem into a number of simpler problems. For each technique, you will be presented with the steps it involves and how to apply it to real-life problems. We will discuss SMART, planning networks, simulation, and financial analysis. We will also discuss bargaining and negotiation, which is another central activity in management, and how to become a more effective negotiator.
The module will include lectures but also interactive activities, such as presentations and discussion of scientific articles and TED talks. You will also be given the opportunity to apply the decision aiding tools to solve problems.
The evaluation depends on a written exam at the end of the module. The exam will be composed of two parts, reflecting the dual purpose of this course. The first part will involve short-answer questions regarding unaided judgment and decision making. The second part will involve problems which you will need to solve by selecting and applying the proper decision tool.
Plous, S. (1993). The psychology of judgment and decision making. New York: McGraw-Hill. (Essential; related to the first part of the course)
Goodwin, P., & Wright, G. (2014). Decision analysis for management judgment (5th edition). John Wiley and Sons: UK. (Essential; related to the second part of the course)