MANAGERIAL DECISION MAKING AND NEGOTIATION

This course focuses on the psychology of decision making. Most people, rely heavily on intuition in making decisions. As we’ll discover, there are many advantages to intuition. Relying on “gut-feel” has gotten many of us pretty far in life. Then why study decision making? A large amount of research in recent years shows that people rely on a small number of heuristics, or “rules of thumb,” in making decisions. These heuristics are extremely useful. For starters, they’re fast and easy. In fact, they’re so easy that most of the time we’re not even aware that we’re using them! In addition, heuristics probably get us close to the right answer much of the time. However, they can also lead to big mistakes. There are numerous examples of important real-world decisions that have gone badly because of over-reliance on heuristics. While intuition often serves us well, there are many decision traps that we tend to fall into on a repeated basis. These traps relate to how we think about risk and probability, how we learn from experience, and how we make choices. This course will teach you about the traps. It’s true that each decision is unique and poses its own special problems.

At the same time, there are many commonalities across decisions. Understanding a few basic principles can take us a long way. You will notice that by the end of the course students begin to internalize the basic principles. They start asking the necessary questions to avoid falling into the traps. Knowing what can go wrong and knowing the right questions to ask will help you think smarter, and maybe only a little harder.

In addition to improving your own decision making, this course will teach you a great deal about how other people make decisions. Even if you are completely rational yourself and require no tutoring whatsoever (there are always a few people who think this of themselves), you will still find this course useful. Managers, consumers, investors, and negotiators all fall into the traps. Therefore, understanding the psychology of decision making can give you a competitive advantage.

A critical part of the course is the notion of negotiation. We negotiate every day. We negotiate with potential employers, coworkers, bosses, merchants, service providers, spouses, and even our children. What price we want to pay, how much we want to be paid, who will do the dishes … all of these are negotiations. Yet, although people negotiate all the time, most know very little about the strategy and psychology of effective negotiations. Why do we sometimes get our way while other times we walk away feeling frustrated by our inability to achieve the agreement we desire?

Negotiation is the art and science of securing agreements between two or more interdependent parties. It is a craft that must hold cooperation and competition in creative tension. It can be very difficult to do well. Even the most experienced negotiators often fall prey to common biases and errors in judgment. Fortunately, there is a massive and still-growing collection of good research in the field of negotiations. The purpose of this course is to help you understand the theory and process of effective negotiations that has emerged (and is emerging) from that careful study.

The role of key people in any organization and industry is almost constantly up for negotiation. The advantages of negotiation in business cannot be underestimated. Achieving a beneficial agreement is the ultimate goal when doing business negotiations. But it is only those that are mutually beneficial that truly bear fruit. Often, this could be the determining difference between business that thrive and those which are merely maintained. Negotiators need to cooperate with bargaining counterparts to create value for both sides. The knowledge of the different strategies, tactics and skills required for such purpose is therefore important in every negotiation. The aim is to win, not by defeating the other side but by winning them over to jointly explore and choose the best options to be agreed in their business relationship.