24336 - Decision and Cognitive Processes Theory

Learning outcomes

People credited with this course are able to understand and explain the most important theories about individual and collective decision making, with a specific attention to their cognitive foundations. That implies: i) to know the different visions (axiomatic vs pragmatic) of human rationality in social and economic fields; ii) to understand the nature of mental process involved in representation, “construction” and judgment about reality; iii) to acquire reflexive capabilities and learning skills about the decisional behaviour; iv) to acquire some practical skills in order to analyse the “real life” decision making processes, with a specific view for the Internet phenomena.

Course contents

• Ground reasons for the (new) interest in decision making and cognitive theories. Changes in organizational paradigm and their consequences on the decisional process.

• Decision making in the neoclassical approach. The homo oeconomicus axiomatic rationality and its inherent limits: informative bounds, cognitive bias.

• St. Petersburg paradox: expected value and utility function. The Bentham marginal utility. Von Neuman and Morgenstern axiomatic treatment of numerical utilities. Savage's subjective expected utility. Allais and Ellsberg paradoxes. The prospect theory of Kahneman and Tversky and their consequences on the axiomatic approach.

• Beyond Bentham: ethical aspects of decision making.

• The bounded rationality: from prescriptive to behavioral models. The Herbert Simon “search and satisficing theory” and the James March “exploration and exploitation model”. The “garbage can theory”: decision making and ambiguous behaviors.

• Decision making as a social belonging. The logic of appropriatenessvs. rational choice model. The path dependency bias: homeostatic vs morphogenetic behaviour. Single-loop and double-loop learning. Problem reframing.

• Karl Weick's radical subjective approach: enacting and sensemaking in the organizations.

• Approach and techniques of decision making analysis: a brief outline: Conjoint Analysis; Repertory grid; Cognitive maps and Social Network Analysis.

• Applications of decision making techniques in social and economic contexts.

Readings/Bibliography

Bazerman M. (2003), Judgment in managerial decision making, NY, John Wiley, 2003
Kahneman D. (2003), “Maps of Bounded Rationality: Psychology for Behavioral Economics”, The American Economic Review, Vol. 93, n. 5, pp. 1449-1475.
Cohen M., March, J.G., Olsen J, (1972), “A Garbage Can Model of Organizational Choice”, in Administrative Science Quarterly, n. 17.
March J. G. (1991), “Exploration and exploitation in organizational learning”, Organization Science, Vol. 2, n. 1, pp. 71-86.
K. Weick, “The collapse of sensemaking in organizations: the Mann Gulch disaster” in Administrative Science Quarterly, n. 38, 1993

Teaching methods

Frontal teaching. Classroom group practice.

Assessment methods

Oral examination, integrated by a brief dissertation about a bibliographic reference choosed by the student.

Teaching tools

On line teacher notes. Selected papers.

Office hours

See the website of Marco Ruffino