Decision Making and Careers

Lecture 22

Psychology 360
Outline
•	I. Models of individual decision making
•	II. Finding a job
•	III. Sources of decision bias
•	IV. Diagnosing your career
An application decision
•	you are one of 600 people looking for a job
•	Firm A will hire 200 people
•	at Firm B there is a 33% chance of hiring all 600, but a 67% chance of making no hires
•	Where do you want to apply?
Models of individual decision making
•	Normative decision making
–	rational model

•	How we actually make decisions...
–	bounded rationality model
Rational model
•	Goal: obtain the best job

•	Approach: systematic search of options

•	Assumptions: 
–	complete and perfect information about jobs
–	accurate and unbiased processing of information
A rational job search
•	1. Want to find the best job

•	2. Search all possible openings

•	3. Compare all options

•	4. Choose the best job

•	5. Accept job

•	6. Is my job OK?

Bounded rationality model
•	Goal: obtain an acceptable job

•	Approach: systematic search of options

•	Assumptions: 
–	limited information about jobs
–	imperfect processing of information
A boundedly rational job search
•	1. Want to find an acceptable job

•	2. Search possible openings, given available resources

•	3. Compare options, given available resources

•	4. Choose the best job, from those found

•	5. Accept job

•	6. Is my job OK?

Sources of bias
•	framing effects

•	honoring sunk costs
Framing effects
•	you are one of 600 people looking for a job
•	Firm C will reject 400
•	at Firm D there is a 33% chance of no rejections, but a 67% chance of rejecting all 600
•	Where do you want to apply?
Framing effects
•	Firm A = Firm C
•	Firm B = Firm D
•	Paradox: A preferred to B; but -- D preferred to C
•	people avoid risk in domain of gain
•	people seek risk in domain of loss
Framing: Empirical results
•	see diagram in textbook
Honoring sunk costs
•	you are in a bad job
•	you should quitÖ
•	BUT --
–	you have some seniority
–	your friends think you have a dream job
–	you went through an intense competition to get this job
•	Therefore, you put in another day doing work you hate!
Why do we honor sunk costs?
•	see diagram in textbook
Diagnosing your career
•	are you learning?
•	if your job was open, would you get it?
•	do you know what you are contributing?
•	what would you do if your job disappeared tomorrow?
•	are you being exploited?
•	are you worried about your job?

Copyright © 1997, The Regents of the University of Michigan, All rights reserved.
Revised - April 7, 1997