Week 12, Monday Lecture Outline

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 quit
  
• 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?
  

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Revised - April 7, 1997