Abstract for Choices, Values, and Frame
Kahneman,D and Tvesky, A. (1984), ‘ Choices, values, and frames’. Ameriacn Psychologist, 39 (4)
This article discuss when consumers feel a certain price which is bringing the “loss” rather than the “income”, they are more sensitive to price. Consumers are feeling a certain price more cost-effective manner and the other a less cost-effective. They will accord the cognitive psychological evaluation to exhibit a completely different personal attitude and decision making. Economic decision making theory has always been that people are fundamentally rational animal. However, human beings have irrational features in many aspects. One of the most attract somebody’s attention example is calling the “framing effect” In this effect, the positive or negative way to make a decision has had a dramatic effect on subsequent choice. The researchers found that integration from the decision system of emotional preference were potential causes of framing effect. With the potential risk benefit choices need to pay the cognitive effort than defined benefit choice; however, determining the damaged choice and risk selection potential damage to pay cognitive effort is the same.
There are two fundamental analyze principles for rational choice theory: dominance and invariance. Dominance can be defined that project A in the worst case is better than project B, project A should be accept. Invariance requires that human describe selectivity problem for the same thing that will draw the common preference. Framing effect can be divide two types: positive and negative. The positive frame shows risk-averse preference for gains. On the other hand, the negative frame shows risk- seeking preference for losses. In addition, in mental accounting, money can be attributed to the different types of account which cannot replace each other. People are always divide outcomes into different mental accountings and use decision value and experience value, in order to evaluate the results whether can be accepted.
To discuss the cognitive psychology effects our daily life, I will give a example of rent or buy a house in Sydney. If we want rent a house or apartment in Sydney which have two bedrooms, a living room and 2 bathrooms, according to my experience, we need to pay 600-800 dollar each week. Most of us may not feel pressure to rent an apartment for one or two years. If we spend 20000 or 30000 as down payment which is use for purchase an apartment. I think we could be hesitating. We analyze that purchase a apartment is better than rent in order to live one or two years in some place. We are willing spend less to live although we make sure loss 600-800 each week. However, it leads to a value of experience, and this experience value effect our decision. Finally, we would rather to rent an apartment although we know it not a rational investment.
This article point out that the exercise of power in the process of development and implementation of organizational information systems are very expensive and time consuming. Accordingly, the theory of ‘sociology of translation’ provides corresponding solutions for the organization. According to the theory, there are two important features in the problemastisation. Firstly, actor or group should more specific in a general problem to find a mental to solving. Secondly, actors should be defined identities in a plan that will use their skill and experience precisely. The author point out an example that senior manager enjoy the IT program and analyze it to use reducing cost as a new tool. In addition, most of the consultants believe that organizations should make clear position, future goals and behavior before implement IT strategy. Meanwhile, consultants also believed that IT system is great significance strategy for organizations lead to successful. For another example, IT consultants try them best to make sure problematisation steady. The successive problematisations build an exercise of power and prevent other alternative problematisations from getting onto the agenda of the project team.
In conclusion, the author solves the problems in the information technology process in the theory of concepts. Consultants adopted the theory of ‘sociology of translation’ to solve organizations’ problem. Discuss the nature of the relationship between external management consultants and customer or user groups. The author considers the other resource management role and differential access to its knowledge and skills, such as an important exercise of power relations.
ERP (Enterprise Resource Planning): Enterprise resource planning system is basing on information technology. The use of information technology implementation of enterprise supply chain management, in order to realize scientific management of each link in the supply chain. ERP integrates information technology and advanced management ideas become the modern enterprise mode which reflecting the era of enterprise reasonable allocation of resources. It maximizes the creation of social wealth and become the cornerstone of corporate survival. In the company, the general management mainly includes three aspects: production control (planning, manufacturing, logistics (distribution), procurement, inventory management) and financial management (accounting, financial management); three systems are integrating and the importance of human resources constitutes the primary module of ERP system. The ERP system of business each module refinement, split, forming a relatively independent software system and the seamless connection, so that the enterprises of different scales can be freely combined according to need and make enterprise resource optimization configuration.
The author claims a general make a strategic relate to several aspects. This article points out that your teammates or colleagues making decision will affect on yourself. Namely, the title of this article: “looking up and looking around”. Firstly, “looking up” is a basic human nature in any situation. In other words, when you meet a more experience and knowledge person (such as your manager and your boss) make a strategic, and then making decision follow how he/she would act. Secondly, ‘looking around’ is one of your opinions. When you work with your teammates or colleagues, you will find out how they deal with problems and what they make decisions. Then you will follow their opinions to deal with yourself problems.
The author also points out that “decision- making paralysis” always effect on everyone no matter you are middle manage or even the top manager and CEO. When face with a problem, human minds always goes blank. They want to find a solution to solve the problem. If not, they will look for someone to take the burden. On the other hand, they will afraid to make decision in any situation because they don’t want the decision bring fail. Most of managers suffer from anxiety that colleagues will find out their incapability. There is important problem that makes a rational strategic not only managers’ duty, it also relate to company’s structure and the project. Manager always are demanded to make a decision quickly which based on information transmits from primary levels. However, the information not particularly correct that leads to some wrong decisions in that situation. Obviously, the manager who makes the wrong decision in a organization should take the blame and be fired. This situation always happens in many companies. The author claims that a outstanding managers should have a rational analyze and quick thinking abilities.
In my experience, when I worked at an international land sales company, my manager receives a project to help a China company find an office. Our team receive the order which needs a 300㎡ work place in shanghai CBD. Firstly, we should make a research to find out whether a suitable square. Our manager makes a decision to ask some building manager which is located in shanghai CBD. Finally, we find a suitable place for the China Company. However, when we check require with the company, our assistant told us we get wrong squares that is 400 ㎡. So our manager has to afresh contact to the building list. Fortunately, we found a 90 ㎡ near the former one. Our manager decides to connect the two work place to reach 400㎡. We successfully completed out task on time.