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Ethics, rationality
and decision making
Fred Wenstøp
21/07/2015
Fred Wenstøp
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Matthew 12, 10-12
“And behold, there was a man which had his hand
withered. And they asked him, saying, is it lawful
to heal on the Sabbath days? that they might
accuse him. And he said unto them, What man
shall there be among you, that shall have one
sheep, and if it fall into a pit on the Sabbath day,
will he not lay hold on it, and lift it out? How
much then is a man better than a sheep?
Wherefore it is lawful to do good on the Sabbath
days. ”
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Normative theories of
decision making
• Teleological ethics
• Deontological ethics
• Teleos = goal
• Consequential ethics
• To deon = duty
– Immanuel Kant (1724-1804)
– David Hume (1711-76)
• Rule based management
• Utility theory
– Max Weber (1864-1920)
– Von Neumann, Morgenstern ‘40
– Keeney, Raiffa 1976
• Management by objectives
– The balanced scorecard
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Immanuel Kant (1724-1804)
• Duty based ethics
– Rational action cannot be based on a single individual’s
personal desires, but must be in accordance with
something he can will to be a universal law
– Actions posses moral worth only when we do our duty
for its own sake, not because of its consequences
• Kant’s categorical imperative
– “Act only on that maxim through which you can at the
same time will that it should become a moral law!”
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Kantian rules
• Examples
– The United Nations’ Universal Declaration of Human Rights of
1948
• The rights are considered absolute regardless of their consequences.
– Kofy Annan’s Global Compact CSR-rules
• One rule bans child labour
• Kant’s deontological ethics is incompatible with the
paradigm of decision making
– Amartya Sen:
• Kant is difficult to defend as a general ethical principle because the
consequences may be so great that they just cannot be overlooked
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Max Weber
• Rule base Management
– Basis
•
•
•
•
Logic of appropriateness
Obligation
Identity
Duty
• Survival of the fittest organizations
– Organizational learning through rule building
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Decisions sine ira et studio
• Weber:
– a major social consequence of idealized bureaucratic
control is a world without need for emotional decisionmaking:
• “The dominance of a spirit of formalistic impersonality, sine
ira et studio, without hatred or passion, and hence without
affection or enthusiasm. The dominant norms are concepts of
straightforward duty without regard to personal considerations.
Everyone is subject to formal equality of treatment; that is,
everyone is in the same empirical situation. This is the spirit in
which the ideal official conducts his office.”
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David Hume (1711-76)
• Reason cannot be the basis of morality
– Reason can show us the best way to achieve our ends,
but it cannot determine our ultimate desires
• “‘Tis not contrary to reason to choose my total ruin, to prevent
the least uneasiness of an Indian”
– Beliefs are formed through cause-effect analysis
• Hume’s law
– There is a gulf between facts and values, between “is”
and “ought”
• Inherited Sympathy is one basis for morality
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Von Neumann and Morgenstern
• John von Neumann and Oscar Morgenstern 1944
–
–
–
–
Formalisation of the theory of utility
Rationality defined as consistency through axioms
The principle of rationality as utility maximisation
One dimensional theory of utility
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Management by objectives
• McGregor (1960) theory X and theory Y:
– X: humans dislike work and will avoid it if possible
– Y: the integration of individual and organizational goals
• He states that the assumptions of theory Y are not finally
validated, but that they are nevertheless far more consistent
with existing knowledge in the social sciences than are the
theory X assumptions.
• The integration of organizational goals with those
of the employees is a main managerial task:
Management by Objectives
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Stake Holder Theory
• Kaplan & Norton
• R. Edward Freeman
– The Balanced Scorecard
– Value creation for
stakeholders
Maximize
Long term value of the firm
Customer
objectives
Financial
objectives
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Internal
business
process
objectives
Maximize
Long term value of the firm
Learning
and growth
objectives
Customer
objectives
Fred Wenstøp
Owner's
objectives
Employee's
objectives
Supplier's
objectives
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Keeney and Raiffa 1976
• Dichotomy between facts and values
– Good decision analysis requires the separation between
objective facts and subjective values
• Multi-objective decision making
– Formalisation of weighting
• The goal hierarchy and weights should be used as
a medium for communicating organizational goals
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Emotion and decision making
• Case: Phineas Gage
• Experiment 1:
– A group of people, some normal and some suffering
from prefrontal deficiency was
– Exposed to a fire alarm
– Shown value laden pictures
• Experiment 2:
– Choice of card decks
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Damasio’s theory
Neocortex
Prefrontal
lobes
Amygdala
Stimulus
Feelings
Emotional response
from the body
Primary emotions trigger
Secondary emotions
trigger
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Rationality
Føllesdal 1992
• Four dimensions of rationality
– rationality as logical consistency
• pertains both to values and beliefs
– rationality as well-foundedness of beliefs
• beliefs are well supported by available evidence
– rationality of action
• application of decision theory
– rationality as well-foundedness of values
• reflective equilibrium that gives a stable set of convictions that
are relevant for the decision situation
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Consistency of beliefs I
• Wason 1966
– Cards: A D 3 7
– Each card has a number on one side and a letter on the
other
– Rule: If there is an A on one side, there is a 3 on the
other
– Which cards would you turn to check whether the rule
has been applied properly?
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Consistency of beliefs II
• Tversky & Kahneman 1983
Linda is 31 years old, single,
out- spoken, and very
bright. She majored in
philosophy. As a student,
she was deeply concerned
with issues of
discrimination and social
justice, and also
participated in antinuclear
demonstrations. Please,
rank the following
statements by their
probability.
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A. Linda is a teacher in an
elementary school
B. Linda works in a bookstore and
takes Yoga classes
C. Linda is active in the feminist
movement
D. Lina is a psychiatric social
worker
E. Linda is a member of the league
of Women Voters
E. Linda is a bank teller
F. Linda is an insurance
salesperson
G. Linda is a bank teller and is
active in the feminst movement
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