Deck 18: Strategies for Improving Managerial Decision Making

Question 1

The need for cognitive closure is both an individual personality-type variable and a can be driven by situational variables.

Answer 1

True

Question 2

Statistically, when a manager considers more options, there is a greater chance of finding an optimal solution.

Answer 2

True

Question 3

The "operations research perspective" suggests the best way to control product costs is to produce many units of the same component before making changes to the production process.

Answer 3

True

Question 4

People use base rate information when the causal relevance of the information is apparent.

Question 5

Freezing refers to the tendency to attain cognitive closure quickly.

Question 6

Preference reversals are more likely to occur when a decision maker focuses on costs or benefits unequally.

Question 7

Research shows that people are very good predicting future events.

Question 8

Validity and reliability should be strongly considered when evaluating information quality.

Question 9

The overconfident belief that a project will proceed smoothly is known as the planning fallacy.

Question 10

Linear models can only deal with objective (rather than subjective) information.

Question 11

Decision makers must frequently make a difficult tradeoff between speed and accuracy.

Question 12

Epistemic seizing and freezing generally improves managerial decision making.

Question 13

One reason people tend to underuse base rate information is that base rate is a sum statistic based on the occurrence of a single important event in the past.

Question 14

"Bootstrapping" is the opposite of linear modeling.

Question 15

Research on the framing effect shows that once options have been identified, managers tend to mainly focus on benefits and ignore costs.

Question 16

Invalid information varies because of poor measurement even when the target does not change.

Question 17

Subjective linear modeling would be a good way to select which university to attend for a high school student.

Question 18

Many firms require their managers to justify and explain their judgments to a higher-ranking officer in the firm.

Question 19

Events that have occurred frequently in the past are likely to happy again in the future.

Question 20

Research on the framing effect shows that focusing on costs leads decision makers to behave in a risk seeking manner.

Question 21

The pseudodiagnosticity effect contributes to the problem of overconfidence.

Question 22

Many managers are reluctant to use linear models.

Question 23

"Calibration" refers to the degree to which confidence matches scenario thinking.

Question 24

The best way to overcome overconfidence is to focus intensely on one possibility or outcome.

Question 25

Confidence increases as need for cognitive closure increases.

Question 26

Fault trees would not be helpful for the restaurant management industry due to the nature of the tool.

Question 27

Unrelated pieces of information converging on the same conclusion provide weak evidence for a conclusion.

Question 28

In Bayes's Theorem, the likelihood ratio serves as a measure of the probability of a hypothesis being true.

Question 29

Intuition follows the rules of Bayes Theorem, which is why intuition is often a good decision tool.

Question 30

Objective linear models are also called fault tree models.

Question 31

The best defense against a scenario is to generate your own scenario leading to a different conclusion.

Question 32

The case of the U.S. automobile industry maintaining the status quo while the Japanese developed innovative new solutions to old problems is an example of:

A) openness to new frames
B) poor decision frame management
C) abandoning an operations research perspective
D) relying too heavily on Bayes Theorem
E) high need for cognitive closure

Question 33

Once the options have been identified managers tend to focus on all, except:

A) costs
B) decision frame management
C) benefits
D) possible risky options
E) deadlines

Question 34

Bayes's Theorem is closely related to anchoring-and-adjustment.

Question 35

Fault trees help managers identify the source of a problem quickly.

Question 36

The degrees of correlation between two or more variables can be estimated accurately by such statistical measures as the chi-square test or the Spearman rank-order test.

Question 37

An event seems much more likely to occur if when a scenario related to that event is presented or imagined.

Question 38

Confidence decreases as insensitivity to omissions increases.

Question 39

According to your readings, the Space Shuttle Challenger tragedy is an example of scenario thinking on the part of NASA.

Question 40

Decision aids often cause managers decisions to be even more inconsistent.

Question 41

The example discussed in your readings which explained how the Eurotunnel went over budget and past deadline is an example of:

A) a linear model
B) the planning fallacy
C) neglecting base rates
D) unfreezing
E) redundancy

Question 42

The base rate is a statistic based on:

A) a single significant event score
B) a distribution of event scores
C) a series of isolated events
D) a median event score
E) None of the above is correct.

Question 43

Advising managers to be sensitive to new information and to revise prior judgments in light of new information reduces the effects of which of the following heuristics?

A) Representativeness heuristic
B) Availability heuristic
C) Simulation heuristic
D) Anchoring-and-adjustment heuristic
E) Confirmation bias

Question 44

When several independent or unrelated pieces of information taken from a large data set point to the same conclusion, a manager should be concerned with:

A) reliability and confidence
B) accuracy and cost
C) speed and accuracy
D) seizing and freezing
E) convergence and redundancy

Question 45

Subjective linear models:

A) consistently outperform unaided human judgments
B) rarely outperform unaided human judgments
C) perform about the same as unaided human judgments
D) never outperform unaided human judgment
E) The data are ambiguous regarding unaided human judgments and linear models

Question 46

What is the root (or essence) of the planning fallacy?

A) Overconfidence
B) Unreliable information
C) Too much emphasis on the base rate
D) Complacency
E) Lack of confidence

Question 47

_____ is a desire for definite knowledge, rather than ambiguity or confusion.

A) Judgment convergence
B) Need for cognition
C) Bayes theorem
D) Calibration theory
E) None of the above is correct.

Question 48

Which actions do not improve managerial judgment?

A) Unseizing
B) Seizing
C) Unfreezing
D) Considering a wider range of possibilities
E) All of the above improve managerial judgment.

Question 49

The Consumer Cost Perception Index is an economic indicator that has historically been inaccurate and has varied greatly due to poor measurement techniques. This measure is:

A) unreliable
B) invalid
C) insensitive to omission
D) actuarial
E) convergent

Question 50

Scenario thinking:

A) is harder to handle than statistical decision aids
B) leads to good predictions and judgments
C) increases the perceived likelihood of an event
D) increases manager productivity
E) All of the above are correct.

Question 51

Taking books home over a holiday expecting to do lots of work and doing nothing at all is an example of:

A) confidence
B) the planning fallacy
C) neglecting base rates
D) unfreezing
E) redundancy

Question 52

Focusing on _____ leads decision makers to act _____.

A) costs; risk averse
B) benefits; risk seeking
C) losses; risk averse
D) benefits; risk averse
E) None of the above is correct.

Question 53

As the need for cognitive closure increases:

A) people consider more alternatives.
B) people consider larger amounts of information about each individual alternative.
C) people make snap or quick conclusions.
D) people become more sensitive to inconsistent evidence.
E) people exhibit lower levels of confidence with their decision.

Question 54

The decision aid involving the construction of a key list of inputs for a decision, importance weights for each input, and objective ratings of each input for each decision alternative is known as:

A) an actuarial model
B) an objective linear model
C) a subjective linear model
D) Both a and b are correct.
E) None of the above are correct.

Question 55

People sometimes _____ base rate information because it is a statistic.

A) over use
B) misuse
C) ignore
D) emphasize
E) over estimate

Question 56

The linear model is:

A) unsystematic compared to an actuarial model
B) used to graph ideal vectors
C) a decision aid
D) used only by banks
E) All of the above are correct.

Question 57

Confidence tends to increase as _____ to omission (missing information) _____.

A) sensitivity; increases
B) insensitivity; increases
C) attention; decreases
D) calibration; increases
E) sensitivity; decreases

Question 58

Information that confounds measures of a target with measures of nontargets are:

A) unreliable
B) invalid
C) insensitive to omission
D) actuarial
E) convergent

Question 59

When you want to gain cognitive closure quickly, this is known as what component of need for cognitive closure?

A) Convergence
B) Seizing
C) Unfreezing
D) Freezing
E) Integrative complexity

Question 60

The decision aid involving the use of a list of categories of common difficulties for use in troubleshooting is known as:

A) an actuarial model
B) a subjective linear model
C) an objective linear model
D) a fault tree
E) a convergence model

Question 61

What is the outcome when managers focus mainly on benefits?

Question 62

Which of the following is not a way in which Bayes's theorem can improve decision making?

A) Increasing attention to base rates
B) Reducing pseudodiagnostic thinking
C) Eliminating the confusion of the inverse fallacy
D) Helping decision makers adjust initial estimates with new information
E) All of the above are way in which Bayes's Theorem can improve decision making.

Question 63

What should always be the first step in managerial decision making?

Question 64

What is the planning fallacy? Provide an example.

Question 65

Distinguish between convergence and redundancy.

Question 66

How can a linear model improve decision making?

Question 67

Bayes's theorem is closely relate to what heuristic?

A) Anchoring-and-adjustment heuristic
B) Price/quality heuristic
C) Availability heuristic
D) Simulation heuristic
E) Contrast effect

Question 68

Explain the difference between "seizing" and "freezing."

Question 69

How does the need for cognitive closure influence decision making?

Question 70

What is the best way to reduce overconfidence?

Question 71

Bayes's theorem:

A) de-emphasizes base rates
B) prevents confusion of the inverse
C) can frequently be duplicated by intuitive judgment
D) uses only a small amount of information to make its predictions
E) All of the above are correct.

Question 72

Why is a subjective linear model also called a "bootstrapping" model?

Question 73

When can accountability improve decision making? When can it harm decision making?

Question 74

The degree to which confidence matches accuracy is known as:

A) omission neglect
B) calibration
C) convergence
D) redundancy
E) framing effect