Deck 3: Foundations of Decision Making

Question 1

A scientist cites two studies that show a positive effect for her drug and ignores five other studies that show a negative effect.Which error or bias is she committing?

A)Confirmation bias
B)Anchoring effect
C)Overconfidence bias
D)Framing bias

Answer 1

A

Question 2

Why do managers often use heuristics?

A)Heuristics eliminate errors and biases.
B)Heuristics help managers explore all alternatives.
C)Heuristics simplify decision making.
D)Heuristics allow managers to identify weaknesses in their decision-making style.

Answer 2

C

Question 3

Sondra has decided to collect information about the features the company needs for its system.Which stage of the decision-making process is she carrying out?

A)Identifying decision criteria
B)Evaluating her decision's effectiveness
C)Identifying alternative solutions
D)Allocating weights to the criteria

Answer 3

A

Question 4

To identify a problem, a manager _________.

A)compares one set of standards or goals to a second set of standards or goals
B)looks for unhappy employees
C)seeks confirmation from other managers
D)compares the current state of affairs with some standard or goal

Question 5

All criteria are equally important in the decision-making process.

Question 6

Which of the following defines a problem in the decision-making process?

A)A discrepancy between the ideal and the practical
B)A hindsight bias has been identified
C)A discrepancy between what exists and what the decision-maker desires to exist
D)When 'rules of thumb' are not used

Question 7

For a high-tech bicycle buyer, decision criteria would be determined by __________________.

A)personal preferences of the buyer
B)expert ratings in bike magazines
C)whatever most bike buyers recommend
D)technical specifications

Question 8

A manager is considering purchasing new computers for her department.The manager spends time assessing the computers her department now has.Which stage of the decision-making process is she going through?

A)Selecting an alternative
B)Development of alternatives
C)Identification of a problem
D)Evaluation of decision effectiveness

Question 9

What is a heuristic?

A)A totally unreliable method of decision making
B)A shortcut or rule of thumb that is used for decision making
C)A complicated and systematic method of decision making
D)A purely intuitive method of decision making

Question 10

A banker opts for short-term gain despite indications that his decision might not pay off in the long run.Which error or bias is the banker guilty of?

A)Selective perception bias
B)Immediate gratification
C)Representation
D)Overconfidence

Question 11

A manager is determining what kind of new computers she should purchase for her department.She has made a list of five different computer models for consideration.Which stage of the decision-making process is this?

A)Selection of an alternative
B)Identification of decision criteria
C)Development of alternatives
D)Analysis of alternatives

Question 12

According to the decision-making process, the first step Sondra should take is to _________.

A)evaluate her decision's effectiveness
B)identify decision criteria
C)identify the problem
D)analyse alternative solutions

Question 13

Which question would a manager ask when evaluating the results of her decision?

A)Did the alternative that was chosen and implemented accomplish the desired result?
B)What determines the best choice?
C)How did personal judgement influence the final decision?
D)Which alternative should be implemented first?

Question 14

Sondra has decided to purchase a new system.After obtaining permission, she has ordered the system from a reputable company.Which stage of the decision-making process is she carrying out in making the order?

A)Implementing the alternative
B)Selecting an alternative
C)Identifying the problem
D)Analysing alternative solutions

Question 15

Decision making begins with _________.

A)eliminating false alternatives
B)analysis of alternatives
C)identifying a problem
D)selecting alternatives

Question 16

Because they are not systematic or comprehensive, using heuristics in place of an eight-step decision-making process can lead to _________.

A)consistently better decisions
B)decisions that more directly solve problems
C)errors and biases
D)more imaginative decisions

Question 17

The very last step Sondra should take, according to the decision-making process, is to _________.

A)implement the alternative
B)select alternatives
C)evaluate the decision's effectiveness
D)analyse alternative solutions

Question 18

Sam is a manager who wants to determine if it is more environmentally sustainable to use email or direct mail to reach customers.What is the first step that Sam should take?

A)Analyse the strengths and weaknesses of each alternative
B)Define 'environmentally sustainable'
C)Figure out how to reduce waste generation
D)Minimise carbon emissions

Question 19

A manager chooses to ignore a rigorous decision-making process and select TV monitor A over monitor B because he trusts company A more than company B.If the decision he made was rational, which of the following is true?

A)The manager should have included trust as a criterion
B)Monitor A is really the better choice
C)The manager must have made a mistake in calculating his weighted criteria
D)Monitor B is really the better choice

Question 20

Sondra has determined that the speed of the system she settles on is twice as important as the capacity of the system.Which stage of the decision-making process is she carrying out?

A)Allocating weights to the criteria
B)Implementing the alternative
C)Identifying the problem
D)Selecting an alternative

Question 21

Which of the following is assumed in a rational decision?

A)Maximised value
B)Vague goals
C)Ambiguous problems
D)Diversified groups

Question 22

Briefly explain decision implementation.Why is this an important step in the decision-making process?

Question 23

The final step of the decision-making process is the development of alternatives.

Question 24

The three main models that managers use to make decisions are _________.

A)bounded rational, intuitive, systematic
B)rational, bounded rational, intuitive
C)intuitive, systematic, heuristic
D)rational, irrational, unbounded rational

Question 25

Herbert Simon won the Nobel Prize in economics for his work in describing _________.

A)how almost all people are risk averted
B)how most people are perfectly rational
C)people's spending and saving behaviour
D)how people make decisions

Question 26

Decision makers who only use information that matches what they already know are guilty of confirmation bias.

Question 27

Managers are expected to act _________ when making decisions.

A)intuitively
B)rationally
C)erratically
D)covertly

Question 28

Why do decision makers often escalate their commitment to a bad decision?

A)They do not want to admit that their initial decision may have been flawed.
B)They have reached cognitive overload.
C)They have allowed themselves to be influenced by the organisation's culture.
D)They were not able to find a reasonable alternative.

Question 29

Identifying the right problem and failing to solve it is just as much a failure as identifying the wrong problem.

Question 30

A basketball coach who takes a very good shooter out of a game because she missed her last two shots has availability bias.

Question 31

Unconscious reasoning is synonymous with _________.

A)intuitive decision making
B)bounded rationality
C)escalation of commitment
D)assumptive reasoning

Question 32

A person who satisfices fails to _________.

A)understand his or her position
B)accept the truth of a situation
C)maximise his or her decision
D)make any kind of decision

Question 33

It is assumed that a rational decision maker _________.

A)would be objective and logical
B)would always be emotional and impractical
C)would never make a wrong choice
D)would excel in all aspects of life

Question 34

Which of the following is the best definition for the word satisfice?

A)Very satisfying
B)Requires a perfect solution
C)Accepts a less than perfect solution
D)Not sufficient

Question 35

Because heuristics are considered 'rules of thumb', they rarely lead to errors.

Question 36

Bounded rationality recognises that managers are cognitively limited in the _________.

A)problems they can identify
B)logical assumptions they can understand
C)amount of information they can process
D)criteria they can use

Question 37

A heuristic can simplify the decision-making process.

Question 38

What does it mean for a decision maker to maximise value?

A)To make the decision to be as clear and logical as possible
B)To use as little resources as possible
C)To make the achievement of goals as likely as possible
D)To make decisions as quickly as possible

Question 39

The term 'good enough' pertains to _________.

A)subconscious mental processing
B)bounded rationality
C)intuitive decision making
D)escalation of commitment

Question 40

Identify and briefly describe the first four steps in the decision-making process.Give an example of each step.

Question 41

In order to make the best decision, managers must ignore emotions.

Question 42

A synonym for the word satisfice is maximise.

Question 43

Which of the following is not a way in which intuition guides people who are making decisions?

A)Intuition draws on knowledge, skills, and training
B)Intuition provides a formal analysis method
C)Intuition provides experiences to draw from
D)Intuition provides ethics and values guidelines

Question 44

Emotions and feelings _________ decision making.

A)decrease performance in
B)can improve
C)have no effect on
D)are more important than facts and logic in

Question 45

What is an experience-based decision?

Question 46

Sticking to a decision despite evidence that it is a mistake is called _________.

A)confirmation bias
B)overconfidence bias
C)error enhancement
D)escalation commitment

Question 47

Which of the following is an example of an unstructured problem?

A)Choosing the best wardrobe for an executive
B)Comparing fuel consumption for different car models
C)Measuring pollution levels in a power plant
D)Finding the list price of different copy machines

Question 48

One assumption of bounded rationality is that managers can analyse all relevant information about all alternatives for a situation.

Question 49

How often do managers typically use intuitive decision making?

A)Almost never
B)Almost all of the time
C)100 per cent of the time
D)More than half of the time

Question 50

Unstructured problems are situations in which _________.

A)all options are known
B)not all options are known
C)all decisions are perfectly rational
D)not all decisions are perfectly rational

Question 51

Managers are expected to make decisions that maximise value.

Question 52

Rational decision making is logical, consistent, and aims for the best outcome.

Question 53

Escalation of commitment can occur when people do not _________.

A)want to admit that an earlier decision was flawed
B)accept current conditions
C)understand that conditions have changed
D)want to make a decision

Question 54

Past experiences and ethical values are aspects of _________.

A)cognitive-based decisions
B)affect-initiated decisions
C)escalation
D)intuition

Question 55

Intuitive decision making is based on mysterious sensations and perceptions.

Question 56

Programmed decisions work well for solving _________.

A)unstructured problems
B)both structured and unstructured problems
C)poorly defined problems
D)structured problems

Question 57

Which model of decision making takes advantage of subconscious mental processing?

A)Non-rational
B)Emotional
C)Intuitive
D)Bounded rationality

Question 58

Structured problems are typically _________, whereas unstructured problems are typically _________.

A)straightforward; ambiguous
B)undefined; unproven
C)incomplete; easily defined
D)unusual; clear

Question 59

Intuitive decision making can complement _________.

A)rational decision making only
B)bounded rationality only
C)both rationality and bounded rationality
D)neither rationality nor bounded rationality

Question 60

Define bounded rationality.How does bounded rationality lead to satisficing?

Question 61

Non-programmed decisions tend to be routine.

Question 62

Which three conditions do decision makers face?

A)Uncertainty, low risk, high risk
B)Certainty, uncertainty, confidence
C)Risk, high risk, low risk
D)Certainty, risk, uncertainty

Question 63

A highway speed limit is an example of a policy.

Question 64

Managers often use historical data when estimating risk.

Question 65

A retail clothing store manager who estimates how much to order for the current spring season based on last spring's outcomes is operating under what kind of decision-making condition?

A)Seasonal
B)Uncertainty
C)Risk
D)Certainty

Question 66

A judge consults guidelines before ordering the amount of damages to be paid in a legal case.What kind of decision making is she doing?

A)Following a policy
B)Following the rule of law
C)Non-programmed
D)Unstructured and intuitive

Question 67

Which statement about problems and decisions is correct?

A)Structured problems are best solved by programmed decisions.
B)Structured problems are best solved by structured decisions.
C)Unstructured problems are best solved by rigid decisions.
D)Unstructured problems are best solved by programmed decisions.

Question 68

A low-level manager is most likely to solve problems under which condition?

A)Low risk
B)Certainty
C)Uncertainty
D)Low certainty

Question 69

Top managers in an organisation tend to _________.

A)solve structured problems
B)make non-programmed decisions
C)solve well-defined problems
D)make programmed decisions

Question 70

In a condition of certainty, _________.

A)some alternatives are not known
B)most outcomes are known
C)the decision is already made
D)all outcomes of all alternatives are known

Question 71

Managerial decisions are likely to become more programmed as managers rise in an organisational hierarchy.

Question 72

A basketball coach makes the decision to bench or not bench his aggressive defence player based on the number of fouls he accumulated.Which decision-making method does the coach use?

A)A hunch
B)A procedure
C)A rule
D)A policy

Question 73

Which of the following is not a type of programmed decision?

A)Brainstorm
B)Systematic procedure
C)Policy
D)Rule

Question 74

A risk situation involves the decision maker estimating the likelihood of _________.

A)certain outcomes
B)organisational efficiency
C)programmed decisions
D)conditional uncertainty

Question 75

If a car buyer knows the price of the same car at different dealerships, he or she is operating under what type of decision-making condition?

A)Certainty
B)Risk
C)Factual
D)Uncertainty

Question 76

A manager has a choice of three investment funds.To assess them, he looks at their past investment records over the previous five years.The manager is operating under which condition?

A)Uncertainty
B)Risk
C)Certainty
D)Probability

Question 77

Programmed decisions draw heavily on which of the following?

A)Past solutions that were unsuccessful
B)Mistakes made in the past
C)Innovative new solutions
D)Past solutions that were successful

Question 78

_________ is a situation in which a decision maker has only incomplete information about outcomes and does not have the ability to reasonably estimate outcomes that are not known.

A)Low risk
B)Uncertainty
C)Risk
D)Certainty

Question 79

Implementing a procedure requires more judgement and interpretation than implementing a policy.

Question 80

A manager has a choice of three different bank term deposits that pay different amounts of interest over different time periods.The manager is operating under which condition?

A)Jeopardy
B)Certainty
C)Risk
D)Uncertainty