Deck 7: Decision Making, Learning, Creativity, and Entrepreneurship

Question 1

Managers with limited expertise are more likely to make better intuitive judgments than those with greater expertise.

Answer 1

False
Explanation:Kahneman distinguishes between the intuition of managers who are truly expert in the content domain of a decision and the intuition of managers who have some knowledge and experience but are not true experts. Although the intuition of both types can be faulty, that of experts is less likely to be flawed.

Question 2

The final step in the decision-making process is learning from feedback.

Answer 2

True
Explanation:The final step in the decision-making process is learning from feedback.

Question 3

Identifying all relevant information for a decision means the manager has complete information.

Answer 3

False
Explanation:Identifying all relevant information for a decision does not mean the manager has complete information.

Question 4

Decision making in response to threats occurs when managers search for ways to improve organizational performance to benefit customers, employees, and other stakeholder groups.

Question 5

Generating creative alternatives to solve problems may require managers to abandon their existing mind-sets.

Question 6

The optimum decision is the most appropriate decision possible in light of what managers believe to be the most desirable consequences for the organization.

Question 7

Managers make decisions whenever they are engaged in planning, organizing, leading, or controlling.

Question 8

The first step in the decision-making process is to recognize the need for a decision.

Question 9

The administrative model suggests that human decision-making capabilities are free of cognitive limitations.

Question 10

Decision making in response to opportunities occurs when managers search for ways to improve organizational performance to benefit customers, employees, and other stakeholder groups.

Question 11

When uncertainty exists, the probabilities of alternative outcomes cannot be determined and future outcomes are unknown.

Question 12

The classical decision-making model assumes that managers require very little or no information in order to make an optimum decision.

Question 13

The key to a good assessment of the alternatives is to define the opportunity or threat exactly.

Question 14

The administrative model is based on three important concepts: bounded rationality, incomplete information, and satisficing.

Question 15

Once managers have generated a set of alternatives, the next task is to implement these alternatives.

Question 16

Nonprogrammed decision making is a routine, virtually automatic process.

Question 17

Decisions that require time and effort and result from careful information gathering are called intuitive decisions.

Question 18

The administrative model developed by March and Simon fails to explain why decision making is always an inherently uncertain and risky process.

Question 19

The tendency of managers to ignore critical information is not as serious as the existence of incomplete information.

Question 20

The likelihood of a manager making an error in judgment is much greater in programmed decision making than in nonprogrammed decision making.

Question 21

Allowing individuals to develop a sense of personal mastery is detrimental to organizational learning.

Question 22

The higher the level of entrepreneurship in a firm, the higher the level of learning and innovation.

Question 23

Dialectical inquiry is easier to implement than devil's advocacy to blunt the effects of groupthink in group decision making.

Question 24

Individual decision making is superior to group decision making in several respects.

Question 25

Entrepreneurs have an external locus of control and believe that they are not responsible for what happens to them.

Question 26

Cognitive biases enable managers to make good decisions.

Question 27

When a group of managers makes a decision, the probability that the decision will be implemented successfully decreases.

Question 28

Entrepreneurship is the same as management.

Question 29

Developing a learning organization is a quick and easy process.

Question 30

A skunkworks is a group of intrapreneurs who are deliberately separated from the normal operation of an organization to encourage them to devote all their attention to developing new products.

Question 31

The illusion of control causes managers to overestimate the odds of a favorable outcome and, consequently, to make inappropriate decisions.

Question 32

Prior-hypothesis bias implies that managers tend to seek and use information that is consistent with their prior beliefs.

Question 33

Entrepreneurship is noticing an opportunity to satisfy a customer need and then deciding how to find and use resources to make a product that satisfies that need.

Question 34

Team learning is less important than individual learning when increasing organizational learning.

Question 35

To deal with opportunities and threats, managers must select one solution from a set of alternatives. This process is known as _____.

A) groupthink
B) intuition
C) decision making
D) bounded rationality
E) heuristics

Question 36

Escalating commitment is the tendency of decision makers to overestimate their ability to control activities and events.

Question 37

The ability of a decision maker to discover novel ideas that lead to feasible alternatives in decision making is known as creativity.

Question 38

Brainstorming is a group problem-solving technique in which managers meet face-to-face to generate and debate a wide variety of alternatives from which to make a decision.

Question 39

Groupthink causes the unintended effect of discouraging individuals from raising issues that run counter to majority opinion.

Question 40

To avoid production blocking that occurs during brainstorming, the nominal group technique is often used.

Question 41

Decisions that are based on rules and guidelines are known as:

A) brainstormed decisions.
B) heuristic decisions.
C) programmed decisions.
D) intuitive decisions.
E) creative decisions.

Question 42

A situation in which the number of suitable alternatives are greater than what a manager can evaluate is called _____.

A) prior-hypothesis
B) bounded rationality
C) productive blocking
D) illusion of control
E) satisficing ambiguity

Question 43

In the classical model of decision making, the most appropriate decision possible in light of what is believed to be the most desirable consequences for the organization is known as the ____________ decision.

A) intuitive
B) creative
C) heuristic
D) subjective
E) optimum

Question 44

Which of the following would be considered a programmed decision by James Calloway, CEO of FSE Inc.?

A) Launching a new promotional campaign
B) Hiring additional staff
C) Entering a new market
D) Expanding operations internationally
E) Developing a new product line

Question 45

The classical model specifies how decisions should be made. In other words it is:

A) heuristic.
B) prescriptive.
C) optimizing.
D) intuitive.
E) satisficing.

Question 46

Eileen, a college professor, has to pick a textbook for an upcoming course. She has just enough time to review a few books from the many choices available. She settles for one of the books, even though the best book might be a book that she hasn't yet reviewed. What is this process called?

A) Optimizing
B) Brainstorming
C) Rationality binding
D) Satisficing
E) Cognitive biasing

Question 47

When the probabilities of alternative outcomes cannot be determined and future outcomes are unknown, there exists:

A) satisficing ambiguity.
B) systematic error.
C) prior-hypothesis bias.
D) uncertainty.
E) blocking.

Question 48

Nonroutine decisions made in response to novel situations in business are known as:

A) rule-based decisions.
B) automatic decisions.
C) guideline-based decisions.
D) predetermined decisions.
E) nonprogrammed decisions.

Question 49

Jordan, the manager of JT's Tasty Treats, has to decide whether to introduce a new frozen dessert that has never been sold previously. What type of decision would this represent?

A) Automatic
B) Rule-based
C) Predetermined
D) Nonprogrammed
E) Inconsequential

Question 50

Programmed decision making is a(n) ______ process.

A) novel
B) routine
C) intuitive
D) unusual
E) creative

Question 51

Which of the following is a reason for incomplete information?

A) Ambiguity
B) Complexity
C) Specificity
D) Heuristic ability
E) Satisficing ability

Question 52

According to the administrative model of decision making, why wouldn't managers be able to arrive at the optimum decision even if they had unlimited ability to evaluate information?

A) Managers would not have complete information.
B) Managers would not have bounded rationality.
C) Managers would have no decision-making ability.
D) Managers would have varying perspectives.
E) Managers would have too many alternatives.

Question 53

Peggy, a foreman at a petrochemical plant, asks the plant superintendent to hire an additional worker whenever overtime hours for the previous month increase by more than 15 percent over the headcount. What type of decision is this?

A) Intuitive
B) Groupthink
C) Satisficing
D) Programmed
E) Bounded

Question 54

When paper supplies reaches a minimum level, Ethan makes a call to the supplier to order more paper. What type of decision does this represent?

A) Brainstormed decision
B) Heuristic decision
C) Programmed decision
D) Intuitive decision
E) Creative decision

Question 55

_____ is present when managers know the possible outcomes of a particular course of action and can assign probabilities to them.

A) Uncertainty
B) Incomplete information
C) Risk
D) Ambiguity
E) Cognitive limitation

Question 56

Based on guidelines established by the accounting manager, Jaime, the accounts payable clerk, makes payments to vendors in order to maximize discounts. What type of decision does this represent?

A) Programmed
B) Bounded
C) Intuitive
D) Groupthink
E) Creative

Question 57

Which of the following is an assumption made by the classical model?

A) There is no optimum decision.
B) There is more than one alternative.
C) There is only one alternative.
D) Managers have access to all the information they need.
E) Managers are not capable of making the right decisions.

Question 58

WashUrCar, which operates five car washes, has to decide whether or not it should invest in the latest drying equipment. What type of decision does this represent for the organization?

A) Automatic
B) Intuitive
C) Bounded
D) Nonprogrammed
E) Rule-based

Question 59

Managers must rely on their ______ to make the best decision when faced with uncertainty and ambiguity.

A) intuition and judgment
B) cognitive biases
C) bounded rationality
D) escalating commitment
E) illusion of control

Question 60

Barbara, a school superintendent, hires an additional teacher whenever the student enrollment in a grade goes beyond 35. This can be classified as a(n) _____ decision.

A) programmed
B) heuristic
C) brainstormed
D) intuitive
E) creative

Question 61

John, an operations manager, has chosen an alternative way to solve a problem he is faced with. Now John must decide whether the company has the capabilities and resources required to implement the alternative. Which criterion of decision making is he focusing on?

A) Legality
B) Ethicality
C) Economic feasibility
D) Practicality
E) Product sustainability

Question 62

_____ results from the tendency to generalize inappropriately from a small sample or from a single vivid event or episode.

A) Prior hypothesis
B) Dialectical inquiry
C) Escalating commitment
D) Representativeness bias
E) The illusion of control

Question 63

Which of the following is a source of bias that can adversely affect the way managers make decisions?

A) Reasoned judgments
B) Bounded rationality
C) Economic feasibility
D) Escalating commitment
E) Dialectical inquiry

Question 64

Which of the following is a reason why managers fail to generate creative solutions?

A) They find it difficult to view problems from a fresh perspective.
B) They often fail to specify the criteria that are important in reaching a decision.
C) They violate domestic or international laws or government regulations.
D) They fail to perform a cost-benefit analysis of the various alternatives.
E) They do not have complete information in most cases.

Question 65

Dan, the president of Bank Missouri, is attempting to determine whether the bank has both the capability and the resources to open a branch facility in a new location. Which criterion of decision making is Dan focusing on?

A) Practicality
B) Ethicalness
C) Legality
D) Economic feasibility
E) Functionality

Question 66

_____ results from the tendency to make decisions based on preexisting beliefs even though evidence suggests that those beliefs are wrong.

A) Prior hypothesis bias
B) Dialectical inquiry
C) Escalating commitment
D) Representativeness bias
E) The illusion of control

Question 67

The last step in the managerial decision-making process is:

A) generating alternatives.
B) learning from feedback.
C) recognizing the need for a decision.
D) implementing the chosen alternative.
E) choosing between alternatives.

Question 68

Dale, a manager, is assessing possible alternative solutions of a problem. Dale attempts to determine whether a possible alternative will threaten other company projects. Which criterion of decision making is Dale focusing on?

A) Economic feasibility
B) Practicality
C) Legality
D) Ethicalness
E) Functionality

Question 69

Which of the following is true of decision making?

A) Making a decision and not acting on it is better than not making a decision at all.
B) Identifying relevant information means that the manager has complete information.
C) In order to implement the chosen alternative, many subsequent and related decisions must be made.
D) Effective managers prefer planning for the future rather than conducting a retrospective analysis.
E) If the advantages of an alternative are significantly high, its disadvantages need not be evaluated.

Question 70

_____ occurs when individuals in a team strive for agreement among themselves rather than assessing information accurately.

A) Groupthink
B) Intuition
C) Bounded rationality
D) Escalating commitment
E) Representativeness bias

Question 71

Steven, a marketing manager, wants to budget the advertising for a new product launch. He is trying to determine the amount of money that the company can afford to spend on advertising. Which criterion of decision making is he focusing on?

A) Legality
B) Ethicality
C) Economic feasibility
D) Practicality
E) Product sustainability

Question 72

_____ results from overestimating one's own ability to influence actions and events.

A) Escalating commitment
B) Illusion of control
C) Prior hypothesis bias
D) Representativeness bias
E) Dialectical inquiry

Question 73

Having committed large amounts of manpower and money to his landscaping business, Tony continues to keep the business running despite incurring heavy losses. What is the source of Tony's cognitive bias?

A) Escalating commitment
B) Illusion of control
C) Prior hypothesis bias
D) Representativeness bias
E) Dialectical inquiry

Question 74

Which of the following is an accurate description of satisficing?

A) Viewing problems from a fresh perspective to come up with creative alternative solutions to specific problems
B) Generating creative alternatives to solve problems and taking advantage of opportunities by abandoning existing mind-sets
C) Conducting a retrospective analysis to see what can be learned from past successes or failures
D) Searching for and choosing acceptable or satisfactory ways to respond to problems and opportunities rather than trying to make the optimal decision
E) Seeking and using information that is consistent with prior beliefs and ignoring information that contradicts those beliefs

Question 75

Corey has been looking at several alternative locations for his new facility and performs a cost-benefit analysis in order to determine the net financial payoff of each location. Which criterion of decision making is Corey focusing on?

A) Economic feasibility
B) Practicality
C) Ethicalness
D) Legality
E) Functionality

Question 76

Which of the following is a guideline for managers to avoid the negative effects of cognitive biases?

A) Concentrate on planning for the future instead of conducting a retrospective analysis.
B) Reward middle managers irrespective of whether they fail or succeed to implement a decision.
C) Rank various alternatives even when all relevant information is not available.
D) List the criteria that are being used to assess and evaluate alternatives.
E) Persist with economically superior alternatives despite the threat of cannibalization.

Question 77

_____ are rules of thumb that simplify the decision-making process.

A) Dialectical inquires
B) Cognitive biases
C) Heuristics
D) Intuitions
E) Reasoned judgments

Question 78

The first step in the managerial decision-making process is to:

A) choose between alternatives.
B) assess alternatives.
C) implement the chosen alternative.
D) recognize the need for a decision.
E) conduct a retrospective analysis.

Question 79

Mistakes in decision making that some managers make repeatedly are known as:

A) dialectical errors.
B) programmed decisions.
C) nonprogrammed decisions.
D) intuitive judgments.
E) systematic errors.

Question 80

Which of the following is true of choosing among alternative solutions?

A) The alternative solutions are ranked in the order that they were developed or created.
B) Identifying all relevant information doesn't mean that a manager has complete information.
C) Existence of incomplete information is more serious than ignoring critical information.
D) Once alternatives are chosen and ranked, they must be evaluated.
E) The final step in the decision-making process is choosing among alternative solutions.