Deck 11: Decision Making

Question 1

The existing and desired states of a well-structured problem are clear.

Answer 1

True

Question 2

A rule is an example of a program for making a decision.

Answer 2

True

Question 3

One is most likely to see a program used to make a(n)________ decision.

A)routine
B)unique
C)executive-level
D)important
E)ill-structured

Answer 3

A

Question 4

At what part of an organization would an ill-structured problem most likely be encountered?

A)The top of the hierarchy
B)The middle of the hierarchy
C)The bottom of the hierarchy
D)Where the bottom of the hierarchy meets the middle
E)Ill-structured problems are equally likely throughout the organizational hierarchy.

Question 5

An ill-structured problem is one where the existing state is unclear and the desired state is clear.

Question 6

Which of the following most clearly involves a decision program?

A)A medical ethics committee
B)A task force to improve company image
C)A standing order to a supplier
D)A billion dollar investment decision
E)A corporate merger

Question 7

Which of the following problems would most likely be solved with a program (that is,using programmed decision making)?

A)Should this convict be granted parole?
B)Which candidate should we choose to be vice-president of marketing?
C)In which part of the country should we locate our new business?
D)How many workers should we call out to staff the assembly line next week?
E)Should we merge with this company or not?

Question 8

The well-structured problem does NOT exhibit which of the following characteristics?

A)Clear existing state
B)Clear desired state
C)Uncertainty about what to do
D)Certainty about what to do
E)Familiar and repetitive problem

Question 9

In computer terminology,"garbage in" will result in "garbage out." This is used to describe

A)non-programmed decision making.
B)programmed decision making.
C)bounded rationality.
D)escalation of commitment.
E)satisficing.

Question 10

The ill-structured problem is one where the

A)existing state is clear, desired state is clear.
B)existing state is clear, desired state is unclear.
C)existing state is unclear, desired state is clear.
D)existing state is unclear, desired state is unclear.
E)existing state is clear, but the method of getting to the desired state is unknown.

Question 11

Which of the following is an example of an ill-structured problem?

A)Which of these 10 car loan applications should I approve?
B)How much assistance should this client receive?
C)How much weight should I carry?
D)In which part of the country should we build a new plant?
E)All of the above

Question 12

Which of the following is characteristic of well-structured problems?

A)They are unusual and have not been encountered before.
B)They tend to be complex and involve a high degree of uncertainty.
C)The existing state and the desired state are understood.
D)They frequently arouse controversy and conflict among those interested in the problem.
E)They often entail high risk.

Question 13

Which of the following is another name for a programmed problem solution technique?

A)Rules
B)Routines
C)Rules of thumb
D)Standard operating procedures
E)All of the above

Question 14

A program would most likely be used

A)to justify group decision making.
B)to solve problems dealt with by top management.
C)to solve a well-structured problem.
D)to solve an ill-structured problem.
E)to solve a risky problem.

Question 15

Which of the following is an example of an ill-structured problem?

A)The retailer must decide whether to reorder lawn chairs.
B)The sales manager must decide what to do about sales that seem sluggish.
C)The assistant bank manager must decide which automobile loan applications to approve.
D)The welfare officer must decide how much assistance a particular client should receive.
E)The production manager must decide how many workers to schedule on the line next week.

Question 16

You have just applied for a job and when completing the application form you were surprised to see questions about your age and marital status.Such questions would seem to violate equal employment and human rights legislation and not likely to be related to the job.It made you wonder why a company would ask these questions.What is a good explanation for this?

A)Difficulties of non-programmed decision making
B)Bounded rationality
C)Cognitive biases
D)Information overload
E)Difficulties of programmed decision making

Question 17

What three things are noteworthy about the definition of decision making?

A)Choice, problem, and resources
B)Choice, problem, and process
C)Choice, process, and resources
D)Problem, process, and resources
E)Choice, problem, and program

Question 18

A characteristic of a well-structured problem is uncertainty.

Question 19

Non-programmed decision making

A)may stimulate strong political considerations.
B)is used to solve well-structured problems.
C)is most likely to be required at lower levels of the organizational hierarchy.
D)tends to involve much certainty.
E)is used to solve repetitive problems.

Question 20

Programs should be used to solve ill-structured problems.

Question 21

When a gap is perceived to exist between an existing state and a desired state we have a(n)________.

Question 22

________ frequently arouse controversy and conflict among the people who are interested in the decision.

Question 23

In evaluating alternative solutions,decision makers with bounded rationality

A)know the ultimate value of each alternative.
B)often consider the political acceptability of the solution to other organizational members.
C)know the probability that each alternative will work.
D)tend to exhibit maximization.
E)rarely engage in satisficing.

Question 24

An Economic Person does NOT

A)make rational decisions.
B)make decisions like the average consumer or manager.
C)use economic gain to evaluate the correctness of decisions.
D)have adequate information to make good decisions.
E)use logic in making decisions.

Question 25

Many of the problems encountered in organizations are well structured.

Question 26

Information overload is likely to lead to

A)fast decision making.
B)only relevant information influencing decision making.
C)greater confidence by managers in their decisions.
D)higher quality decisions.
E)lower satisfaction with the ultimate decision.

Question 27

What is bounded rationality and how can it influence alternative development,evaluation,and choice?

Question 28

What did Nobel Prize winner Herbert Simon recognize?

A)The usefulness of programmed decision making
B)The usefulness of non-programmed decision making
C)The perfectly rational characteristics of Economic Person do not exist in real decision makers
D)The characteristics of Economic Person
E)The existence of groupthink

Question 29

The perfectly rational characteristics embodied in Economic Persons exist in many decision makers.

Question 30

For a(n)________ problem,the existing and desired states are clear,and it is obvious how to get from one to another.

Question 31

When the existing state of a situation is well-known and the desired state is also known,you are facing a ________ problem.

Question 32

Rules,routines,and rules of thumb are programmed solution techniques.

Question 33

When he heard that turnover was increasing,the human resource manager immediately told the president that salaries would have to be raised.Unfortunately,low pay wasn't the cause of the turnover.Which decision making error did the manager commit?

A)He treated sunk costs improperly.
B)He defined the problem in terms of a solution.
C)He escalated commitment.
D)He exhibited the knew-it-all-along effect.
E)He revealed a confirmation bias.

Question 34

Both ill-structured and well-structured problems can be solved with programmed problem solving methods.

Question 35

A standardized way of solving a problem is a(n)________.

Question 36

The perfect prototype for ________ is the Economic Person.

Question 37

Political considerations,time constraints,and limited information processing capacity mean that people exhibit ________ rather than perfect rationality.

Question 38

Ill-structured problems can entail high risk and stimulate political considerations.

Question 39

________ refers to the often subtle aspects of the presentation of information about a problem that are assumed by decision-makers.

Question 40

Managers who exhibit bounded rationality

A)might be operating under time constraints.
B)might be factoring political considerations into decisions.
C)might be limited in their capacity to acquire and process information.
D)might be subject to cognitive biases.
E)All of the above

Question 41

Decision makers who establish an adequate level of acceptability for a solution and then screen solutions until one that exceeds this level is found are

A)maximizers.
B)optimizers.
C)satisficers.
D)rationalizers.
E)diffusers.

Question 42

Satisficing is a concept that is most associated with

A)identifying a problem.
B)searching for information.
C)choosing a solution.
D)implementing a solution.
E)monitoring a solution.

Question 43

Sharon framed the problem as a choice between two losses.What is she likely to do now?

A)Make a conservative decision
B)Ignore sunk costs
C)Make a risky decision
D)Ignore sample sizes
E)Ignore economic considerations

Question 44

Which of the following is a problem frame?

A)How the problem is stated
B)How the problem is solved
C)How the solution is evaluated
D)How the solution is implemented
E)How the decision makers are rewarded

Question 45

The following illustrate the operation of bounded rationality EXCEPT

A)framing.
B)cognitive biases.
C)emotions and moods.
D)political considerations.
E)maximization.

Question 46

Decision makers violate statistical principles at what stage of the decision making process?

A)Problem identification
B)Information search
C)Solution implementation
D)Solution evaluation
E)Alternative development, evaluation, and choice

Question 47

When Thelma's boss said,"What we have here is a morale problem," what was she doing?

A)Defining a problem in terms of functional specialty
B)Defining a problem in terms of solution
C)Diagnosing a problem in terms of symptoms
D)Confirmation bias
E)Hindsight

Question 48

After graduating from university you are planning to get a job as an accountant.Your best friend Jay is planning on opening his own restaurant.He says he has thought a great deal about this and believes he will be very successful and it is a good decision.You explain to him that most new restaurants fail,but it does not factor into Jay's decision.What does this demonstrate?

A)Base rates
B)Anchoring effect
C)Perceptual defence
D)Sunk costs
E)Hindsight

Question 49

Research has shown that people tend to have a ________ to value information advice for which they have paid over free advice of equal quality.

A)insight bias
B)interpretation bias
C)insight forgiveness
D)cognitive bias
E)confirmation bias

Question 50

Managers must often rely upon others when making decisions and solving problems.At what stage of the rational decision making process does reliance upon others often cause special problems?

A)Information search
B)Development of alternative solutions
C)Evaluation of alternative solutions
D)Solution choice
E)Solution implementation

Question 51

Which of the following is a cognitive bias that contributes to the failure of decision makers to acquire enough information to make a good decision?

A)Perceptual defence
B)Anchoring effect
C)Satisficing
D)Hindsight
E)Confirmation bias

Question 52

In a study on real estate agents,it was found that the agents allowed the asking price of a house to unduly influence their professional evaluation of the house.What is this an example of?

A)Satisficing
B)Anchoring effect
C)Confirmation bias
D)Hindsight
E)Risky shift

Question 53

At which stage of the rational decision-making model is information overload a particular problem?

A)Problem identification
B)Search for relevant information
C)Evaluate alternative solutions
D)Implement chosen solution
E)Monitor and evaluate chosen solution

Question 54

Which of the following is NOT a difficulty that can result from bounded rationality in problem identification?

A)Perceptual defence
B)Problem defined in terms of functional specialty
C)Problem defined in terms of solution
D)Problem diagnosed in terms of symptoms
E)Problem defined as ill-structured

Question 55

Mark has two alternatives.There is a 50 percent chance that he will earn $120,000 if he accepts a government contract.If he decides not to accept the contract and instead continues on his present project,he has an 80 percent chance of earning $100,000.If Mark is a perfectly rational decision maker,which of the following statements is TRUE?

A)He will accept the government contract.
B)His expected value of continuing on the present project is $80,000.
C)He will attempt to satisfice.
D)He will ignore economic criteria in making his decision.
E)He will revise his earnings estimate on the government contract to make it more attractive.

Question 56

Sales at the Smelly Cheese Company had been down all year.Management met to try and identify the problem.The marketing manager was convinced that the problem was the result of poor marketing.The manager of human resources believed the problem was due to the lack of employee motivation.What is the difficulty they are having?

A)Perceptual defence
B)Problem defined in terms of solution
C)Problem diagnosed in terms of symptoms
D)Problem defined in terms of functional specialty
E)Too little information

Question 57

The perfectly rational decision-maker tends to satisfice.

Question 58

According to the anchoring effect,people

A)resist problem solutions developed by others.
B)depend too much on problem solutions developed by others.
C)don't adjust successive estimates enough in the face of new information.
D)rely too much on the most recent information received.
E)tend to invest additional resources in an apparently failing course of action.

Question 59

Research by Daniel Kahneman and Amos Tversky shows that

A)when people view a problem as a choice between losses, they tend to make conservative decisions.
B)when people view a problem as a choice between gains, they tend to make risky decisions.
C)when people view a problem as a choice between losses, they tend to make risky decisions.
D)when people view a problem as a choice between losses, they tend to make poor decisions.
E)when people view a problem as a choice between losses, they tend to make better decisions.

Question 60

Absenteeism has become a problem at the Smelly Cheese Company,so the human resource manager has decided to do something about it.He has decided to choose the first solution he comes across that will get the level of absenteeism to what it was in the previous year.What is this an example of?

A)Anchoring effect
B)Satisficing
C)Sunk costs
D)Framing
E)Confirmation bias

Question 61

The decision making strategy of choosing the alternative with the greatest expected value is called ________.

Question 62

Too little information can damage the quality of decisions but you can never have too much information for making a decision.

Question 63

Which of the following is an example of faulty hindsight?

A)Alan erroneously predicted that his superiors would favour the reorganization plan.
B)The small business owner could never forget how she had been let down by a particular supplier.
C)The small business owner who had been let down by a supplier gave the supplier another large order.
D)Suki decided to spend more money upgrading her old computer instead of buying a new one.
E)When it became clear that the investment was a poor one, Pierre realized that he had known it was bad all along.

Question 64

Decision makers know that more information is not always better.

Question 65

Is it possible for a manager to have too much information when faced with an ill-structured problem? Explain.

Question 66

When people frame the alternatives as a choice between gains,they tend to make conservative decisions.

Question 67

Confirmation bias occurs during problem identification.

Question 68

When people view a problem as a choice between losses,they tend to make ________ decisions.

Question 69

Define bounded rationality and discuss the difficulties it can lead to in problem identification?

Question 70

________ constitute assumptions and shortcuts that can improve decision-making efficiency but lead to serious errors in judgment.

Question 71

________ refers to the tendency to seek out information that conforms to one's own definition of or solution to a problem.

Question 72

________ refers to the practice of accepting a solution to a problem that is not optimal but is good enough to meet pre-established criteria.

Question 73

Tendencies to acquire and process information in an error-prone way are known as ________.

Question 74

Decision makers are often dependent on others to ________ their decisions.

Question 75

When people view a problem as a choice between losses,they tend to make conservative decisions.

Question 76

Although information overload damages decisions,decision-makers are usually eager to collect a large amount of information.

Question 77

Receiving more information than is necessary to make an effective decision puts a person in a state of ________.

Question 78

Satisficing refers to making the best possible decision that can be made.

Question 79

At the ________ stage of the rational decision making model the assistance of others is often a particularly critical issue.

Question 80

Suzie Desouza,the Manager of Industrial Relations at Zeta Manufacturing,has just come from a ten hour marathon meeting with the union negotiators who represent the workers in the assembly plant.The union leaders have tabled their final offer and are threatening to call a strike if management does not accept it.Suzie now has to meet with her boss,Gordon Wong,and brief him on the union's final offer.Suzie is hopeful that Gordon will accept the union's terms,but she is not sure how to frame the cost arguments in order to achieve this objective.In her meeting with Gordon the next morning she summarizes the impact of the union's offer as follows: "If we accept their offer,it will cost us an extra $10 million over the next three years.However,if we reject their offer,there's a 50 percent chance that it will cost us more than $10 million,perhaps as much as $20 million; but also a 50 percent chance that it will cost us less,perhaps much less." Do you think Gordon will accept or reject the union's offer? Use your knowledge of framing bias to explain why.