Chapter: 4 ( Foundations of decision making) 1) In 1) In decision making, a problem can be defined as a discrepancy between what exists and what the problem solver desires to exist. ✔ 2) The 2) The second step in the decision-making process is identifying a problem. X 3) A 3) A decision criterion defines factors that are relevant in a decision. ✔ 4) Managers 4) Managers identify a problem by comparing the current state of affairs to some standard. ✔ Answer: TRUE 5) All 5) All criteria are equally important in the decision-making process. X 6) 6) Identifying the wrong problem is just as much a failure for a manager as identifying the right problem and failing to solve it. ✔ 7) 7) The final step of the decision-making process is to implement the alternative that has been selected. X 8) A 8) A heuristic can simplify the decision-making process. ✔ 9) Because 9) Because heuristics simplify the decision-making process, they are unlikely to lead to errors. X 10) Decision 10) Decision makers who "cherry-pick" information that matches what they already know are guilty of confirmation bias. ✔ 11) A 11) A basketball coach who takes a very good shooter out of a game because she missed her last two shots has availability bias. ✔ 12) A 12) A rational decision will never fail to provide the best and most successful solution to a problem. X 13) Maximizing 13) Maximizing value means a decision will have the best possible outcome for the parties involved. ✔ 14) 14) One assumption of bounded rationality is that managers can analyze all relevant information about all alternatives for a situation. X 15) A 15) A synonym for the word satisfice is maximize. X 16) One 16) One assumption of bounded rationality is that managers usually make rational decisions. ✔ 17) Intuitive 17) Intuitive decision making is systematic, logical, and orderly. X
18) Intuitive 18) Intuitive decision making cannot be a part of the rational decision -making process. X 19) The 19) The expression "throwing good money after bad" is an example of an escalation of commitment. ✔
20) Emotions 20) Emotions should always be strictly ignored in a decision-making process. X 21) Programmed 21) Programmed decisions tend to be routine. ✔ 22) A 22) A rule is simpler than a policy or a procedure to implement. ✔ 23) 23) Implementing a procedure requires more judgment and interpretation than implementing a policy. X 24) A 24) A highway speed limit is an example of a policy. X 25) 25) Managerial decisions are likely to become more programmed as managers rise in an organizational hierarchy. X 26) Most 26) Most managerial decisions include an element of risk. ✔ 27) 27) Uncertainty involves a situation in which the probability of a certain outcome is known to be small. X 28) 28) A manager is more confident of his assessment of a situation if it involves risk rather than uncertainty. ✔ 29) Group 29) Group decisions tend to provide more complete information than individual decisions. ✔ 30) 30) An advantage of group decisions is that they increase the perception of the legitimacy of the solution. ✔ 31) A 31) A drawback of group decision making is groupthink. X 32) Groups 32) Groups tend to be b e more efficient and less effective than individual decision making. ✔ 33) Two 33) Two major advantages of electronic meetings are anonymity and honesty. ✔ 34) A 34) A country with high uncertainty avoidance and high power distance is more likely to engage in groupthink than a country with low uncertainty avoidance and low power distance. ✔ 35) Creative 35) Creative solutions to problems are valued because they are new and different from traditional solutions. X
36) Decision making begins with ________. A) selecting alternatives B) identifying decision criteria C) identifying a problem D) eliminating false alternatives alternatives 37) Which of the following defines a problem in the decision-making process? A) a discrepancy between what exists and what the decision decisi on maker desires to exist B) a discrepancy between the ideal and the practical C) something that causes irritation D) something that calls for attention 38) The decision-making process consists of a series of eight steps that identify a problem and work toward ultimately ________. A) determining if there is a solution to the problem B) solving the problem C) making a plan to solve the problem D) breaking down the problem into a series of steps 39) 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 customers C) uses intuition to see that things don't look right D) compares the current state of affairs with some standard s tandard or goal 40) A manager can faithfully execute the decision-making process, but still end up with nothing of value if ________. A) he fails to identify the correct problem B) he fails to assign number values to different criteria C) he solves the problem inefficiently D) he fails to correctly identify the steps of the process 41) 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 decision -making process is she going through? A) identification of a problem B) identification of decision criteria C) development of alternatives D) implementation of an alternative
42) 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 43) After purchasing new computers for her department, a manager is now comparing the performance of the new computers to the computers they replaced. Which stage of the decisionmaking process is she carrying out? A) analysis of alternatives B) evaluation of decision effectiveness C) selection of an alternative D) implementation of an alternative 44) For a high-tech bicycle buyer, decision criteria would be determined by ________. A) whatever most bike buyers recommend B) expert ratings in bike magazines C) technical specifications D) personal preferences of the buyer 45) Which of the following is LEAST likely to be a decision criterion for a high-tech bicycle buyer who cares primarily about performance? A) warranty B) gear mechanism C) frame composition D) brake assembly 46) Which of the following would be a fairly objective criterion by which a bicycle buyer could assess different bike models? A) handling B) weight C) quality of craftsmanship D) style 47) 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) Monitor A is really the better choice. B) The manager should have included "trust" as a criterion. criterion. C) Monitor B is really the better choice. D) The manager must have made a mistake in calculating his weighted criteria. criteria.
48) In allocating weights to the decision criteria, which of the following is most helpful to remember? A) All weights must be the same. B) The total of the weights must sum to 100. C) The high score should be a 10, and no two criteria should be assigned the same weight. assi gn weights against that standard. standard. D) Assign the most important criterion a score, and then assign 49) What is a heuristic? A) a complicated and systematic method of decision making B) a purely intuitive method of decision making C) a totally unreliable method of decision making D) a shortcut or rule of thumb that is used us ed for decision making 50) Because they are not systematic or comprehensive, using heuristics in place of an eight-step decision-making process can lead to ________. A) errors and biases B) consistently better decisions C) more imaginative decisions D) decisions that more directly solve problems 51) Which of the following is NOT a reason why managers often resort to using heuristics? A) They seem to eliminate complexity. B) They seem to eliminate ambiguity. C) They save time. alternatives. D) They thoroughly explore all alternatives. 52) 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) overconfidence B) immediate gratification C) selective perception bias D) representation 53) 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) hindsight B) anchoring effect C) confirmation bias D) self-serving
54) One legislator sees decreased tax revenue as the key problem in the budget. A second legislator sees increased spending as the problem. Each of these legislators has a(n) ________. ________. A) representation representation bias B) self-serving bias C) availability bias D) framing bias 55) Which of the following is NOT a common decision-making error or bias? A) sunk costs B) randomness C) forest for the trees D) overconfidence bias 56) The three main models that managers use to make decisions are ________. ________. A) rational, bounded rational, and intuitive B) rational, irrational, bounded rational C) intuitive, unintuitive, rational D) bounded rational, intuitive, systematic 57) It is assumed that a rational decision maker ________. A) would never make a wrong choice B) would be subjective and impractical C) would face only difficult decisions D) would be objective and logical 58) What does it mean for a decision maker to maximize value? A) to make the decision to be as clear and logical as possible B) to make the achievement of goals as likely as possible C) to waste as little time and energy as possible D) to make decision making as simple as possible 59) Maximizing value for an organization means making sure that ________. A) the organization makes money B) the best interests of the organization are addressed C) the decision made is as rational as possible D) the decision is as simple as possible 60) Which of the following is NOT assumed in a rational decision? A) a clear and specific goal B) a clear and unambiguous problem C) many alternatives and consequences are known D) value is maximized
61) It is assumed that in most cases, the decisions of all managers are limited by ________. A) greed and short-sightedness short-sightedness B) having too much information C) not being able to analyze all information for all alternatives D) not being able to act rationally or in the best interests of their organization 62) Which term best characterizes a decision that has bounded rationality? A) virtually perfect B) rigorous and comprehensive C) not good enough D) good enough 63) Software programs that use a series of questions to aid humans in decision making are called ________. ________. A) text reading software B) expert systems C) group systems D) support software 64) Expert systems are primarily used to help what kinds ki nds of decision makers? mak ers? A) lower-level managers B) top managers C) senior managers D) experts 65) Neural networks are able to outdo the performance of humans by ________. A) analyzing symbols B) handling up to three variables at once C) handling hundreds of variables at once D) reading facial expressions 66) Neural networks differ from expert systems in that they can ________. A) draw conclusions from data B) ask questions to the decision maker C) perform sophisticated calculations D) learn from experience 67) Neural networks outperfom expert systems in uncovering ________. ________. A) credit card fraud B) false positives for pregnancy C) potential credit card customers D) credit problems in bank mortgages
68) Herbert Simon won the Nobel Prize in economics for his work in describing ________. A) how people spend money B) how most people are perfectly rational C) how people make decisions D) how people avoid decisions 69) Which of the following is the best definition for the word satisfice? A) very satisfying B) not sufficient C) accepts a less than perfect solution D) requires a perfect solution 70) Simon found that in making decisions, most people satisficed because they had limited ability to ________. ________. A) be truthful and honest in situations that deal with other p eople B) think independently C) deal with difficult situations D) grasp present conditions and anticipate future conditions 71) A person who satisfices fails fail s to ________. A) maximize his or her decision B) understand his or her position C) accept the truth of a situation D) make any kind of decision 72) Sticking to a decision despite evidence that it is a mistake is called ________. A) escalation of commitment B) escalation of rationality C) satisficing commitment D) error enhancement 73) Escalation of commitment can occur when people don't ________. ________. A) want to make a decision B) want to admit that an earlier decision was flawed C) accept current conditions D) understand that conditions have changed 74) Which model of decision making takes advantage of unconscious reasoning? A) rational B) non-rational C) intuitive D) factual
75) Compared to fully rational decision making, what is a major advantage of intuitive decision making? A) total reliability B) fully quantified C) thoroughness D) speed 76) How often do managers typically use intuitive decision making? A) 100 percent of the time B) almost never C) almost all of the time D) more than half of the time 77) 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 78) Which of the following is NOT a way in which intuition guides people who are making decisions? A) Intuition provides ethics and values guidelines. B) Intuition provides a formal analysis method. method . C) Intuition provides experiences to draw from. D) Intuition draws on knowledge, skills, and training. 79) Emotions and feelings ________ decision making. A) have no effect on B) can improve C) decrease performance in D) are more important than facts and logic in 80) Structured problems are ________. ________. A) ambiguous B) undefined and vague C) clear and straightforward D) incomplete 81) Unstructured problems are ________. A) perfectly rational B) clear and straightforward straightforward C) situations in which all options are known D) situations in which all options are not known
82) Which of the following is an example of a structured problem? A) designing a new MP3 player B) hiring a lawyer C) deciding shipping options for a vacuum cleaner D) drafting a quarterback for a pro football team 83) Which of the following is an example of an unstructured problem? A) finding the list price of different copy machines B) choosing the best wardrobe for an executive C) comparing gas mileage for different car models D) measuring pollution levels in a power plant 84) Structured problems typically have ________ while unstructured problems typically have ________. ________. A) only one solution; many solutions B) many solutions; one solution C) many solutions; fewer solutions D) two solutions; three solutions 85) Programmed decisions work well for solving ________. A) structured problems B) unstructured problems C) both structured and unstructured problems D) poorly defined problems 86) Programmed decisions draw heavily on which of the following? A) mistakes made in the past B) past solutions that were successful C) past solutions that were unsuccessful D) innovative new solutions 87) Which of the following is NOT a type of programmed decision? A) systematic procedure B) policy C) brainstorm D) rule 88) Following the directions to put together an elliptical exercise machine is an example of which way to solve a problem? A) procedure B) rule C) general practice D) policy
89) A football coach makes the decision to punt or not to punt on fourth down based on whether or not he is past his own 50-yard line. Which decision-making method does the coach use? A) a policy B) a hunch C) a procedure D) a rule 90) Which pair or pairs of terms is i s true? ( This question can have more than one correct answer ) A) structured problem, programmed decision B) structured problem, structured decision C) unstructured problem, programmed decision D) unstructured problem, nonprogrammed decision 91) A judge consults guidelines before handing down an award for damages in a legal case. What kind of decision making is she doing? A) following a policy B) following a rule C) programmed D) following a procedure 92) Top managers in an organization tend to ________. A) make programmed decisions B) solve structured problems C) make nonprogrammed decisions D) solve well-defined problems 93) Which three conditions do decision makers face? A) certainty, risk, uncertainty B) certainty, uncertainty, confidence C) risk, high risk, low risk D) certainty, risk, high risk 94) In a condition of certainty, ________. ________. A) most outcomes are known B) the decision is already made C) all outcomes of all alternatives are known D) some alternatives are not known 95) If a car buyer knows the inventory dealer price of the same car at different dealerships, he or she is operating under what type of decision-making decisi on-making condition? A) risk B) uncertainty C) certainty D) factual
96) 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) risk C) uncertainty D) certainty 97) ________ is a situation in which a decision maker has only incomplete information about outcomes and does not have ability to reasonably estimate outcomes that are not known. A) Certainty B) Risk C) Uncertainty D) High certainty 98) A low-level manager is most likely to solve problems under which condition? A) certainty B) low risk C) uncertainty D) low certainty 99) A top manager is most likely to solve problems under which condition? A) certainty B) risk C) uncertainty D) high certainty 100) 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) certainty B) probability C) uncertainty D) risk 101) A manager has a choice of three bank CDs that pay different amounts of interest over different time periods. The manager is operating under which condition? A) jeopardy B) certainty C) uncertainty D) risk
102) A manager wants to invest in one of three start-up companies. All three of the companies seem to have a good business plan. None of the companies has a track record. The manager is operating under which condition? A) uncertainty B) certainty C) low certainty D) risk 103) A key to what is commonly used to assess risk is for a decision maker to examine the ________ an investment. A) the promises made by a company for B) the ads posted by a company for C) historical data for D) the minor details of 104) Managers in organizations make group decisions ________. ________. A) frequently B) never C) almost never D) rarely 105) The eight steps of decision making ________. A) can only be employed by individuals B) can only be employed in very small groups C) can be employed by individuals and groups D) can only be employed by groups 106) One advantage of group decision making is that it usually provides ________ than individual decision making. A) faster decisions B) more ethical decisions C) less confusion D) more information 107) Group decisions generally feature ________ acceptance than decisions made by an individual. A) greater B) less C) neither greater or less D) more enthusiastic
108) Group decision making typically increases the legitimacy of a decision because the decision was made ________. A) over a long period of time B) democratically C) by experts D) primarily by the group leader 109) Decisions made by individuals typically suffer from suspicions that the decision maker ________. ________. A) is dishonest B) is not rational C) did not try to analyze the situation D) did not consult all interested parties 110) Seeking the views of a diverse group of people can provide a decision maker with ________ on issues. A) fresh perspectives B) conventional wisdom C) universal agreement D) a foolproof way to get the perfect answer 111) Which of the following is a drawback to seeking diverse views in decision making? A) less reliable decision B) easier decision-making process C) more time consuming D) less time consuming 112) Which phrase best summarizes the drawbacks of group decisions? A) A camel is a racehorse put together by a manager. B) A camel is a racehorse put together by a committee. committee. C) A camel is a no racehorse when it comes to speed. D) A camel beats a racehorse in a long race. 113) Groups decisions are usually ________ individual decisions. A) more efficient than B) less efficient than C) equal in efficiency to D) more efficient but less effective 114) Since all members of a group are rarely equal in status, most groups suffer from ________. A) minority domination B) majority domination C) too much diversity D) gridlock
115) ________ can cause people in a group to fail to express their true opinions. A) Ambiguous responsibility responsibility B) Group imbalance C) Pressure to conform D) Years of experience 116) Which of the following is a primary characteristic of groupthink? A) conflict among group members B) failure to reach consensus within a group C) complete conformity among group members D) a group that is candid and open 117) Which of the following is NOT a factor that can increase the probability of groupthink? A) Influential group members dominate the discussion and the decision-making process. B) Group leaders stress the importance of consensus above all other concerns. C) The group has more than 40 group members. ideas. D) Group leaders solicit ideas from all group members without passing judgment on their ideas. 118) Which of the following is the most effective number of people to have in a group? A) 5-7 B) 2-4 C) 10-15 D) 16-25 119) Which of the following is used to exclusively generate creative ideas in a group setting? A) brainstorming B) nominal group technique C) groupthink D) electronic meetings 120) Which of the following is NOT allowed in a brainstorming session? A) clear definition of the problem B) criticism or dismissal of poor ideas C) large number of alternatives alternatives D) recording of all alternatives 121) Which of the following group techniques allows group members to meet together, but at the same time facilitates independent decision making? A) brainstorming B) nominal group technique C) large meetings of over 50 individuals D) small meetings of less than 10 individuals
122) The ________ blends the nominal group technique with sophisticated computer technology. A) personal meeting B) electronic meeting C) virtual meeting D) preliminary meeting 123) What advantages does videoconferencing provide for group decision making? A) anonymous expression of opinions B) less groupthink C) less minority domination D) savings on travel and time 124) Mid-level managers in a country with high power distance are ________ than managers from a low power distance country. A) more likely to make risky decisions B) less likely to make risky decisions C) less likely to make safe, conservative decisions D) more likely to disagree with their leaders' decisions 125) Mid-level managers in a country with low uncertainty avoidance are ________ than managers from a high uncertainty avoidance country. A) more likely to make risky decisions B) less likely to make risky decisions C) less likely to make foolish decisions D) more likely to avoid making decisions 126) Individualistic countries like the United States tend to have ________ than group-oriented countries like Japan. A) more conformity and more cooperation B) more conformity and less cooperation C) less conformity and more cooperation D) less conformity and less cooperation 127) The use of ringisei in in Japanese organizations reflects which of the following values in Japanese culture? A) tradition-following B) consensus-seeking C) risk taking D) go-it-alone
128) French management style tends to be ________ in style. A) permissive B) group oriented C) rule following D) autocratic 129) When dealing with international organizations, managers must be ________ in order to accommodate the managing styles of different cultures. A) as flexible as possible B) as inflexible as possible C) as strict as possible D) as thorough 130) ________ helps people find better solutions to problems using innovative problem-solving methods. A) Planning B) Creativity C) Organization D) Structure 131) According to one study, about ________ of men and women were somewhat creative. A) 1 percent B) 10 percent C) 30 percent D) 60 percent 132) One well-accepted model states that individual creativity requires ________, or a commanding understanding of a subject matter. A) expertise B) task motivation C) high interest D) intuition 133) Which of the following is NOT a characteristic of a creative problem solver? A) self confidence B) tolerance for ambiguity C) frustrates easily D) accepts risks readily
134) Which of the following traits do all creative people seem to share? A) They like to save time. B) They get along well with others. C) They love their work. D) They don't like to work hard. 135) Which of the following tends to impede i mpede a person's creativity? A) providing time and resources B) clearly defined goals C) being watched while you work D) internal motivation
