ORGB364 - Chapter 7 - Decision-Making and
Creativity Exam Questions With Verified
Answers
Decision Making
The process of making choices among alternatives with the intention of moving toward something
desired.
Rational Choice Paradigm
Effective decision makers identify, select and apply the best possible alternatives. Use logic and all
available information to choose the alternative with the highest value
Subjected expected utility (Maximization)
Determines choice with the highest value. EX. hiring an employee people want to hire someone who
brings the greatest value to the company.
Systematic stages of Rational choice diagram
IDENTIFY problem or opportunity, CHOOSE best decision process, DEVELOP possible choices, SELECT
choice with highest value, IMPLEMENT the selected choice, EVALUATE the selected choice.
Programmed decision
follow standard operating procedures; they have been resolved in the past so the optimal solution has
already been identified and documented.
Non-Programmed Decision
Requires all steps in the decision process model because the problem is new, complex or ill-defined.
Problems with the rational choice paradigm
It is impossible to apply to reality. The model assumes people are efficient and logical information-
processing machines. In reality people have difficulty recognizing problems and cannot simultaneously
process huge volumes of info. The model focuses on logical thinking and completely ignores the fact
that emotions also influence.
Problem Identification Challenges
Problems/opportunities are constructed from ambiguous information, not "given" to us. They are also
influence by cognitive and emotional biases.
Stakeholder Framing
Employees, suppliers, customers and other stakeholders have vested interests when bringing good or
bad news to corporate decision makers. Employees point fingers at external factors rather than their
own faults.
Mental Models
Visual or relational images of the external world. The problem is that it does not let us think outside
the box.
, Decisive Leadership
A sign of an effective leader. The problem is that people become too eager to have this characteristic
that they miss important things.
Solution-Focused Problems
Define problems as veiled solutions. "The problem is we need more control over our suppliers" This
doesn't tell us whats going on with the suppliers.
Perceptual Defense
A way to block out bad news as a coping mechanism. People reuse what threatens self-concept. Some
people inherently overlook negative information whereas more are more aware of it.
Identifying problems and opportunities more effectively
(1) become aware of five problem biases. (2) leaders require considerable willpower to resist the
temptation of looking decisive when a more thoughtful examination of the situation occurs.
(3)Leaders need to create norms of "divine discontent"
bounded rationality
people are held back in their decision making capabilities, including access to limited information,
limited information processing and tendency toward satisficing, rather than maximization when
making choices.
Problems with Information Processing
(1) People evaluate only a few alternatives and only some of the main outcomes of those alternatives.
(2) Typically evaluate alternatives sequentially rather than all at the same time.
Implicit favorites
A preferred alternative that the decision maker uses repeatedly as a comparison with others. This can
distort information to favor the implicit over alternatives.
Biased Decision Heuristics
People have built in decision heuristic that bias evaluation of alternatives
Anchoring and Adjusting heuristic
initial information (opening bid) influences evaluation and do not sufficiently move away from that
point as new information is provided.
Availability Heuristic
We estimate probabilities by how easy we recall the event, even though other factors(emotional,
traumatic or recent events) influence ease of recall.
Representiveness Heuristic
We pay more attention to whether something resembles something else than on more precise
statistic about its probability.
Clustering illusion
Creativity Exam Questions With Verified
Answers
Decision Making
The process of making choices among alternatives with the intention of moving toward something
desired.
Rational Choice Paradigm
Effective decision makers identify, select and apply the best possible alternatives. Use logic and all
available information to choose the alternative with the highest value
Subjected expected utility (Maximization)
Determines choice with the highest value. EX. hiring an employee people want to hire someone who
brings the greatest value to the company.
Systematic stages of Rational choice diagram
IDENTIFY problem or opportunity, CHOOSE best decision process, DEVELOP possible choices, SELECT
choice with highest value, IMPLEMENT the selected choice, EVALUATE the selected choice.
Programmed decision
follow standard operating procedures; they have been resolved in the past so the optimal solution has
already been identified and documented.
Non-Programmed Decision
Requires all steps in the decision process model because the problem is new, complex or ill-defined.
Problems with the rational choice paradigm
It is impossible to apply to reality. The model assumes people are efficient and logical information-
processing machines. In reality people have difficulty recognizing problems and cannot simultaneously
process huge volumes of info. The model focuses on logical thinking and completely ignores the fact
that emotions also influence.
Problem Identification Challenges
Problems/opportunities are constructed from ambiguous information, not "given" to us. They are also
influence by cognitive and emotional biases.
Stakeholder Framing
Employees, suppliers, customers and other stakeholders have vested interests when bringing good or
bad news to corporate decision makers. Employees point fingers at external factors rather than their
own faults.
Mental Models
Visual or relational images of the external world. The problem is that it does not let us think outside
the box.
, Decisive Leadership
A sign of an effective leader. The problem is that people become too eager to have this characteristic
that they miss important things.
Solution-Focused Problems
Define problems as veiled solutions. "The problem is we need more control over our suppliers" This
doesn't tell us whats going on with the suppliers.
Perceptual Defense
A way to block out bad news as a coping mechanism. People reuse what threatens self-concept. Some
people inherently overlook negative information whereas more are more aware of it.
Identifying problems and opportunities more effectively
(1) become aware of five problem biases. (2) leaders require considerable willpower to resist the
temptation of looking decisive when a more thoughtful examination of the situation occurs.
(3)Leaders need to create norms of "divine discontent"
bounded rationality
people are held back in their decision making capabilities, including access to limited information,
limited information processing and tendency toward satisficing, rather than maximization when
making choices.
Problems with Information Processing
(1) People evaluate only a few alternatives and only some of the main outcomes of those alternatives.
(2) Typically evaluate alternatives sequentially rather than all at the same time.
Implicit favorites
A preferred alternative that the decision maker uses repeatedly as a comparison with others. This can
distort information to favor the implicit over alternatives.
Biased Decision Heuristics
People have built in decision heuristic that bias evaluation of alternatives
Anchoring and Adjusting heuristic
initial information (opening bid) influences evaluation and do not sufficiently move away from that
point as new information is provided.
Availability Heuristic
We estimate probabilities by how easy we recall the event, even though other factors(emotional,
traumatic or recent events) influence ease of recall.
Representiveness Heuristic
We pay more attention to whether something resembles something else than on more precise
statistic about its probability.
Clustering illusion
