Chapter 8 Decision Making
Explanation: C) Most of us will primarily make programmed decisions during the day
because these are the routine decision making situations we encounter with clearly
identifiable actions and outcomes that are often predictable. - answers1) Which type of
decision do you make most frequently during a typical day?
A) Naturalistic
B) Rational
C) Programmed
D) Non-programmed
Explanation: C) Dealing with changing customer demands is a non-programmed
decision because it is highly complex and not routine. Because of these factors, it may
require that new methods or procedures are developed to assist in decision making. -
answers2) Which of the following is a non-programmed decision?
A) Deciding who to hire
B) Determining budgets
C) Dealing with changing customer demands
D) Production demands
Explanation: C) Mental accounting distorts our view of both gains and losses, and this
becomes the information that we base future decisions on, which could result in a
repeating cycle. - answers3) How does mental accounting distort our perceptions?
A) Downplay loss
B) Emphasize gain
C) Both of the above
D) None of the above
Explanation: C) Incorrect information can impact any stage of the decision making
model; it doesn't wait until the decision to make an impact. For example, if the incorrect
information you perceive leads you to misidentify the problem, it will impact every
subsequent step you take in any problem solving approach that you use. Reaching a
certain stage in a particular model does not correct for the incorrect information that got
you there. - answers4) Where might incorrect information impact the decision making
process?
A) Problem identification
B) Solution evaluation
C) Plan implementation
D) All of the above
Explanation: C) When we don't have time to gather the resources we would like to rely
on, we don't have all of the information we need and we don't have time to fully analyze
, or think through the problem, synthesize a response, or create resiliency. - answers5)
Why do time constraints cause errors in decision making?
A) Your performance is being judged, placing far more pressure on you to quickly solve
the problem successfully
B) Effective managers can quickly assess the situation and make a decision. Taking
more time provides the impression that you aren't a good manager
C) Time constraints limit your ability to gather information
D) Time is money
Explanation: D) The overconfidence bias, availability, and anchoring bias are three of
the common heuristics used to shortcut the rational decision making process. -
answers6) Which of the following is not a heuristic used to shortcut the rational decision
making process?
A) You are overconfident that your opinion will be correct
B) You act with the information that you have instead of taking the time to collect better
information
C) You are focused on resolving only the one factor in the problem you deem to be the
most important
D) All of the above are heuristics used to shortcut the rational decision making process
Explanation: C) You are demonstrating the confirmation bias. You focus on the good
and ignore the bad to confirm your decision was well made and that you took the right
course of action. This leads to inaccurate information and skews our perceptions. -
answers7) When you begin your new job, you are soaking in all types of information
about your new work environment: some good, some bad. Mentally, you emphasize the
number and importance of the good aspects and discount those of the bad as you go
through your first week. What are you doing?
A) Managing your impression that you like the job
B) Maintaining a healthy outlook
C) Confirming to yourself that you made the right decision
D) Gathering information about the organization's culture
Explanation: A) The hindsight bias is a lie (to ourselves or others) that we held the
position originally when we changed to the "correct" answer/viewpoint/decision after
learning new information or learning the outcome. - answers8) What is the hindsight
bias?
A) Changing viewpoints based on new information but not admitting the change
B) Changing viewpoints based on new information
C) The ability to objectively assess what they should or would have done after the fact
(also known as Monday morning quarterbacking)
D) Only occurs in situations that end in less than optimal outcomes
Explanation: B) Behavioral economics seeks to explain consistent errors in decision
making such as bias and heuristics. These specific mental tricks or shortcuts people
use when deciding difficult issues often result in predictably irrational behavior. -
answers9) What is the behavioral economics approach?
Explanation: C) Most of us will primarily make programmed decisions during the day
because these are the routine decision making situations we encounter with clearly
identifiable actions and outcomes that are often predictable. - answers1) Which type of
decision do you make most frequently during a typical day?
A) Naturalistic
B) Rational
C) Programmed
D) Non-programmed
Explanation: C) Dealing with changing customer demands is a non-programmed
decision because it is highly complex and not routine. Because of these factors, it may
require that new methods or procedures are developed to assist in decision making. -
answers2) Which of the following is a non-programmed decision?
A) Deciding who to hire
B) Determining budgets
C) Dealing with changing customer demands
D) Production demands
Explanation: C) Mental accounting distorts our view of both gains and losses, and this
becomes the information that we base future decisions on, which could result in a
repeating cycle. - answers3) How does mental accounting distort our perceptions?
A) Downplay loss
B) Emphasize gain
C) Both of the above
D) None of the above
Explanation: C) Incorrect information can impact any stage of the decision making
model; it doesn't wait until the decision to make an impact. For example, if the incorrect
information you perceive leads you to misidentify the problem, it will impact every
subsequent step you take in any problem solving approach that you use. Reaching a
certain stage in a particular model does not correct for the incorrect information that got
you there. - answers4) Where might incorrect information impact the decision making
process?
A) Problem identification
B) Solution evaluation
C) Plan implementation
D) All of the above
Explanation: C) When we don't have time to gather the resources we would like to rely
on, we don't have all of the information we need and we don't have time to fully analyze
, or think through the problem, synthesize a response, or create resiliency. - answers5)
Why do time constraints cause errors in decision making?
A) Your performance is being judged, placing far more pressure on you to quickly solve
the problem successfully
B) Effective managers can quickly assess the situation and make a decision. Taking
more time provides the impression that you aren't a good manager
C) Time constraints limit your ability to gather information
D) Time is money
Explanation: D) The overconfidence bias, availability, and anchoring bias are three of
the common heuristics used to shortcut the rational decision making process. -
answers6) Which of the following is not a heuristic used to shortcut the rational decision
making process?
A) You are overconfident that your opinion will be correct
B) You act with the information that you have instead of taking the time to collect better
information
C) You are focused on resolving only the one factor in the problem you deem to be the
most important
D) All of the above are heuristics used to shortcut the rational decision making process
Explanation: C) You are demonstrating the confirmation bias. You focus on the good
and ignore the bad to confirm your decision was well made and that you took the right
course of action. This leads to inaccurate information and skews our perceptions. -
answers7) When you begin your new job, you are soaking in all types of information
about your new work environment: some good, some bad. Mentally, you emphasize the
number and importance of the good aspects and discount those of the bad as you go
through your first week. What are you doing?
A) Managing your impression that you like the job
B) Maintaining a healthy outlook
C) Confirming to yourself that you made the right decision
D) Gathering information about the organization's culture
Explanation: A) The hindsight bias is a lie (to ourselves or others) that we held the
position originally when we changed to the "correct" answer/viewpoint/decision after
learning new information or learning the outcome. - answers8) What is the hindsight
bias?
A) Changing viewpoints based on new information but not admitting the change
B) Changing viewpoints based on new information
C) The ability to objectively assess what they should or would have done after the fact
(also known as Monday morning quarterbacking)
D) Only occurs in situations that end in less than optimal outcomes
Explanation: B) Behavioral economics seeks to explain consistent errors in decision
making such as bias and heuristics. These specific mental tricks or shortcuts people
use when deciding difficult issues often result in predictably irrational behavior. -
answers9) What is the behavioral economics approach?
