Chapter 12: Decision Making, Creativity & Ethics

Question 1

What is the Rational Decision Making Model?

Answer 1

how individuals should behave in order to create value-maximizing decisions within specified constraints

1. Define the problem
2. Identify the decision criteria
3. Allocate weights to the criteria
4. Develop the alternatives
5. Evaluate the alternatives
6. Select the best alternative

Question 2

Define Bounded Rationality

Answer 2

Limitations on a person’s ability to interpret, process, and act on information

Question 3

Define Rationality

Answer 3

refers to choices that are consistent and value-maximizing within specified constraints

Question 4

Define Satisficing

Answer 4

First acceptable choice encountered, rather than an optional one

Question 5

Define Intuition

Answer 5

Unconscious process created from distilled experience

Question 6

Describe Group vs. Individual Decision Making

Answer 6

• Accuracy (G/I)
• Speed (I)
• Creativity (G)
• Acceptance (G)
• Efficiency (I)

Question 7

What are the decision making issues? (8)

Answer 7

• overconfidence bias
• anchoring bias
• confirmation bias
• availability bias
• escalation of commitment
• randomness error
• risk aversion
• hindsight bias

Question 8

Decision Making Issues: Overconfidence Bias

Answer 8

Error in judgement from being far too optimistic about one’s

own performance

Question 9

Decision Making Issues: Anchoring Bias

Answer 9

Tendency to fixate on initial information, from which one then fails to
adequately adjust for subsequent information

Question 10

Decision Making Issues: Confirmation Bias

Answer 10

Tendency to seek out information that reaffirms past choices and
to discount information that contradicts past judgements

Question 11

Decision Making Issues: Availability Bias

Answer 11

Tendency for people to base their judgements on information that
is readily available to them rather than complete data

Question 12

Decision Making Issues: Escalation of Commitment

Answer 12

Increased commitment to a previous decision despite

negative information

Question 13

Decision Making Issues: Randomness Error

Answer 13

Tendency of individuals to believe that they can predict the

outcome of random events

Question 14

Decision Making Issues: Risk Aversion

Answer 14

Tendency to prefer a sure gain of a moderate amount over a riskier
outcome, even if the riskier outcome might have a higher expected payoff

Question 15

Decision Making Issues: Hindsight Bias

Answer 15

Tendency to believe falsely, after an outcome of an event is actually
known, that one could have accurately predicted that outcome

Question 16

Group Decision Making: Criteria of Effectiveness Pros

Answer 16

• More complete information
• Diversity of views
• Decision quality
• Accuracy
• Creativity
• Degree of acceptance

Question 17

What is Groupthink?

Answer 17

Phenomenon in which group pressures for conformity prevent the group
from critically appraising unusual, minority, or unpopular views

Question 18

How does one minimize groupthink?

Answer 18

• Monitor group size
• Encourage group leaders to play an impartial role
• Appoint one group member to play the role of devil’s advocate
• Stimulate active discussion of diverse alternatives to encourage dissenting views and
  more objective evaluations

Question 19

Define Group-Shift

Answer 19

Phenomenon in which the initial positions of individual group members
become exaggerated because of the interactions of the group

Question 20

What are the four ethicial decision making criteria?

Answer 20

• utilitarianism
• rights
• justice
• care

Question 21

Ethical Decision Making: Utilitarianism

Answer 21

Decision focused on outcomes or consequences that emphasizes the
greatest good for the greatest number
- Promotes efficiency and productivity
- Sideline rights of some individuals

Question 22

Ethical Decision Making: Justice

Answer 22

Impose and enforce rules fairly and impartially to ensure justice or an equitable
distribution of benefits and costs
- Favoured by union members
- Protects interests of the underrepresented and less powerful
- Encourage sense of entitlement

Question 23

Ethical Decision Making: Rights

Answer 23

Respecting and protecting the basic rights of individuals, such as the rights to
privacy, free speech, and due process
- Protects whistle-blowers when reporting unethical or illegal practices by their
organizations to the media or to government agencies, using their right to free
speech

Question 24

Ethical Decision Making: Care

Answer 24

“The morally correct action is the one that expresses care in protecting the special
relationships that individuals have with each other”
- Aware of needs, desires, and well-being of those to whom we are closely connected
- Difficult in being impartial in all decisions

Question 25

What is corporate social responsibility?

Answer 25

Organization’s responsibility to consider the impact of

its decisions on society