Chapter 4

Question 1

Decision making

Answer 1

can be viewed as an eight-step process that involves identifying a problem, selecting an alternative, and evaluating the decision’s effectiveness.

Question 2

Problem

Answer 2

that is, a discrepancy between an existing state of affairs and the desired state of affairs

Question 3

decision criteria

Answer 3

step two in the decision making process. determining what factors are important to making the decision

Question 4

allocate weights

Answer 4

determining the importance of each criteria

Question 5

Developing alternatives

Answer 5

lists of alternatives that could solve the problem

Question 6

Analyzing alternatives

Answer 6

analyzing each criteria to the problem

Question 7

Selecting the best alternative

Answer 7

choosing the best alternative to alleviate the problem

Question 8

decision implementation

Answer 8

involves conveying the decision to those affected and to obtaining their commitment

Question 9

appraising the outcome of the decision

Answer 9

managers appraise the result of the decision

Question 10

Overconfidence

Answer 10

occurs when decision makers think they know more they do

Question 11

immediate gratification

Answer 11

describes decision makers who want immediate rewards but want to avoid immediate costs

Question 12

anchoring effect

Answer 12

when decision makers fixate on initial information

Question 13

selective perception

Answer 13

organize and interpret events based on their biased perceptions

Question 14

confirmation bias

Answer 14

describes decision makers who seek out information that reaffirms their past choices and who discount information that contradicts past judgements

Question 15

framing bias

Answer 15

occurs when decision makers select and highlight certain aspects of a situation while excluding others

Question 16

availability bias

Answer 16

when decision makers focus on events that are the most recent and vivid in their memory

Question 17

Representation bias

Answer 17

describes how decision makers assess the likelihood of an event based on how closely it resembles other events and then draw analogies and see identical situations where they don’t necessarily exist

Question 18

Randomness Bias

Answer 18

describes when decision makers try to create meaning out of random events

Question 19

sunk costs error

Answer 19

occurs when decision makers forget that current choices can’t correct the past.

Question 20

self - serving bias

Answer 20

take credit for their successes and blame failures on outside factors

Question 21

hindsight bias

Answer 21

is the tendency for decision makers to falsely believe that they would have accurately predicted the outcome of an event once that outcome is actually known

Question 22

Rational Decision making

Answer 22

choices that are consistent and value - maximizing within specific constraints

Question 23

Rational decision maker

Answer 23

being fully objective and logical

Question 24

escalation of commitment

Answer 24

an increased commitment to a previous decision despite evidence that it may have been wrong

Question 25

bounded rationality

Answer 25

managers make decisions rationally but are limited by they ability to process information

Question 26

satisfice

Answer 26

they accept decisions that are good enough

Question 27

intuitive decision making

Answer 27

making decisions on the basis of experience, feelings, and accumulated judgement.

Question 28

Structured problems

Answer 28

straightforward, familiar, easily defined

Question 29

Unstructured problems

Answer 29

new or unusual for which information is ambiguous or incomplete

Question 30

programmed

Answer 30

repetitive decisions that can be handled using a routine approach

Question 31

nonprogrammed

Answer 31

deciding whether to acquire another organization or to sell off an unprofitable division

Question 32

certainty

Answer 32

a situation where a manger can make accurate decisions because the outcome of every alternative is known

Question 33

Uncertainty

Answer 33

the decision maker is not certain about the outcomes and can’t even make probability estimates

Question 34

groupthink

Answer 34

a form of conformity in which group members withheld deviant, minority, or unpopular views in order to give the appearance of agreement