Chapter 7: Managerial Decision Making

Question 1

Decision Making

Answer 1

The process of making a choice or selecting a course of action to address a specific problem

Question 2

Effectiveness of Decision Making

Answer 2

Accuracy
Consensus
Acceptability

Question 3

Accuracy

Answer 3

The degree of correspondence between a decision and the correct decision, even if this can only be known after the fact

• This is important in situations where there is an objectively verifiable correct decision to a specific problem.

Question 4

Consensus

Answer 4

The degree to which members of a team generally agree with the team’s choice

• Involves a member of a team agreeing with the teams choice in a specific situation.

Question 5

Acceptability

Answer 5

The degree to which a decision is likely to meet an overall objective or goal

Satisficing - Strategy in which a decision maker accepts an available option as satisfactory

• Used in situations where it might be difficult if not impossible to find the optimal choice and an “acceptable decision will do.

Question 6

Modes of Decision Making

Answer 6

Intuition
Programmed decision making
Non-programmed decision

Question 7

Intuition

Answer 7

Nearly instantaneous judgments about a situation based on past experience and without conscious thought

• When a problem or its context is familiar to an individual and is a “gut feeling”

Resolved quickly using intuition

Reasoning might be difficult to explain
Experts process decisions quickly with little conscious deliberation and they may not even know they arrived at the decision
May lead to problems when experts are working with others who want a clear explanation

Question 8

Programmed decision making

Answer 8

Decisions made in response to recurring problems or situations that are relatively familiar to the decision maker

• They trigger a response that results from learning and expertise from similar situations
• Little difficulty recognizing the problem and solution for it
• Decision happen without too much effort or thought

Question 9

Non-programmed decision

Answer 9

Decisions made in response to novel or complex problems or involve situations that are unfamiliar to the decision maker

• Problems are unique and difficult to understand
• They address problems using more effort and rational approach

Question 10

Rational Decision Making approach

Answer 10

Thoughtful analysis using a series of steps triggered when a discrepancy exists between some desired state and a current state as it is understood

1. Identify the problem
   - Identify the problem and the cause of it.
2. Identify the decision criteria
   - The decision maker needs to consider what an effective decision will, and will not involve.
3. Develop a list of plausible solutions
   - Identify ideas that could possibly solve the solution
4. Evaluate the plausible solutions
   - Working through solutions previously identified in step 3.
5. Implement and monitor the solution

Question 11

Decision-Making Styles

Answer 11

Autocratic
Consult individually style
Consult the group style
Facilitative
Delegative

Question 12

Autocratic

Answer 12

Decision-making style in which a manager makes decisions alone, without any input from others

Question 13

Consult individually style

Answer 13

Decision-making style in which a manager presents a problem and seeks potential solutions from individual subordinates

Question 14

Consult the group style

Answer 14

Decision-making style in which a manager presents a problem and seeks potential solutions from subordinates in a group setting

Question 15

Facilitative

Answer 15

Decision-making style in which a manager shares a problem with the group and works with them to reach a consensus on the final decision

Question 16

Delegative

Answer 16

Decision-making style in which a manager passes the responsibility for making a final decision on a specific problem to subordinates

Question 17

Vroom-Yetten-Jago Time Driven Model

Answer 17

Describes seven variables of a specific situation that should be considered when choosing a certain decision-making style for a problem that needs to be solved quickly

Purpose: helps make decision in a timely manner

Question 18

Bounded rationality

Answer 18

In the decision-making process, a person’s level of rationality is limited by the information he or she possesses. Limited cognative capacity.

Question 19

Heuristics

Answer 19

Mental shortcuts that use past experiences to speed up the decision-making process

Question 20

Biases

Answer 20

The tendency or inclination to make a certain type of decision-making error when confronted with similar decision-making stimuli

Question 21

Representativeness heuristic

Answer 21

Tendency to ignore information regarding the probability of an event in favour of information that seems more representative or relevant to the situation

Question 22

Availability heuristic

Answer 22

Tendency to base judgments about the probability of an event based on how easily the event can be recalled from the memory of similar events

Question 23

Confirmation bias

Answer 23

seek, interpret, and recollect information in a way that supports the person’s position or preferences

Question 24

Escalation of commitment

Answer 24

The decision to maintain or increase commitment to a project or decision despite clear evidence that the project or decision has failed

Question 25

Group think

Answer 25

Tendency of a team to promote conformity among group members and overconfidence in the team’s capabilities // patterns of thoughts and behaviors that maintain harmony within the group but that also collectively serve to hinder a team’s ability to make effective decisions

Question 26

Abilene paradox -

Answer 26

A team decision-making behavior in which individuals acting contrary to their own wishes are likely to experience negative feelings about the outcome

Question 27

Diffusion of responsibility

Answer 27

A team decision-making behavior in which individuals acting contrary to their own wishes are likely to experience negative feelings about the outcome

Question 28

Social influence

Answer 28

Changes in behavior that result from interactions and relationships with others

Question 29

Brainstorming

Answer 29

involves team members meeting as a group either in person or online to review a problem and generate idea and solutions or a problem. Then they can evaluate the effectiveness of the solutions.

Question 30

Devil’s advocacy

Answer 30

Once possible solutions are identified, one or more members of the team take on the role of devils advocate and become a critic of the solutions.

Question 31

Delphi method

Answer 31

a questionnaire is sent to members of the team, an administrator tallies the results, and a second questionnaire is sent to the team based on the results of the feedback obtained in the first round. Several rounds of questionnaires and resulting feedback help team members reach a consensus based on the results of the previous round.

Question 32

Challenges to team decision making

Answer 32

Group think -

Abilene paradox

Diffusion of responsibility

Social influence

Question 33

Problem solving techniques:

Answer 33

1) Brainstorming

2) Devil’s advocacy

3) Delphi method

Question 34

Challenges to INDIVIDUAL Decision Making

Answer 34

Representativeness heuristic

Availability heuristic

Confirmation bias

Escalation of commitment