Chapter 7 - Managerial Decision Making Flashcards by Abby Lachica

What is a decision?
a) A choice made from two or more alternatives.
b) An obstacle that makes it difficult to achieve goals.
c) A process of identifying problems.

a) A choice made from two or more alternatives.

Explanation: A decision involves selecting an option from multiple possibilities to address a problem or achieve a goal.

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Which is the first step in the decision-making process?
a) Developing alternatives
b) Identifying the problem
c) Evaluating the decision

b) Identifying the problem

Explanation: The process begins with recognizing a discrepancy between the current state and the desired state.

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What characteristic must a problem have to be recognized by a manager?
a) It must be easy to solve.
b) There must be pressure to solve it.
c) It must be a new problem.

b) There must be pressure to solve it.

Explanation: A problem is acknowledged when there is urgency and the manager has the authority and resources to address it.

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What are decision criteria?
a) Steps to implement a decision.
b) Factors important to resolving the problem.
c) Alternatives to solve the problem.

b) Factors important to resolving the problem.

Explanation: Decision criteria are the relevant factors that influence the decision-making process.

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Why are weights assigned to decision criteria?
a) To list alternatives.
b) To prioritize their importance.
c) To develop a problem statement.

b) To prioritize their importance.

Explanation: Weights help in ranking the criteria based on their significance in the decision-making process.

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What is the purpose of developing alternatives?
a) To evaluate each alternative.
b) To identify viable options without evaluation.
c) To implement the decision.

b) To identify viable options without evaluation.

Explanation: This step involves listing all possible solutions without judging their feasibility.

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What are decision criteria?
a) Steps to implement a decision.
b) Factors important to resolving the problem.
c) Alternatives to solve the problem.

b) Factors important to resolving the problem.

Explanation: Decision criteria are the relevant factors that influence the decision-making process.

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Why are weights assigned to decision criteria?
a) To list alternatives.
b) To prioritize their importance.
c) To develop a problem statement.

b) To prioritize their importance.

Explanation: Weights help in ranking the criteria based on their significance in the decision-making process.

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What is the purpose of developing alternatives?
a) To evaluate each alternative.
b) To identify viable options without evaluation.
c) To implement the decision.

b) To identify viable options without evaluation.

Explanation: This step involves listing all possible solutions without judging their feasibility.

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What is analyzed in this step (Analyzing Alternatives)?
a) The strengths and weaknesses of each alternative.
b) The implementation plan.
c) The decision criteria.

a) The strengths and weaknesses of each alternative.

Explanation: Each alternative is appraised based on its ability to resolve the identified problem.

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How is the best alternative chosen?
a) By selecting the one with the highest total weight.
b) By choosing the first alternative listed.
c) By implementing all alternatives.

a) By selecting the one with the highest total weight.

Explanation: The alternative with the highest weighted score is considered the best option.

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What is crucial for successful implementation of alternatives?
a) Developing more alternatives.
b) Gaining commitment from those who will carry out the decision.
c) Re-evaluating the problem.

b) Gaining commitment from those who will carry out the decision.

Explanation: Ensuring that the decision is communicated and supported by those involved is key to successful implementation.

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What determines the effectiveness of a decision?
a) The number of alternatives considered.
b) The outcomes resulting from the chosen alternatives.
c) The speed of implementation.

b) The outcomes resulting from the chosen alternatives.

Explanation: The decision’s success is judged by how well it resolves the problem.

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What is assumed in rational decision making?
a) Decision makers are fully objective and logical.
b) Decision makers rely on intuition.
c) Decision makers avoid defining the problem.

a) Decision makers are fully objective and logical.

Explanation: Rational decision making assumes that managers make logical, consistent, and value-maximizing choices.

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What is bounded rationality?
a) Making decisions based on complete information.
b) Making decisions rationally but within the limits of information processing.
c) Making decisions without any constraints.

b) Making decisions rationally but within the limits of information processing.

Explanation: Bounded rationality acknowledges that managers cannot process all information and will satisfice rather than maximize.

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What is intuitive decision making based on?
a) Detailed analysis of alternatives.
b) Experience, feelings, and judgment.
c) Random selection of alternatives.

b) Experience, feelings, and judgment.

Explanation: Intuitive decision making relies on accumulated knowledge and instinct.

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What are structured problems?
a) Problems that are new and unusual.
b) Problems that are clear and familiar.
c) Problems that require custom solutions.

b) Problems that are clear and familiar.

Explanation: Structured problems have occurred before and are easily defined.

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What is a programmed decision?
a) A decision that is unique and nonrecurring.
b) A repetitive decision handled by a routine approach.
c) A decision made under uncertainty.

b) A repetitive decision handled by a routine approach.

Explanation: Programmed decisions are made for structured problems using established procedures.

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What is decision making under risk?
a) Making decisions with complete certainty.
b) Estimating the likelihood of outcomes.
c) Making decisions without any information.

b) Estimating the likelihood of outcomes.

Explanation: Risk involves predicting the probability of different outcomes.

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What characterizes a linear thinking style?
a) Preference for internal sources of information.
b) Preference for external data and rational thinking.
c) Preference for intuitive and creative thinking.

b) Preference for external data and rational thinking.

Explanation: Linear thinkers rely on data and logical analysis.

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What is escalation of commitment?
a) Reducing commitment to a failing decision.
b) Increasing commitment to a previous decision despite evidence it may be wrong.
c) Avoiding any commitment to decisions.

b) Increasing commitment to a previous decision despite evidence it may be wrong.

Explanation: Escalation of commitment occurs when managers continue to invest in a decision despite negative outcomes.

Under which condition is the possibility of decision failure the highest?

a) Certainty
b) Risk
c) Ambiguity

c) Ambiguity

Explanation: Ambiguity, where information is unclear or incomplete, presents the highest possibility of decision failure.

Which type of decision is most likely to be made under conditions of certainty?

a) Programmed Decision
b) Nonprogrammed Decision
c) Intuitive Decision

a) Programmed Decision

Explanation: Programmed decisions are typically made under conditions of certainty, where outcomes are known.

What characterizes a nonlinear thinking style?

a) Preference for external data and rational thinking.
b) Preference for internal sources of information and intuition.
c) Preference for structured and routine decisions.

b) Preference for internal sources of information and intuition.

Explanation: Nonlinear thinkers rely on internal insights, feelings, and intuition to guide their decisions and actions.

Which decision-making style uses external data and facts? a) Nonlinear thinking style b) Intuitive thinking style c) Linear thinking style

c) Linear thinking style ## Footnote Explanation: Linear thinking style is characterized by a preference for using external data and facts and processing this information through rational, logical thinking.

What is a common decision-making error where managers continue to invest in a failing decision? a) Satisficing b) Escalation of commitment c) Rational decision making

b) Escalation of commitment ## Footnote Explanation: Escalation of commitment occurs when managers increase their commitment to a previous decision despite evidence that it may have been wrong.

What is satisficing in decision making? a) Choosing the best possible alternative. b) Selecting the first alternative that satisfactorily solves the problem. c) Avoiding decision making altogether.

b) Selecting the first alternative that satisfactorily solves the problem. ## Footnote Explanation: Satisficing involves choosing an option that meets the minimum criteria for solving the problem rather than seeking the optimal solution.

What type of decision-making condition involves estimating the likelihood of outcomes? a) Certainty b) Risk c) Uncertainty

b) Risk ## Footnote Explanation: Risk involves situations where the manager can estimate the probability of different outcomes resulting from the choice of particular alternatives.

Under which condition is a manager forced to rely on intuition and hunches? a) Certainty b) Risk c) Uncertainty

c) Uncertainty ## Footnote Explanation: Uncertainty occurs when there is limited information, making it difficult to estimate outcome probabilities, thus forcing managers to rely on intuition and hunches.

Which condition has the lowest possibility of decision failure? a) Certainty b) Risk c) Ambiguity

a) Certainty ## Footnote Explanation: Certainty, where the outcome of every alternative choice is known, has the lowest possibility of decision failure.

What type of decision is most likely to be made under conditions of ambiguity? a) Programmed Decision b) Nonprogrammed Decision c) Routine Decision

b) Nonprogrammed Decision ## Footnote Explanation: Nonprogrammed decisions are made for new or unusual problems where information is ambiguous or incomplete.

What are the two dimensions of decision-making styles? a) Ways of thinking and source of information b) Types of problems and decision criteria c) Decision conditions and alternatives

a) Ways of thinking and source of information ## Footnote Explanation: Decision-making styles are characterized by how individuals think (rational or intuitive) and where they source their information (external data or internal insights).

Which decision-making style is characterized by rational, logical, and analytical thinking? a) Nonlinear thinking style b) Linear thinking style c) Intuitive thinking style

b) Linear thinking style ## Footnote Explanation: Linear thinking style involves a preference for using external data and facts and processing this information through rational, logical thinking.

What type of problem involves goals that are clear and familiar? a) Unstructured Problems b) Structured Problems c) Ambiguous Problems

b) Structured Problems ## Footnote Explanation: Structured problems involve clear and familiar goals, making them easier to define and address.

Which type of decision is used to handle structured problems? a) Nonprogrammed Decision b) Programmed Decision c) Intuitive Decision

b) Programmed Decision ## Footnote Explanation: Programmed decisions are repetitive and routine, suitable for structured problems.

At which organizational level are nonprogrammed decisions more likely to be made? a) Lower level b) Middle level c) Top level

c) Top level ## Footnote Explanation: Nonprogrammed decisions are typically made at the top level of the organization, where strategic and complex decisions are required.

What is the main characteristic of decision-making under certainty? a) The outcome of every alternative choice is known. b) The likelihood of outcomes can be estimated. c) Information is limited and ambiguous.

a) The outcome of every alternative choice is known. ## Footnote Explanation: Under certainty, managers can make accurate decisions because they know the outcomes of all alternatives.

What is the main focus of managerial decision making? a) Identifying and solving organizational problems. b) Developing new products. c) Increasing employee satisfaction.

a) Identifying and solving organizational problems. ## Footnote Explanation: Managerial decision making focuses on identifying problems within the organization and finding solutions to resolve them.

What is satisficing in decision making? a) Choosing the best possible alternative. b) Selecting the first alternative that satisfactorily solves the problem. c) Avoiding decision making altogether.

What is a cognitive bias that affects decision making? a) Overconfidence bias b) Rational decision making c) Linear thinking

a) Overconfidence bias ## Footnote Explanation: Overconfidence bias occurs when managers overestimate their knowledge or ability to predict outcomes, leading to flawed decisions.

What is anchoring effect in decision making? a) Relying too heavily on the first piece of information encountered. b) Making decisions based on intuition. c) Considering all alternatives equally.

a) Relying too heavily on the first piece of information encountered. ## Footnote Explanation: The anchoring effect is a cognitive bias where individuals rely too heavily on the initial information (the "anchor") when making decisions.

What is confirmation bias in decision making? a) Seeking out information that contradicts existing beliefs. b) Ignoring information that supports existing beliefs. c) Seeking out information that supports existing beliefs.

c) Seeking out information that supports existing beliefs. ## Footnote Explanation: Confirmation bias occurs when individuals favor information that confirms their preconceptions, leading to biased decision making.

What is hindsight bias? a) Believing that past events were predictable after they have already occurred. b) Predicting future events with high accuracy. c) Ignoring past events when making decisions.

a) Believing that past events were predictable after they have already occurred. ## Footnote Explanation: Hindsight bias is the tendency to see events as having been predictable after they have already happened, which can distort decision making.

What is the availability heuristic? a) Making decisions based on the most readily available information. b) Making decisions based on comprehensive data analysis. c) Ignoring readily available information.

a) Making decisions based on the most readily available information. ## Footnote Explanation: The availability heuristic involves making decisions based on information that is most easily recalled, which may not always be the most accurate or relevant.

What is the framing effect? a) Making decisions based on how information is presented. b) Making decisions based on the content of information. c) Ignoring the presentation of information.

Answer: a) Making decisions based on how information is presented. ## Footnote Explanation: The framing effect occurs when the way information is presented influences the decision, even if the content is the same.

What is the sunk cost fallacy? a) Ignoring past investments when making decisions. b) Continuing an endeavor because of previously invested resources. c) Making decisions based on future potential gains.

b) Continuing an endeavor because of previously invested resources. ## Footnote Explanation: The sunk cost fallacy occurs when individuals continue a project or decision based on the amount of resources already invested, rather than current and future benefits.

What is the self-serving bias? a) Attributing successes to external factors and failures to internal factors. b) Attributing successes to internal factors and failures to external factors. c) Ignoring both successes and failures.

b) Attributing successes to internal factors and failures to external factors. ## Footnote Explanation: The self-serving bias involves attributing positive outcomes to one's own actions and negative outcomes to external factors, which can distort decision making.

What is the hindsight bias? a) Believing that past events were predictable after they have already occurred. b) Predicting future events with high accuracy. c) Ignoring past events when making decisions.

What is the framing effect? a) Making decisions based on how information is presented. b) Making decisions based on the content of information. c) Ignoring the presentation of information.

a) Making decisions based on how information is presented. ## Footnote Explanation: The framing effect occurs when the way information is presented influences the decision, even if the content is the same.