Strategy and Decision Making Flashcards

Question

Diminishing Sensitivity

Answer 1

more sensitive to changes near the reference point than far from the reference point The difference between 900 and 1000 feels smaller than the difference between 100 and 200

Answer 2

Often the status quo The outcome that you expect Outcomes you feel entitled to If outcome > reference point = gain If outcome < reference point = Loss

Answer 3

When making a decision, reframe it from gains to losses and vice versa and see how it affects your preference Bundle bad news Recall that expectations are a reference point for people Experiencing losses is demotivating Anticipating potential losses can be very motivating

Answer 4

the tendency to be more confident than correct—to overestimate the accuracy of our beliefs and judgments.

Answer 5

Train on past cases where outcomes are known Explicitly consider competing hypotheses Gather a group of knowledgeable people just before making a decision

Answer 6

Adding an extreme alternative increases the preference for the middle product Perceived as lowest risk (Safe bet) Easy to justify Combination of Option A and C

Answer 7

Decision makers select the alternative that is supported by the best reasons Thus individuals do not necessarily choose the option with the highest utility. instead, they choose the option that fares best when compared with others.

Answer 8

a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered when making decisions Example: Groups who are presented with high anchor numbers will give estimates that are significantly higher than those who were presented with lower anchor numbers

Answer 9

Insufficient Adjustment Enhanced Accessibility

Answer 10

Insufficient Adjustment people adjust from anchor (effortful operation), and stop adjusting when they are no longer certain

Answer 11

also known as the priming effect of anchor-consistent information, the anchor works as a suggestion

Answer 12

A self-reinforcing process in which a collective belief gains more and more plausibility through its increasing repetition in public discourse (or "repeat something long enough and it will become true"). An initial media report on a minor incident can provoke public panic, leading to increased media coverage

Answer 13

categorizing spending and saving decisions into "accounts" mentally designated for specific consumption transactions, goals, or situations

Answer 14

Higher-status individuals better resist conformity pressures With too many high-status individuals group performance suffers

Answer 15

Surface Level Diversity differences such as age, sex, race/ethnicity, and physical disabilities that are observable, typically unchangeable, and easy to measure

Answer 16

Deep-level diversity differences such as personality and attitudes that are communicated through verbal and nonverbal behaviors and are learned only through extended interaction with others

Answer 17

Benefits ➢ Pools a broader base of information & knowledge ➢ Increases divergent thinking ➢ Increases open-mindedness and creativity Costs ➢ Increased group conflict ➢ Lower levels of satisfaction and group morale

Answer 18

situation in which one party is more informed than another because of the possession of private information

Answer 19

Groups tend to focus on and share information that is commonly held by their members But spend less time disclosing information that is privately held This preference can hinder the group's ability to consider all relevant information and make the best decision

Answer 20

The idea that a group of individuals (the crowd), often consisting of untrained amateurs, will collectively have more insight than a single or small group of trained professionals.

Answer 21

Tendency for social psychology to treat group influence as a one-way process in which individuals or minorities always conform to majorities.

Answer 22

Participants had to match a target line to one of the lines shown on a separate card

Answer 23

Researchers demonstrate that popularity influences others' tastes, for example, music preferences Similar groups may end up making very different judgments simply because of who spoke first

Answer 24

tendency of group members to move to an extreme position after discussing an issue as a group

Answer 25

As a leader, manage conflict productively rather than suppressing it! Distinguish between cognitive and affective dissent Make sure everyone gets a voice before the choice is taken Discuss in sub-groups or 1:1; as a leader leave the room Invite people to play the devil's advocate Delphi Method Invite outsiders (e.g., audits)

Answer 26

the effect that the words, actions, or mere presence of other people have on our thoughts, feelings, attitudes, or behavior

Answer 27

Noise anything that interferes with, distorts, or slows down the transmission of information

Answer 28

Bias A particular preference or point of view that is personal, rather than scientific.

Answer 29

Error in (single) judgment = Bias + Noise

Answer 30

Measure noise with noise audit: give the same problems to different experts and measure differences in their responses

Answer 31

Aggregate multiple independent judgments, different people making judgments independently, rather than assigning the judgment to one person Define the scale on which a judgment is made, and replace an absolute scale with a relative scale Use algorithms or rules of some kind, or artificial intelligence, to replace human judgment