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Management Chapter 7

When a manager makes a decision based on the strong beliefs she already has, she is guilty of a prior- hypothesis bias.
True
You have surveyed all of your close friends, and they all prefer ice cream to frozen yogurt. Thus you should be confident that everyone prefers ice cream; that is, this is a representative sample of adequate size.
False

(Small sample size might be biased)

The process of identifying and choosing between alternative courses of action is known as option evaluation
False

(Decision making is the process of identifying and choosing between alternative courses of action)

Politics has provided evidence that appeals to emotion are more effective than appeals to logic in decision making.
True
Experts may make irrational decisions because they are unable to see things from an outsider’s perspective
True
The rational model of decision making assumes that managers will choose the available alternative that best supports their existing beliefs.
False

(The rational model of decision making, also called the classical model, explains how managers should make decisions; it assumes managers will make logical decisions that will be the optimum in furthering the organization’s best interests)

The first step in the rational decision making process is to think up alternative solutions
False

(The first step in the rational decision-making process is to identify the problem or opportunity)

The final step in the rational decision-making process is to implement and evaluate the chosen solution.
True
Opportunities should be identified in the alternative evaluation stage of the decision-making process
False

(Opportunities are situations that present possibilities for exceeding existing goals and they should be identified in the first step in the rational decision-making process)

Analyzing the underlying causes of a problem or an opportunity is called diagnosis
True
Women investors make trades much less often than men, do a lot more research, and have better returns on average.
True
When evaluating alternatives in decision making, you must assess cost and quality and also ask the question, “Is it simple?”
False

(You need to evaluate each alternative not only according to cost and quality but also according to the following questions: (1) Is it ethical? (2) Is it feasible? and (3) Is it ultimately effective?)

For implementation of a chosen solution in decision making to be successful, you need to plan carefully and be sensitive to those affected
True
Customers who experience poor customer service are more likely to tell the company about it than to tell family or friends
False
If a chosen alternative is implemented and it does not appear to be working, you may need to give it more time
True
The rational model works well even with the incomplete information and uncertainty about consequences that managers often face
False

(The rational model makes some highly desirable assumptions: that managers have complete information, are able to make an unemotional analysis, and are able to make the best decision for the organization)

Nonrational models of decision making describe how managers should make decisions rather than how they actually do.
False

(The nonrational models are descriptive rather than prescriptive: They describe how managers actually make decisions rather than how they should)

The incremental model is a nonrational model of decision making
True

(Three nonrational models are (1) satisficing, (2) incremental, and (3) intuition

Sandra did an Internet search for Jamaican hotels when she was setting up her vacation, but found over 7 million results, of which she could only handle looking at about two pages. Sandra is operating under conditions of bounded rationality
True

(Bounded rationality is a concept that suggests that the ability of decision makers to be rational is limited by numerous constraints, such as complexity, time and money, and their cognitive capacity, values, skills, habits, and unconscious reflexes)

Satisficing occurs when a manager takes small, short-term steps to alleviate a problem
False

(n the satisficing model, managers seek alternatives until they find one that is satisfactory, not optimal. In the incremental model, managers take small, short-term steps to alleviate a problem, rather than steps that will accomplish a long-term solution)

In time-critical situations, satisficing may be a good approach to decision making
True

(While looking for a solution that is merely “satisficing” might seem to be a weakness, it may well outweigh any advantages gained from delaying making a decision until all information is in and all alternatives weighed)

One problem with the incremental model is that temporary steps may actually impede a beneficial long- term solution
True
When then-president of Chrysler Bob Lutz ordered the development of the Dodge Viper without supporting research but because it “just felt right,” he was using the incremental model of decision making
False

(Intuition model)

Intuition based on feelings rather than expertise, or the involuntary emotional response to those feelings, is known as automated experience
True

(Intuition based on feelings, or the involuntary emotional response to those same matters, is known as automated experience. Intuition that stems from expertise, or a person’s explicit and tacit knowledge about a person, situation, object, or decision opportunity, is known as a holistic hunch)

The drawback of using the intuition model of decision making is that it can be difficult to convince others that your decision makes sense
True
When QVC experiments with which products it will sell on its television shopping network and follows
this up with analysis of why some sell and others don’t, it is using evidence-based management
True
Understanding how to use failure is an important implementation principle for evidence-based management
True
To effectively use evidence-based management, the more evidence you can gather, the better
False

(Despite your best intentions, it’s hard to bring the best evidence to bear on your decisions. Among the reasons are that there is sometimes too much evidence)

Evidence shows that firms that announce layoffs have higher stock prices than their peers, both in the near term and over time
False
Portfolio analysis is an example of the incremental model of decision making
False

(Perhaps the purest application of evidence-based management is the use of analytics, or business analytics, the term used for sophisticated forms of business data analysis. One example of analytics is portfolio analysis, in which an investment adviser evaluates the risks of various stocks)

Analytics have been used in baseball and basketball to find undervalued players that could help teams that had limited resources to pay superstars
True
Capital One uses predictive modeling by conducting experiments to evaluate which customers will sign up for credit cards and pay back their debt
True
A recent study says that the world’s information is doubling every seven years
False

(Doubling every two years)

Risk propensity is the willingness to gamble or to undertake risk for the possibility of getting an increased payoff
True
People with a low tolerance for ambiguity and an orientation toward task and technical concerns in making decisions have an analytical decision-making style
False

(People with a directive style have a low tolerance for ambiguity and an orientation toward task and technical concerns in making decisions)

A person with a directive decision style is efficient, logical, practical, and systematic in her approach to solving problems
True
A directive individual takes longer to make a decision than an analytical one
False

(Analytic individuals are careful decision makers who take longer to make decisions but who also respond well to new or uncertain situations)

The conceptual style of decision making is the most people oriented of the styles
False

(The behavioral style is the most people oriented of the four styles. People with this style work well with others and enjoy social interactions in which opinions are openly exchanged)

Most managers have just one dominant decision-making style
False
You can increase your ability to influence others by being aware of decision-making styles
True

(You can use knowledge of decision-making styles to increase your ability to influence others, to understand yourself, and to help you deal with conflict by giving you an awareness of how people can take the same information and yet arrive at different decisions by using a variety of decision-making strategies)

To be compliant with current federal legislation, all for-profit companies are required to have an ethics officer
False
A cost-benefit matrix is a graph of decisions and their possible consequences and is used to create a plan to reach a goal
False

(A decision tree is a graph of decisions and their possible consequences; it is used to create a plan to reach a goal)

Studies show that even severe life events have a negative impact on one’s sense of well-being for no more than about three months
True
Relaxed change is one type of effective response for a manager to take when confronted with a challenge
False

(There are four defective problem-recognition and problem-solving approaches that act as barriers when you must make an important decision in a situation of conflict, one of which is relaxed change)

Yichao, a manager of a downtown hair salon, has been procrastinating about a problem. Over the past year, his company has seen a high rate of customer defections, and even the loss of some of its best stylists. Still, he hasn’t even begun to investigate the issue. This is an indicator of relaxed avoidance
False

(In defensive avoidance, a manager can’t find a good solution and follows by (a) procrastinating, (b) passing the buck, or (c) denying the risk of any negative consequences. This is a posture of resignation and a denial of responsibility for taking action)

Importance of the situation, the credibility of the information about it, and the urgency of it should be considered in the decision about whether to decide
True
Heuristics are strategies that simplify the process of making decisions
True
When managers use information that is readily available from memory to make judgments, it is known as a confirmation bias
False

(The confirmation bias is when people seek information to support their point of view and discount data that do not. The availability bias means managers use information readily available from memory to make judgments)

Being “loss adverse” and hating to admit you’re wrong can contribute to the escalation of commitment bias
True
Groups make better decisions than most individuals acting alone.
True
A disadvantage of group-aided decision making is that groups tend to suppress an individual’s intellectual stimulation and creativity
False
The tendency for group members to agree for the sake of unanimity and thus avoid accurately assessing the decision situation is called satisficing
False

(Groupthink occurs when group members strive to agree for the sake of unanimity and thus avoid accurately assessing the decision situation. Here the positive team spirit of the group actually works against sound judgment)

Where time is of the essence, in most cases an individual should make the decision rather than a group
True
Smaller-sized groups make higher-quality decisions
True
Fawaz is contemplating a couple of new options for the order takers that he manages. There is no great urgency in the situation; he just needs to have a procedure in place within a couple of months. Fawaz would be wise to make this decision by himself
False
Participative management has a large effect on job performance and job satisfaction
False

(small effect)

Consensus occurs when group members are able to express their opinions and reach agreement to support the final decision
True
Middle and supervisory managers may be a source of resistance in participatory management
True
Keep in mind the importance of maintaining group relations; don’t stand in the way of a group trying to reach consensus
False

(Even if your group is seeking consensus, a management expert advises that you should avoid making an agreement simply to keep relations amicable and not rock the boat)

Putting questions to a vote is a good method to help a group reach consensus
False

(A management expert advises you not to try to achieve consensus by putting questions to a vote; this will only split the group into winners and losers, perhaps creating bad feelings among the latter)

Brainstorming is a technique used to help groups generate multiple ideas and alternatives for solving problems.
True
Heuristics is a technique in which members of a group come together over a computer network to generate ideas and alternatives.
False

(Electronic brainstorming is a technique in which members of a group come together over a computer network to generate ideas and alternatives)

Group-driven computer-aided decision systems ask participants to answer predetermined questions on electronic keypads or dials
Fakse

(Chauffeur-driven computer-aided decision-making systems ask participants to answer predetermined questions on electronic keypads or dials)

Which of the following statements about biased decision making is true?
A. Hindsight helps you correctly assess what you should have known beforehand.
B.When you are making a decision and you have considerable experience in that area, you are then most
likely to be overconfident.
C When confronted with a choice, people with strong prior beliefs tend to make their decisions based on . their beliefs even if their beliefs are false.
D. Sometimes a single event can allow you to determine the trend.
E.You could confidently make a decision about something by asking 20 of your friends and deciding
based on their preferences.
When confronted with a choice, people with strong beliefs tend to make their decisions based on their beliefs even if their beliefs are false (C)
Which of the following is a step in the rational decision-making model?
A. Seek consensus among leadership.
B. Identify the problem or opportunity.
C. Improve the chosen solution.
D. Test solutions on a small scale.
E. Implement a holding pattern.
Identify the problem or opportunity (B)

(Typically there are four stages in rational decision making:
Stage 1: Identify the problem or opportunity, Stage 2: Think up alternative solutions, Stage 3: Evaluate alternatives and select a solution, and Stage 4: Implement and evaluate the solution chosen)

The rational model of decision making is also called the ______ model.
A. balanced
B. satisficing
C. incremental
D. classical
E. intuitional
Classical (D)
Diagnosis is used in which stage of the rational decision-making model?
A. Identify the problem or opportunity
B. Think up alternative solutions
C. Evaluate alternatives
D. Select a solution
E. Implement a solution
Identify the problem or opportunity (A)
Which of the following is true about women investors? A. They tend to trade more often than men.
B. They do less research before investing than men.
C. Their portfolios have a higher average gain than men’s.
D. They are increasingly being drawn to careers in finance.
E. They tend to chase “hot tips.”
Their portfolios have a higher average gain than men’s (C)
When evaluating a solution in decision making, answering yes to which of the following questions should cause you to reconsider choosing it?
A. Is there enough time?
B. Are the costs reasonable?
C. Is it ethical?
D. Is the technology available?
E. Do you consider it merely “good enough”?
Do you consider it merely “good enough” (E)
In the final stage of the rational model of decision making, you should
A. provide justification for the choice.
B. select a solution.
C. seek high-level support.
D. evaluate the results.
E. identify the winners and losers.
evaluate the results (D)
Which of the following is NOT a recommended option when you discover that an action is not working after a decision?
A. Give the chosen solution more time.
B. Abandon the solution in favor of the status quo.
C. Try another alternative.
D. Go back to the beginning of the decision-making process.
E. Change the chosen solution slightly.
Abandon the solution in favor of the status quo (B)

(Some possibilities to try if the action is not working include give it more time, change it slightly, try another alternative, or start over)

Which of the following is an assumption upon which the rational model of decision making rests?
A. Decision makers can logically evaluate the alternatives.
B. Consequences of any actions cannot be known.
C. Decision makers typically have emotional blind spots.
D. A decision maker will choose the option that is most ethical.
E. Decision makers are unable to process all of the available information.
Decision makers can logically evaluate the alternatives (A)

(The rational model makes some highly desirable assumptions: that managers have complete information, are able to make an unemotional, logical analysis, and are able to make the best decision for the organization)

Which of the following is one of the nonrational models of decision making?
A. Boundary
B. Classical
C. Goal displacement
D. Satisficing
E. Attitudinal
Satisficing (D)
The concept of “bounded rationality” is most closely related to the _________ model of decision making.
A. classical
B. rational
C. satisficing
D. incremental
E. intuition
Satisficing (C)
Nicole and other managers in her firm have some ties to Europe and are investigating opportunities for global expansion. They are struggling to understand the risks, given the complexity of world markets today and recent global instabilities. The difficulty Nicole’s team is facing prevents perfectly rational decision making, and is an example of
A. risk aversion.
B. bounded rationality.
C. groupthink.
D. defensive avoidance.
E. anchoring and adjustment.
Bounded rationality (B)
Alexis manages a clothing store in the mall. They were understaffed, and she thought she would have to work all day and help close the store that evening until a young man came in for an application around noon. Alexis told him he could have the job if he could come back at 4 p.m. to begin work. Here, Alexis was engaged in
A. relaxed avoidance.
B. confirmation bias.
C. satisficing.
D. heuristics.
E. analytics
satisficing (C)
Which of the following is NOT a hindrance to perfectly rational decision making?
A. Conflicting goals
B. Imperfect information
C. Information overload
D. Limited cognitive capacity
E. Lack of intuition
Lack of intuition (E)

(The ability of decision makers to be rational is limited by numerous constraints, such as complexity, time and money, imperfect or too much information, conflicting goals, and their cognitive capacity, values, skills, habits, and unconscious reflexes)

The incremental model of decision making suggests that managers make decisions by
A. using processes that have worked in past experience.
B. experimenting with alternatives in a controlled setting, one by one.
C. choosing something that is “good enough.”
D. taking small steps to alleviate a problem.
E. involving several lower-level employees.
taking small steps to alleviate a problem (D)
Jerome’s accounts payable department is behind schedule as the month-end close is approaching. This has been happening every month, but he hasn’t found time to provide additional training. Instead he asks all of his employees to work eight hours of overtime that week and reassigns some tasks. This is an example of using the ________ model.
A. rational
B. predictive
C. intuition
D. incremental
E. coalition
incremental (D)
Jenna manages a retail store and she has been noticing long lines at checkout lately. She is unsure about increasing staffing levels right now, so she chooses to reconfigure the physical orientation of the checkout space to alleviate the problem for the time being. Jenna is using the ________ model.
A. incremental
B. coalition
C. rational
D. predictive
E. intuition
incremental (A)
Making a choice without the use of conscious thought or logical interference is called
A. reactive decision.
B. irrational insight.
C. intuition.
D. instinctual choice.
E. heuristics
Intuition (C)
Which of the following is an implementation principle for evidence-based management described by Pfeffer and Sutton?
A. See yourself as outsiders do.
B. If all else fails, speed the spread of good practices.
C. Reserve evidence-based management for top executives.
D. Treat your organization as a trophy.
E. Understand what happens when people succeed
See yourself as outsiders do (A)
Which of the following is NOT a reason why it is hard to bring the best evidence to bear on your decisions?
A. Stories are more persuasive than evidence.
B. People are trying to mislead you.
C. The evidence leads to an unethical solution.
D. The evidence doesn’t quite apply.
E. There’s too much evidence.
The evidence leads to an unethical solution
(C)

(Despite your best intentions, it’s hard to bring the best evidence to bear on your decisions. Reasons include: (1) There’s too much evidence. (2) There’s not enough good evidence. (3) The evidence doesn’t quite apply. (4) People are trying to mislead you. (5) You are trying to mislead you. (6) The side effects outweigh the cure. (7) Stories are more persuasive, anyway)

Redbox uses the large amount of data that it collects at its video and game rental kiosks to determine ways to improve customer retention and to encourage multiple rentals at the same time. The chain is using
A. quantitative decision making.
B. data correlation.
C. heuristics.
D. business analytics.
E. the Delphi technique.
business analytics (D)
Which of the following is characteristic of companies that use analytics?
A. Use of predictive modeling
B. Having a single, focused application for its use
C. Information overload
D. Use of competitive intelligence
E. Making decisions intuitively
Use of predictive modeling (A)

(Attributes of analytics competitors include the use of predictive modeling, going beyond simple descriptive statistics, having multiple applications, and support from the top)

The stores of data so vast that conventional database management systems cannot handle them and which instead require very sophisticated analysis software and supercomputing-level hardware are known as
A. big data.
B. heuristics.
C. information escalation.
D. incremental diagnostics.
E. boundless resources.
big data (A)
Amanda was asked by her boss to create a handbook for new hires because several employees had recently complained, saying they felt lost when they first started because procedures didn’t seem to be formalized. Amanda herself had not felt that way, perhaps because she has a
A. high tolerance for ambiguity.
B. value orientation focused on people.
C. conceptual decision style.
D. high propensity for risk.
E. low value orientation
high tolerance for ambiguity (A)
A person with high tolerance for ambiguity has
A. a high need for structure or control.
B. a strong people orientation.
C. an analytical mind.
D. defensive avoidance tendencies.
E. comfort with uncertain situations.
comfort with uncertain situations (E)
Which of the following is a decision-making style based on the dimensions of value orientation and tolerance for ambiguity?
A. professional
B. personal
C. technological
D. behavioral
E. mechanical
behavioral (D)

(When the dimensions of value orientation and tolerance for ambiguity are combined, they form
four styles of decision making: directive, analytical, conceptual, and behavioral)

An analytical decision-making style reflects a person who is ______ in his value orientation and ______ in his tolerance for ambiguity.
A. task/technical; high
B. task/technical; low
C. people/social; high
D. people/social; low
E. managerial; low
task/techinal; high (A)
A person with a conceptual decision-making style is __________ in her value orientation and __________ in her tolerance for ambiguity.
A. managerial; high
B. task/technical; low
C. people/social; high
D. people/social; low
E. managerial; low
people/social; high (C)
A person who is oriented toward people and social concerns and has a low tolerance for ambiguity is ______ in her decision-making style.
A. analytical
B. relaxed
C. conceptual
D. directive
E. behavioral
behavioral (E)
A person who is oriented toward task and technical concerns and has a low tolerance for ambiguity is ______ in his decision-making style.
A. analytical
B. behavioral
C. conceptual
D. directive
E. heuristic
directive (D)
Ryan is an efficient manager who is very good at meeting his deadlines and quite decisive. Still, his employees find him to be too controlling at times and unable to see the long-term consequences of his actions. Ryan is most likely ______ in his decision-making style.
A. analytical
B. autocratic
C. behavioral
D. conceptual
E. directive
directive (E)
Charlie has a reputation for being slow to reach a final decision but being able to decide a reasoned course of action regardless of the uncertainty. He is very thorough in collecting information and evaluating more alternatives than other managers are. Charlie is most likely ______ in his decision- making style.
A. analytical
B. behavioral
C. conceptual
D. directive
E. relaxed
analytical (A)
Karl is very creative and prefers to look at the long-term issues when making a decision. He considers a wide variety of possible actions based on an open mind about the possibilities. Sometimes his coworkers find him indecisive because of these tendencies. Karl is probably ______ in his decision-making
style.
A. analytical
B. behavioral
C. conceptual
D. directive
E. relaxed
conceptual (C)
Savannah is a warm and likeable manager who is extremely supportive of her employees, but she sometimes doesn’t say no when she needs to and is somewhat passive in enforcing her decisions. Her decision-making style is most likely
A. analytical.
B. heuristic.
C. behavioral.
D. conceptual.
E. directive.
behavioral (C)
Scott has received training in resolving ethical dilemmas and currently oversees the development of an ethical code for his workplace. Scott is a(n)
A. member of the principles board.
B. morality team member.
C. social responsibility chief.
D. ethics officer.
E. chief executive officer
ethics officer (D)
A graph of decisions and their possible consequences is known as a(n)
A. decision tree.
B. Gantt chart.
C. results chart.
D. outcome matrix.
E. fishbone diagram
decision tree (A)
According to Harvard professor Constance Bagley, ethical decisions can be facilitated with a(n)
A. goal statement.
B. improved legal department.
C. cross-department task force.
D. decision tree.
E. brainstorming session
decision tree (D)
Which of the following questions about a proposed action is NOT a key question in Bagley’s ethical decision tree?
A. Is it legal?
B. Does it maximize shareholder value?
C. Is it ethical?
D. Would it be ethical not to do it?
E. Should the effect of it be disclosed to shareholders
Should the effect of it be disclosed to shareholders (E)
It has been discovered that an overseas manufacturing facility your company uses has been employing child labor despite your position against it. You are contemplating relocating your manufacturing to another country where costs are somewhat higher but workplace standards are more tightly controlled. In using Bagley’s ethical decision tree, you determine it would be unethical NOT to relocate, so you should
A. relocate the facility, but don’t tell shareholders about potentially smaller profits.
B. warn the manufacturer that you will relocate should a violation occur again.
C. continue to use the facility, despite your objections, because this will maximize shareholder value.
D. relocate the facility, and tell the shareholders how this will affect their returns.
E. continue to use the facility, because it is benefitting your company, and all workers, even underage
ones.
relocate the facility, and tell shareholders how this will affect their returns (D)
When a manager decides to take no action in the belief that there will be no great negative consequences, she is engaged in
A. limited reaction.
B. relaxed avoidance.
C. relaxed change.
D. decreased involvement.
E. defensive avoidance.
relaxed avoidance (B)
Carla heard from a client that a product similar to a popular one at her retail store was now at Walmart, imported from China, and costing just over half of her sales price. But Carla isn’t really worried because she believes in her customers’ loyalty, so she has no plans to make changes. Carla is practicing
A. relaxed change.
B. defensive avoidance.
C. postponed action.
D. relaxed avoidance.
E. delayed decision.
relaxed avoidance (D)
Which of the following responses to a challenge would be considered most like satisficing?
A. Panic
B. Relaxed avoidance
C. Relaxed change
D. Decreased involvement
E. Defensive avoidance
relaxed change (C)
When a manager realizes that complete inaction will have negative consequences but opts for the first available alternative that involves low risk, it is called
A. relaxed change.
B. defensive avoidance.
C. postponed action.
D. relaxed avoidance.
E. delayed decision.
relaxed change (A)
Passing the buck or procrastinating about a decision are examples of which type of reaction to a challenge?
A. Panic
B. Relaxed avoidance
C. Relaxed change
D. Decreased involvement
E. Defensive avoidance
Defensive avoidance (E)
Erik has been putting off a decision about firing several workers who have been ignoring safety regulations on the factory floor. After all, he thinks, his boss will eventually notice and take action. Erik is experiencing a(n) ______ reaction.
A. relaxed change
B. relaxed avoidance
C. defensive avoidance
D. unresponsive
E. delayed change
Defensive avoidance (C)
Robin is very worried about potentially having to lay off several of her staff. She can’t sleep well, her stomach is bothering her, and she snaps at her employees. She doesn’t know what to do but won’t talk with anyone about it. Robin is experiencing a ______ reaction to a challenge.
A. relaxed change
B. defensive avoidance
C. panic
D. deciding to decide
E. heuristic
panic (C)
In deciding to decide about a problem or opportunity, a manager should evaluate the importance of the situation, the credibility of the information, and
A. the equitability of the outcomes.
B. the availability of heuristics.
C. the urgency of the situation.
D. the cost of the solution.
E. the ethics of making no change
the urgency of the situation (C)
Casey has a simple rule that he follows when it comes to new hiring; if four or more of his staff are working 20% or more overtime, he hires another employee. Casey is using
A. relaxed change.
B. heuristics.
C. the Delphi technique.
D. rational models.
E. brainwriting.
heuristics (B)
Managers tend to give more weight to more recent behavior. This is due to the
A. heuristic bias.
B. halo effect.
C. recency effect.
D. availability bias.
E. representativeness bias
availability bias (D)
As Janine prepares to perform Ian’s performance review, she carefully reviews notes she made throughout the year, rather than relying just on what she remembers. Janine is attempting to avoid the ______
bias.
A. sunk-cost
B. adjustment
C. representativeness
D. availability
E. escalation of commitment
availability (D)
Meg hired a great candidate from UCLA who has a big career ahead, and every year since Meg insists on going on a recruiting visit to that campus. Meg is convinced that hiring from UCLA in the future will produce the same level of success. This is an example of a(n)
A. heuristic bias.
B. professional effect.
C. anchoring effect.
D. availability bias.
E. representativeness bias
representativeness bias (E)
Angelina is interviewing for an open position since she recently let go an employee for excessive absenteeism. Though she thinks that Ivy is the best candidate for the job, she has small children, which seemed to be the source of the last employee’s absenteeism. Angelina is reluctant to hire Ivy, which is a(n) ______ bias.
A. anchoring and adjustment
B. confirmation
C. availability
D. representativeness
E. escalation of commitment
representativeness bias (D)
When managers add up all the money already spent on a project and conclude it is too costly to simply abandon it, it is known as a(n) ________ bias.
A. anchoring and adjustment
B. confirmation
C. availability
D. representativeness
E. sunk cost
sunk cost (E)
Managers at Thomas Canyon Credit Union have given employees raises year after year based on what they had given the year before, even though now their employees were quite underpaid compared to similar positions with other credit unions. This is an example of a(n)
A. anchoring and adjustment bias.
B. escalation of commitment bias.
C. sunk-cost bias.
D. availability bias.
E. representativeness bias
anchoring and adjustment bias (A)
Many investment advisors attribute their successful outcomes to skill, even when it is more likely luck, which is an example of which bias?
A. Overconfidence.
B. Escalation of commitment bias.
C. Hindsight.
D. Availability.
E. Framing
Overconfidence (A)
The tendency for decision-makers to be influenced by the way a situation or problem is presented to them is known as the ________ bias.
A. overconfidence.
B. escalation of commitment bias.
C. hindsight.
D. availability.
E. framing
framing (E)
Having just spent $1,500 for a new engine for his old car, Danilo now learns his transmission needs to be replaced. He decides to junk the car now, rather than repair it. Danilo has avoided the __________ bias.
A. anchoring and adjustment
B. confirmation
C. availability
D. representativeness
E. escalation of commitment
escalation of commitment (E)
The idea that decision makers find the notion of an actual loss more painful than giving up the possibility of a gain is called
A. a heuristic.
B. an availability bias.
C. a representativeness bias.
D. the prospect theory.
E. satisficing
prospect theory (D)
Which of the following is an advantage of group decision making?
A. Groupthink
B. Deeper commitment to the decision
C. Less thought required
D. A quicker decision
E. More flexibility in the final decision
Deeper commitment to the decision (B)

(Advantages of group decision making include (1) greater pool of knowledge, (2) different perspectives, (3) intellectual stimulation, (4) better understanding of decision rationale, (5) deeper commitment to the decision)

Which of the following is a disadvantage of group decision making?
A. Lower commitment to the decision
B. Lower levels of confidence in judgments
C. Different perspectives
D. Greater discomfort with the final decision
E. Satisficing
Satisficing

(Disadvantages of group decision making include (1) groupthink, (2) satisficing, (3) goal displacement)

Spencer talked with Allie after their task force meeting, and they discovered that neither of them had been in favor of dropping some items from next year’s budget, yet neither spoke up. Both wanted to be supportive of the group instead. This is an example of
A. goal displacement.
B. satisficing.
C. groupthink.
D. heuristics.
E. self-selection.
groupthink (C)
The tendency of a group to settle on a decision that is “good enough” is called
A. goal displacement.
B. satisficing.
C. groupthink.
D. heuristics.
E. pseudo-optimization
satisficing (B)
Because Greg and Karen were having an argument about the order of their respective projects on the website, they were unable to work with the rest of the management team to come up with a staffing schedule. This is an example of what potential problem that occurs in groups?
A. Goal displacement
B. Satisficing
C. Groupthink
D. Heuristics
E. Availability bias
Goal displacement (A)
The ______ a group is, the ______ the quality of the decision.
A. more diverse; lower
B. larger; lower
C. more confident; higher
D. more knowledgeable; lower E. more creative, lower
larger;lower (B)
Which of the following characteristics of groups may lead to groupthink?
A. Too little information available to the group
B. Errors in the information available to the group
C. Overconfidence
D. Disagreements among the members
E. Diversity in the group
Overconfidence (C)
Anders has assembled a task force that is composed of people who don’t know each other well. He should expect this group to make better decisions if
A. it is a large group.
B. the members have common knowledge.
C. the group is very confident.
D. time pressure is high.
E. individuals have unique, specialized knowledge.
the members have common knowledge (B)
Which of the following statements about group decision making is true?
A. Individuals are always better than groups in decision making.
B. Groups are always better than individuals in decision making.
C. Groups minimize satisficing.
D. Groups are faster at making decisions.
E. Managers should utilize groups for decision making on a selective basis
Managers should utilize groups for decision making on a selective basis (E)
Which of the following is a practical guideline in determining whether to use group decision making?
A. When it can encourage satisficing
B. When it can increase speed
C. When it can produce groupthink
D. When it can increase development
E. When a decision occurs infrequently
When it can increase development (D)

(Managers should use practical guidelines to determine if group decision making will be helpful. These guidelines recommend use of groups when it can increase quality, when it can increase acceptance,
or when it can increase development (see Table 7.3). If people can be developed through their participation, managers may want to involve those whose development is most important)

The process of involving employees in setting goals, making decisions, solving problems, and making changes is called
A. conjoint management.
B. escalation of commitment.
C. satisficing.
D. goal displacement.
E. participative management
participative management (E)
Research on the effects of participative management (PM) on employees’ performance and satisfaction indicates that
A. PM has no effect on either.
B. PM has a small positive effect on both.
C. PM has a large effect on satisfaction, but a small effect on performance.
D. PM has a large positive effect on both.
E. PM has a large effect on performance, but no significant effect on satisfaction
PM has a small positive effect on both (B)
Which of the following is a factor that helps participative management work?
A. Top management is occasionally involved.
B. Employees trust managers.
C. PM is implemented without interference from TQM.
D. Employees work in interdependent jobs.
E. Employees need more training
Employees trust managers (B)

( Factors that can help make participative management work include (1) top management is continually involved, (2) middle and supervisory managers are supportive, (3) employees trust managers, (4) employees are ready, (5) employees don’t work in interdependent jobs, (5) PM is implemented with TQM)

Which of the following is NOT a rule for brainstorming suggested by IDEO?
A. Go for quality over quantity.
B. Defer judgment.
C. Stay focused on the topic.
D. Encourage wild ideas.
E. Be visual
Go for quality over quantity (A)

(The seven rules from brainstorming proposed by IDEO are: 1. Defer judgment. 2. Build on the ideas of others. 3. Encourage wild ideas. 4. Go for quantity over quality. 5. Be visual. 6. Stay focused on the topic. 7. One conversation at a time )

_________ uses physically dispersed experts who fill out questionnaires to generate ideas and the judgments are combined into an expert consensus.
A. Brainstorming
B. PM
C. TQM
D. Brainwriting
E. The Delphi technique
The delphi technique (E)
Cara was enthusiastic about the new decision technique being used at her office. Everyone gathered in a room with their computers and typed responses anonymously. These appeared on the screen in the front of the room. Cara felt comfortable participating fully even though she was new to the company, and by the great number of comments, it seemed that everyone else did, too. Cara participated in
A. the Delphi technique.
B. collaborative management.
C. a group-driven computer-aided system.
D. a chauffeur-driven computer aided system.
E. brainstorming
a group-driven computer aided system (C)
Which of the following is NOT one of the suggestions for decision making recommended by management consultant Odette Pollar?
A. Decide in a timely fashion.
B. Don’t agonize over minor decisions.
C. Separate outcome from process.
D. Never stop gathering facts.
E. When overwhelmed, narrow your choices
Never stop gathering facts (D)

(Some ways Odette Pollar suggests making decision making easier: Decide in a timely fashion, don’t agonize over minor decisions, separate outcome from process, learn when to stop gathering facts, and when overwhelmed, narrow your choices)

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