MGMT CH 7 review

In regard to decision making, based of what research has found, groups make better decisions than most individuals acting alone. Why?

(Although groups don't make as high-quality decisions as the best individual acting alone, research suggests that groups make better decisions than individuals acting alone.)

A decision tree is ?

A graph of decisions and their possible consequences (it is used to create a plan to reach a goal. Decision trees are used to aid in making decisions.)

Which of the following is an example of the "curse of knowledge"?

A writer with a large vocabulary writes a novel using many words that the average reader cannot understand.

Doreen, a project manager, has been given a limited amount of money to run the new marketing campaign. She was also told that the client wants the campaign ready to roll out in less than two weeks. Doreen is feeling very limited by these constraints and is not sure that it will produce her team's best work. Her supervisor and career mentor, tells Doreen that she is???

Affected by bounded rationality. (Herbert Simon proposed that managers could not act truly logically because their rationality was bounded by so many restrictions. Called bounded rationality, the concept 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.)

Daniel loves sales because he responds well to the pressure he faces in the many new or uncertain situations he encounters as a salesperson. Like most successful salespeople, he is high in his tolerance for ambiguity, yet he struggles with making decisions quickly. Daniel likely has a(n) ________ decision-making style.

Analytical (A person with an analytical style has a much higher tolerance for ambiguity than someone with a directive style, and tends to focus on tasks and technical concerns in the workplace. People with this style like to consider more information and alternatives than those following the directive style. Analytic individuals are careful decision-makers who take longer to make decisions but who also respond well to new or uncertain situations.)

When Damien, the sales manager, is deciding on who will train the new sales trainee, he tries not to look at just the recent sales numbers but also checks past sales reports to determine who is the most productive salesperson. By using this method he is not affected by the _________ bias.

Availability (Availability bias comes from managers using information readily available from memory to make judgments. Damien is reviewing past sales reports, not relying on his memory, to avoid availability bias!)

________ is the process of studying LARGE amounts of DATA of a variety of types to uncover hidden patterns, unknown correlations, and other useful information.

Big Data Analytics (the process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations, and other useful information.)

________ is the idea that proposes that the ability of decision makers to be rational is limited by numerous constraints, such as complexity, time, cognitive capacity, values, skills, habits, and unconscious reflexes.

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

Charles believes in having his team members PRESENT conflicting proposals before choosing one. He feels that this leads to the BEST DECISION and saves time in the long run because ALL OPTIONS are explored up front. Charles uses the ______ decision method.

Dialectic (Accordingly, the dialectic method calls for managers to foster a structured dialogue or debate of opposing viewpoints prior to making a decision)

Bill is the new CEO at World's Fair, a nationwide store that specializes in unique items from around the world. At his first managers meeting, he told them he likes to think of his management style as PRACTICAL, efficient, LOGICAL, and systematic. Which STYLE of DECISION MAKER is Bill?

Directive Style (People with a directive style have a low tolerance for ambiguity and are oriented toward task and technical concerns in making decisions. They are efficient, logical, practical, and systematic in their approach to solving problems, and they are action oriented and decisive and like to focus on facts.)

Dale, the owner of a local real estate agency, is even more committed to making the used copier, which he recently purchased, work even though it keeps jamming, and his employees have been telling him about other problems they have been having with the copier. The ______ affects Dale's decision making.

Escalation of commitment bias (You need to be aware of the escalation of commitment bias, whereby decision makers increase their commitment to a project despite negative information about it.)

When evaluating the alternatives of a decision, managers need to base decisions strictly on cost, quality, and feasibility. T or F?

FALSE: (Managers 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)

__________ is the tendency for people with strong prior beliefs, when confronted with a choice, to make their decisions based on assumptions they've already made.

Information bias (To make good decisions you need to be ready to take in all valid information, even if it contradicts or questions your own beliefs and experience. (Just because you don't agree with something, that doesn't make it wrong.) It is best to avoid this logical flaw called "information bias," in which you consider only information that supports assumptions you've already made.)

Grace is the owner of a local trinket shop. A successful global candle company approached her about selling its products in her shop. Grace knows this product and company can help her exceed her existing goals. Selling candles is a(n) _____ for Grace.

Opportunity (situations that present possibilities for exceeding existing goals.)

How does the text suggest prioritizing your decisions?

Organize your decisions into three categories. (Strategic decisions, like deciding how to frame your job search, will require the most time and attention, can affect the largest number of people, and probably also require you to gather the most information. Significant decisions demand less energy and information but are still important. Quick decisions are the least complex you face, require the least input, and can often be resolved if you apply a simple rule.)

____ occurs when people's subjective confidence in their decision-making is greater than their objective accuracy. For example, Penelope thinks she is a superb writer and editor, but her reports are always filled with typos, grammatical errors, and sentence fragments.

Overconfidence Bias (Overconfidence bias is the bias in which people's subjective confidence in their decision-making is greater than their objective accuracy. For instance, with experienced investment advisers whose financial outcomes simply depended on luck, behavioral psychologist Daniel Kahneman found "the illusion of skill is not only an individual aberration; it is deeply ingrained in the culture of the industry.")

With satisficing, managers look for alternatives until they find one that is satisfactory, not optimal. T or F?

TRUE (In the satisficing model, managers seek alternatives until they find one that is satisfactory, not optimal.)

What is the role of the devil's advocate in the decision-making process?

To be the Critic (In today's organizations devil's advocacy assigns someone the role of critic)

When people seek information to support their point of view and discount data that do not, they are subject to ______ bias. For example, Rick uses the fact that his commute is now shorter to confirm his belief that there are fewer cars on the road. However, Rick is not accounting for the fact that he recently took over the graveyard shift, and that traffic is always lighter at night and in the wee hours of the morning.

confirmation (Confirmation bias occurs when people seek information to support their point of view and discount data that do not.)

Republican advertisements about Representative Adam Johnson, the Democratic candidate, portray him as lazy, dishonest, and poor at his job. At the same time, the Democratic ads for Adam Johnson describe him as a caring, honest, hard worker. The sponsors of these advertisements know that ads can affect whom voters choose on Election Day. The tendency of decision makers (the voters in this example) to be influenced by how a situation or problem is presented to them is an example of???

framing bias (Framing bias is the tendency of decision makers to be influenced by the way a situation or problem is presented to them. For instance, customers prefer meat that is framed as "85 percent lean meat" instead of "15 percent fat," although of course they are the same thing)

The advantages of _______ are having a greater pool of knowledge, gaining different perspectives, gaining intellectual stimulation, having a better understanding of decision rationale, and having a deeper commitment to the decision.

group decision-making

With the community interested in eating healthy, Mary Catherine, a restaurant owner, is considering adding more gluten-free dishes to her menu. This decision is UNCERTAIN and RISKY, and she finally decides to go with her gut feelings. Mary Catherine is exhibiting???

nonrational decision making (Nonrational models of decision making explain how managers make decisions; they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions)

When Ford was slow to recall vehicles to fix a possible carbon monoxide leak, it was most likely due to ________, because Ford was convinced that the modifications made by police departments were the cause of the problem, not the manufacturing of the vehicle.

overconfidence bias

Scott and his partner, Greg, have decided to update their computer network, although they have no expertise in this area. During a meeting with Greg, Scott commented that "Our decision is limited by numerous constraints, such as our understanding of the complexity of technology, time and money, imperfect information, and our conflicting goals." These limitations are hindrances to???

rational decision making (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)

Which of the following is NOT an advantage of group decision making?

satisficing (The Delphi technique is a group process that uses physically dispersed experts who fill out questionnaires to anonymously generate ideas; the judgments are combined and in effect averaged to achieve a consensus of expert opinion.)

It was brought to Dwight's attention that one of his hotel employees had a substance abuse problem. Without fully investigating the issue, Dwight decided to fire the employee. Dwight was using??

satisficing (While "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.)