Assignment of Decision-Making Biases in Management

Topics: Decision making, Decision theory, Flipism Pages: 34 (7246 words) Published: October 30, 2012
Chapter 6 Decision Making: The Essence of the Manager’s Job

True/False Questions


1. Problem identification is purely objective.
(False; moderate; p. 157)

2. The second step in the decision-making process is identifying a problem. (False; easy; p. 158)

3. A decision criterion defines what is relevant in a decision. (True; moderate; p. 158)

4. The fourth step of the decision-making process requires the decision maker to list viable alternatives that could resolve the problem. (True; easy; p. 159)

5. Once the alternatives have been identified, a decision maker must analyze each one. (True; moderate; p. 159)

6. The step in the decision-making process that involves choosing a best alternative is termed implementation. (False; moderate; p. 160)


7. Making decisions is with the essence of management.
(True; easy; p. 161)

8. Managerial decision making is assumed to be rational.
(True; moderate; p. 162)

9. One assumption of rationality is that we cannot know all of the alternatives. (False; difficult; p. 162)

10. Managers tend to operate under assumptions of bounded rationality. (True; moderate; p. 163)

11. Studies of the events leading up to the Challenger space shuttle disaster point to an escalation of commitment by decision makers. (True; moderate; p. 163)

12. Managers regularly use their intuition in decision making. (True; easy; p. 164)

13. Rational analysis and intuitive decision making are complementary. (True; moderate; p. 164)

14. Programmed decisions tend to be repetitive and routine.
(True; easy; p. 165)

15. Rules and policies are basically the same.
(False; moderate; p. 166)

16. A policy is an explicit statement that tells a manager what he or she ought or ought not to do. (False; moderate; p. 166)

17. The solution to nonprogrammed decision making relies on procedures, rules, and policies. (False; moderate; p. 166)

18. Most managerial decisions in the real world are fully nonprogrammed. (False; easy; p. 167)

19. The ideal situation for making decisions is low risk.
(False; moderate; p. 167)

20. Risk is the condition in which the decision maker is able to estimate the likelihood of certain outcomes. (True; easy; p. 167)

21. Risk is a situation in which a decision maker has neither certainty nor reasonable probability estimates. (False; difficult; p. 168)

22. People who have a low tolerance for ambiguity and are rational in their way of thinking are said to have a directive style. (True; moderate; p. 171)

23. Decision makers with an analytic style have a much lower tolerance for ambiguity than do directive types. (False; moderate; p. 171)

24. Individuals with a conceptual style tend to be very broad in their outlook and will look at many alternatives. (True; moderate; p. 171)

25. Behavioral-style decision makers work well with others.
(True; easy; p. 171)

26. Most managers have characteristics of analytic decision makers. (False; moderate; p. 171)

27. According to the boxed feature, “Managing Workforce Diversity,” diverse employees tend to make decisions faster than a homogeneous group of employees. (False; moderate; p. 172; AACSB: Diversity)

The anchoring effect describes when decision makers fixate on initial information as a starting point and then, once set, they fail to adequately adjust for subsequent information.

(True; moderate; p. 173)

28. The availability bias describes when decision makers try to create meaning out of random events. (False; moderate; p. 173)

29. The sunk cost error is when decision makers forget that current choices cannot correct the past. (True; moderate; p. 173)


Today’s business world revolves around making decisions, usually with complete or adequate information, and under minimal time pressure.

(False; difficult; p. 175)

30. Managers need to understand...
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