Question 1

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.

Accepted Answer

Managers will often give their employees a standard percentage raise in salary, even though the raise may be completely out of alignment with what other companies are paying for the same skills.This is an instance of the anchoring and adjustment bias, the tendency to make decisions based on an initial figure.

Question 2

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?

Accepted Answer

According to Bagley's ethical decision tree, when you answer no to the question "Would it be ethical not to take the action?", you should do the action but disclose the effect of the action to shareholders .

Question 3

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.

Accepted Answer

Heuristics are rules of thumb, or strategies that simplify the process of making decisions.

Question 4

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

Accepted Answer

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.

Question 5

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.

Accepted Answer

The 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 advisors 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."

Question 6

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.

Accepted Answer

In relaxed avoidance, a manager decides to take no action in the belief that there will be no great negative consequences.

Question 7

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.

Accepted Answer

Representativeness bias is the tendency to generalize from a small sample or a single event.The bias here is that just because something happens once, that doesn't mean it is representative, or that it will happen again or will happen to you.

Question 8

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

Accepted Answer

Availability bias comes from managers using information readily available from memory to make judgments.Janine is reviewing her notes, not relying on her memory, to avoid availability bias.

Question 9

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.

Accepted Answer

Managers tend to give more weight to more recent behavior.This is because of the availability bias, whereby managers use information readily available from memory to make judgments.

Question 10

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

Accepted Answer

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.Erik is passing the buck, hoping someone else will make a decision.

Question 11

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

Accepted Answer

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.

Question 12

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

Accepted Answer

Representativeness bias is the tendency to generalize from a small sample or a single event.The bias here is that just because something happens once, that doesn't mean it is representative, or that it will happen again or will happen to you.

Question 13

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

Accepted Answer

In relaxed change, a manager realizes that complete inaction will have negative consequences but opts for the first available alternative that involves low risk.This is a form of "satisficing"; the manager avoids exploring a variety of alternatives in order to make the best decision.

Question 14

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.

Accepted Answer

If the action would not directly benefit shareholders, it might still be ethical to go ahead with it.Not relocating might be harmful underage children or be damaging to relationships with customers.Thus, the ethical conclusion might be to relocate but to disclose the effects of the decision to shareholders.

Question 15

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.

Accepted Answer

In relaxed avoidance, a manager decides to take no action in the belief that there will be no great negative consequences.

Question 16

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.

Accepted Answer

In relaxed change, a manager realizes that complete inaction will have negative consequences but opts for the first available alternative that involves low risk.

Question 17

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

Accepted Answer

In panic, a manager is so frantic to get rid of the problem that he or she can't deal with the situation realistically.Troubled by anxiety, irritability, sleeplessness, and even physical illness, if you're experiencing this reaction, your judgment may be so clouded that you won't be able to accept help in dealing with the problem or to realistically evaluate the alternatives.

Question 18

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.

Accepted Answer

Three ways to help you decide whether to decide are to evaluate the following: 1.Importance: "How high priority is this situation?" 2.Credibility: "How believable is the information about the situation?" 3.Urgency: "How quickly must I act on the information about the situation?"

Question 19

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.

Accepted Answer

The 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 have been found to prefer meat that is framed as "85% lean meat" instead of "15% fat," although of course they are the same thing.

Question 20

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

Accepted Answer

The sunk-cost bias, or sunk-cost fallacy, is when managers add up all the money already spent on a project and conclude it is too costly to simply abandon it.Most people have an aversion to "wasting" money.Especially if large sums have already been spent, they may continue to push on with an iffy-looking project to justify the money already sunk into it.

Quiz 7: Individual and Group Decision Making: How Managers Make Things Happen

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)

Which of the following questions about a proposed action is NOT a key question in Bagley's ethical decision tree?

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

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.

Many investment advisors attribute their successful outcomes to skill, even when it is more likely luck, which is an example of which bias?

When a manager decides to take no action in the belief that there will be no great negative consequences, she is engaged in

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)

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.

Managers tend to give more weight to more recent behavior.This is due to the

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.

Passing the buck or procrastinating about a decision are examples of which type of reaction to a challenge?

Which of the following responses to a challenge would be considered most like satisficing?

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

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.

In deciding to decide about a problem or opportunity, a manager should evaluate the importance of the situation, the credibility of the information, and

The tendency for decision-makers to be influenced by the way a situation or problem is presented to them is known as the ________ bias.

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.