Question 1

Busy decision makers tend to focus on:

Accepted Answer

The answer of Busy decision makers tend to focus on:
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Question 2

Which of the following is not a bias based on overprocessing?

Accepted Answer

All the options listed (The dilution effect, The perseverance effect, The correspondence bias, and Premature cognitive commitment) are examples of biases that can be attributed to overprocessing. Overprocessing refers to the tendency to process information to an unnecessary or excessive degree, which can lead to distorted judgments or decisions. Each of these biases involves overinterpreting or giving too much weight to certain information, which aligns with the concept of overprocessing.

Question 3

Which of the following is not a common group decision making problem?

Accepted Answer

All the options listed (A: Common knowledge effect, B: Groupthink, C: Group polarization, D: Selective hypothesis testing) are recognized problems or phenomena that can occur within group decision-making processes.

Question 4

Assuming that someone's action are a reflection of their true personality or disposition, and ignoring the possibility that their behavior could be influenced by the situation is known as:

Accepted Answer

This phenomenon is known as the correspondence bias, also called the fundamental attribution error. It refers to the tendency to overestimate the importance of dispositional (personality) factors and underestimate the influence of situational factors when explaining other people's behavior. This bias can lead to inaccurate judgments and conclusions about others.

Question 5

Kelly is interviewing candidates for a job in her department. She meets Bill. Bill mentions that he is from California. The last person Kelly hired from California had to be fired. Kelly infers that Bill probably won't make a good employee. Kelly is falling victim to what effect?

Accepted Answer

Kelly is making an irrelevant analogy by assuming that because the last person she hired from California did not work out, Bill, also from California, probably won't make a good employee. This is irrelevant because the previous employee's performance does not logically predict Bill's potential performance.

Question 6

A manager who helped develop a new product that looks like it would be successful predicted a 90% chance of success for the new product. However, historical data indicate that of all new products introduced, only about 50% succeed. This suggests that the manager's prediction was guided primarily by the:

Accepted Answer

The manager's prediction is likely guided by the representativeness heuristic, which involves making judgments based on how closely the current situation matches similar situations in memory or experience. In this case, the manager may be basing their prediction on how similar the new product is to successful products they have been involved with in the past, rather than considering the overall success rate of new products.

Question 7

Various television shows about shark attacks makes it easy to imagine that one could be attacked by a shark when visiting the beach. This assumption is based on what effect?

Accepted Answer

The answer of Various television shows about shark attacks makes...

Question 8

Which of the following heuristics involve judgments based on memory?

Accepted Answer

The availability heuristic involves making judgments based on how easily relevant examples come to mind, which is based on memory retrieval.

Question 9

Which bias results from underprocessing?

Accepted Answer

The answer of Which bias results from underprocessing?
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Question 10

_____ is the tendency to focus on one possibility at a time and ignore other possibilities.

Accepted Answer

Selective hypothesis testing is the tendency to focus on one possibility at a time and ignore other possibilities. This can lead to confirmation bias, where we only seek out information that supports our preferred hypothesis and ignore information that contradicts it.

Question 11

John thinks Mary is a great team member in his department based on a project he worked with her on a few months ago. During a current project, John has received several complaints about Mary from various team members. Despite this, John persists in believing his initial opinion of Mary is correct. This is an example of what effect?

Accepted Answer

The biased assimilation effect occurs when an individual is presented with new information that is contrary to their initial belief, but instead of updating their belief based on this new information, they use it to further support their original belief. In this case, John's initial belief about Mary being a great team member is being reinforced by his biased assimilation of the positive experience he had with her in the past, despite the current negative feedback from other team members.

Question 12

Risky decision making involves making a tradeoff between the desirability and the likelihood of an outcome. However, managers often focus mainly on desirability in some situations, and focus mainly on likelihood in others. This results in inconsistent preferences. Which heuristic is responsible for this bias?

Accepted Answer

The answer of Risky decision making involves making a tradeoff...

Question 13

What is the best way to overcome groupthink?

Accepted Answer

The best way to overcome groupthink is to seek the opinion of impartial consultants. This brings in fresh perspectives and reduces the likelihood of the group becoming overly homogeneous in its thinking. Encouraging group polarization (A) can actually exacerbate groupthink by pushing people further into their existing positions. While having a strong leader (B) can help ensure that all voices are heard and considered, it can also lead to a situation where the leader's opinion dominates and groupthink persists. Always having an agenda (D) and recapping what was discussed at the last meeting (E) are good practices, but they do not directly address the root causes of groupthink.

Question 14

Which of the following heuristics involve judgment based on imagination?

Accepted Answer

The answer of Which of the following heuristics involve judgment...

Question 15

Stores that experience extremely low sales in one sales period will typically perform better in the next sales period due to:

Accepted Answer

Regression to the mean suggests that extreme values (such as extremely low sales) are likely to move closer to the average in subsequent periods. Therefore, stores that experience extremely low sales in one sales period are likely to perform better in the next sales period due to regression to the mean.

Question 16

Home appraisals offered by real estate agents are heavily influenced by listing prices, even when more objective and more useful information is available. Which cognitive heuristic is responsible for this bias?

Accepted Answer

The anchoring-and-adjustment heuristic is responsible for this bias. Real estate agents anchor their appraisals on the listing prices and then adjust them based on other available information. However, this adjustment is not enough to completely eliminate the influence of the anchor, leading to an over-reliance on the listing price.

Question 17

_____ is a shift toward a contextual reference point.

Accepted Answer

The answer of _____ is a shift toward a contextual...

Question 18

When managers treat irrelevant information as if it were relevant, they exhibit:

Accepted Answer

The pseudodiagnosticity effect refers to when decision-makers act as if irrelevant information is useful and diagnostic, leading them to overemphasize its relevance in their decision-making process.

Question 19

When two similar objects or issues are compared, and they are judged to be very similar, this is an example of what context effect?

Accepted Answer

The assimilation effect occurs when two similar objects or issues are compared and judged to be very similar, as individuals tend to assimilate or blend their perceptions of the objects or issues due to their similarities.

Question 20

After approving a $100,000 expenditure for a new piece of capital equipment, deciding to spend $10,000 on a print advertisement seems inconsequential. This is an example of what type of effect?

Accepted Answer

The contrast effect occurs when the evaluation of a second option is influenced by a comparison with a first option. In this case, the decision to spend $10,000 seems less significant when compared to the prior decision to spend $100,000 on capital equipment.

Quiz 17: Biases in Managerial Decision Making