Question 1

"We cannot rely on Stephen. He also worked for the same company Anna did. And we all know how little we could rely on her." This statement is an example of a(n) ___. A) availability bias B) conjunction fallacy C) representativeness bias D) anchoring bias E) framing error

Accepted Answer

This statement is an example of representativeness bias, where Stephen is judged based on a similarity to Anna and the assumption that their reliability is the same because they worked for the same company. This bias involves stereotyping or assuming that someone or something will behave in a certain way because they resemble a typical case.

Question 2

The ___ occurs when people assess the likelihood of something occurring based on its similarity to a stereotyped set of occurrences.
A) representativeness heuristic
B) availability heuristic
C) escalation heuristic
D) satisficing heuristic
E) anchoring and adjustment heuristic

Accepted Answer

The representativeness heuristic is the tendency to judge the likelihood of an event by comparing it to a similar prototype in one's mind and assuming that it is representative of the larger group or category from which it is drawn. This can lead to inaccurate judgments because individuals may ignore relevant base rate information or the fact that the sample size is too small to generalize from.

Question 3

Ludo authorizes the expenditure of an additional $200,000 for the production of a new product despite mounting concerns from top management that it will be unprofitable. His behaviour illustrates the phenomenon of ___.
A) confirmation bias
B) represenation bias
C) anchoring bias
D) availability bias
E) escalation of commitment

Accepted Answer

Ludo's decision to authorize additional expenditure despite mounting concerns from top management that it will be unprofitable is an example of escalation of commitment. This bias refers to the tendency to continue investing time, money, or resources into a decision even when evidence suggests it may be a mistake. Ludo is committed to the decision and is increasing investments rather than acknowledging the decision may have been a mistake.

Question 4

The generation of a novel idea or unique approach to solving performance problems or exploiting performance opportunities is ___.
A) heuristics
B) satisficing
C) creativity
D) cost benefit analysis
E) diversity

Accepted Answer

Creativity refers to the ability to generate novel ideas or unique approaches to solving problems or exploiting opportunities. Heuristics refer to problem-solving strategies that rely on previous experiences or learning, and satisficing refers to making decisions that are satisfactory rather than optimal. Cost-benefit analysis involves comparing the costs and benefits of different options, while diversity refers to a range of different perspectives or backgrounds within a group.

Question 5

The ___ occurs when decisions are influenced by inappropriate allegiance to a previously existing value or starting point.
A) confirmation error
B) lack-of-participation error
C) representativeness bias
D) anchoring and adjustment bias
E) availability bias

Accepted Answer

Anchoring and adjustment bias occurs when decisions are influenced by an initial value or starting point, which may be inappropriate or irrelevant, and then subsequently adjusted to reach a final decision. This bias can lead to incorrect decisions because the initial value or starting point may have no bearing on the actual situation or decision at hand.

Question 6

___ is the continuation of a course of action even though it is not working. A) Confirmation error B) Escalating commitment C) Lack-of-participation error D) Framing error E) Strategic opportunism

Accepted Answer

Escalating commitment refers to the tendency to continue investing resources, time, and energy into a failing course of action. It occurs when decision-makers feel that abandoning the project would be a sign of failure or admitting defeat, and therefore choose to persevere, even if it is not rational to do so.

Question 7

The three-component model of creativity that the text defines as personal creativity drivers in organizations is
A) task expertise, task motivation, creativity skills
B) task expertise, task completion, creativity skills
C) creativity skills, goal oriented, task completion
D) creativity skills, task expertise, goal oriented
E) external rewards, personal ambition, management support

Accepted Answer

The three-component model of creativity includes task expertise, task motivation, and creativity skills. These components are essential personal creativity drivers in organizations, emphasizing the importance of having knowledge in the task area (task expertise), the intrinsic motivation to engage in the task (task motivation), and the ability to think in novel ways (creativity skills).

Question 8

Jeff has had problems in the past with employees who smoke because they always took more than fifteen minutes on their breaks. During an interview with a potential new employee, Jeff notices that she smells of smoke. Though she had the necessary qualifications and effectively answered all of his questions, Jeff chose not to hire her. This is an example of the ___. A) representation bias B) framing error C) anchoring effect D) representation bias. E) confirmation error.

Accepted Answer

The answer of Jeff has had problems in the past...

Question 9

Julie is a manager who completely trusts one of her employee's decisions due to his previous good performances. She always looks for positives in his decisions rather than analyzing the employee's decisions in a rational manner. She generally tends to neglect the drawbacks in his decision making. This type of error in decision making is called ___.
A) anchoring and adjustment bias
B) framing error
C) confirmation error
D) representativeness bias
E) lack-of-participation error

Accepted Answer

Confirmation error, also known as confirmation bias, is the tendency to search for, favor, interpret, and recall information in a way that confirms one's preconceptions or hypotheses, while giving lesser consideration to alternative possibilities. In this scenario, Julie is only considering the positive aspects of her employee's decisions and neglecting any potential drawbacks, indicating a confirmation bias.

Question 10

The ideation step in design thinking involves
A) accepting problems as they are delivered.
B) defining problems by research and observation.
C) visualizing and brainstorming potential solutions in collaboration with others.
D) looking for answers to assigned problems through standard procedures.
E) testing and modifying the potential solution over and over to achieve the best outcome.

Accepted Answer

The ideation step in design thinking involves visualizing and brainstorming potential solutions in collaboration with others. This involves generating new ideas and possibilities to solve the problem at hand.

Question 11

Rupert, who leads the design team in an automobile firm, decides not to invest in a particular technology that helps to improve the fuel efficiency of cars, as other automobile companies who had invested in similar technologies had not achieved much success. The type of decision-making error made by Rupert is known as ___. A) availability bias B) confirmation error C) adjustment bias D) lack-of-participation error E) representativeness bias

Accepted Answer

Rupert's decision-making error is an example of representativeness bias, as he is basing his decision on the past experiences of other companies without considering the unique circumstances of his own company and the potential for success with the technology.

Question 12

A(n) ___ occurs when focusing only on information that validates a decision already made.
A) confirmation error
B) escalating commitment
C) lack-of-participation error
D) anchoring and adjustment bias
E) framing error

Accepted Answer

A confirmation error, also known as confirmation bias, is the tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses. This can result in ignoring or dismissing information that contradicts those beliefs, leading to errors in decision-making.

Question 13

The ___ occurs when people assess likelihood of something happening based on its similarity to a stereotyped set of occurrences.
A) availability bias
B) lack-of-participation error
C) representativeness bias
D) confirmation error
E) adjustment bias

Accepted Answer

The representativeness bias occurs when people make judgments based on how closely something resembles a stereotyped set of occurrences. For example, if someone assumes that all engineers are introverted and socially awkward simply because that is the stereotype associated with the profession, they are exhibiting the representativeness bias.

Question 14

Based on his recollection of a recent product failure, Abdul, the manager of a company, decides not to invest in a new product, even though the readily available information is infallible and irrelevant. This is an example of ___. A) confirmation error B) framing error C) availability bias D) escalating commitment E) anchoring bias

Accepted Answer

Abdul's decision is influenced by his availability bias, which means his memory of a recent product failure is affecting his current decision-making process. He is giving more weight to the easily accessible information rather than considering the objective data on the new product.

Question 15

The tendency to increase effort and perhaps apply more resources to pursue a course of action that is not working is known as ___. A) cost-benefit impact B) heuristics C) escalating commitment D) escalating cost impact E) satisficing

Accepted Answer

Escalating commitment is the tendency to continue investing resources, even when the evidence clearly suggests that the initial decision was incorrect. Rather than cutting losses and changing course, individuals or organizations become committed to the initial decision and try to make it work despite mounting evidence that it will not succeed. This can lead to a "sunk cost fallacy" in which individuals or organizations feel that they have already invested too much to quit now.

Question 16

The ___ involves making decisions based on alterations to a previously existing value or starting point.
A) representativeness heuristic
B) availability heuristic
C) escalation heuristic
D) satisficing heuristic
E) anchoring and adjustment heuristic

Accepted Answer

The anchoring and adjustment heuristic involves making decisions based on alterations to a previously existing value or starting point. The individual is anchored to the initial value and makes adjustments from that point.

Question 17

___ unlocks creativity in decision making through a process of experiencing, ideation, and prototyping.
A) Problem solving
B) Escalating commitment
C) Business Intelligence
D) Design thinking
E) Strategic opportunism

Accepted Answer

The process of experiencing, ideation, and prototyping is a key characteristic of design thinking, which is a methodology used to unlock creativity in decision making. Options A, B, and E do not involve this specific process, while option C is focused on data analysis and reporting, rather than creativity and ideation.

Question 18

Rajiv was asked to prepare a report on the estimated costs of introducing a new product into the market. He estimated the costs by slightly increasing the costs the company had incurred while introducing a product into the market the previous year. This might not be accurate, because a number of other factors should also have been considered while calculating the estimated costs for the current year. This type of decision-making error is known as ___. A) availability bias B) confirmation error C) representativeness bias D) anchoring and adjustment bias E) lack-of-participation error

Accepted Answer

The decision-making error described in the scenario is anchoring and adjustment bias, where Rajiv relied too heavily on the costs from the previous year's product introduction and did not consider other relevant factors. Availability bias refers to making decisions based on readily available information, confirmation error is when individuals seek out information that confirms their pre-existing beliefs, representativeness bias is when decisions are based on stereotypes or prototypes, and lack-of-participation error is when key stakeholders or team members are not included in the decision-making process.

Question 19

Ryan, the marketing manager at a company, decides to invest more money to promote a technology that has earlier failed at the market due to its technical incompetency. Ryan is unwilling to accept that the product lacks the competitive edge to survive in the market. He is not ready to admit his mistakes and applies more resources to pursue a course of action that is not working. This type of decision-making trap is known as ___. A) confirmation error B) escalating commitment C) framing error D) strategic opportunism E) lack-of-participation error

Accepted Answer

Escalating commitment is the tendency to invest additional resources into a failing decision, often due to the difficulty of accepting that a mistake has been made. This is exactly what Ryan is doing by investing more money into a technology that has already failed. Confirmation error (A) refers to the tendency to seek out information that confirms one's existing beliefs, rather than seeking out disconfirming evidence. Framing error (C) refers to the way in which a decision problem is presented, which can influence the choices that are made. Strategic opportunism (D) refers to a more positive type of decision-making, in which an organization seeks to take advantage of unique opportunities that arise. Lack-of-participation error (E) refers to the mistake of failing to involve the appropriate stakeholders in decision-making.

Question 20

Vikram is a very successful car salesman who generates a lot of revenue for his firm. His manager is impressed with his performance and hires his younger brother as a car salesman in the firm, assuming that he will be as successful as Vikram in selling cars. However, Vikram's brother fails to live up to the expectations. The type of decision-making error made by Vikram's manager in this scenario is known as ___.
A) availability bias
B) confirmation error
C) adjustment bias
D) lack-of-participation error
E) representativeness bias

Accepted Answer

The type of decision-making error made by Vikram's manager is representativeness bias. This is because he assumed that Vikram's younger brother would be as successful as Vikram based on their shared genetics and similar background. However, this assumption is not necessarily true, as each individual has their own unique abilities and characteristics that affect their success in a given job. The manager's decision was influenced by the representativeness of the situation, rather than taking into account other relevant factors like the younger brother's qualifications and experience.

Quiz 7: Information and Decision Making

"We cannot rely on Stephen. He also worked for the same company Anna did. And we all know how little we could rely on her." This statement is an example of a(n) ___.

The ___ occurs when people assess the likelihood of something occurring based on its similarity to a stereotyped set of occurrences.

Ludo authorizes the expenditure of an additional $200,000 for the production of a new product despite mounting concerns from top management that it will be unprofitable. His behaviour illustrates the phenomenon of ___.

The generation of a novel idea or unique approach to solving performance problems or exploiting performance opportunities is ___.

The ___ occurs when decisions are influenced by inappropriate allegiance to a previously existing value or starting point.

___ is the continuation of a course of action even though it is not working.

The three-component model of creativity that the text defines as personal creativity drivers in organizations is

The ideation step in design thinking involves

A(n) ___ occurs when focusing only on information that validates a decision already made.

The ___ occurs when people assess likelihood of something happening based on its similarity to a stereotyped set of occurrences.

Based on his recollection of a recent product failure, Abdul, the manager of a company, decides not to invest in a new product, even though the readily available information is infallible and irrelevant. This is an example of ___.

The tendency to increase effort and perhaps apply more resources to pursue a course of action that is not working is known as ___.

The ___ involves making decisions based on alterations to a previously existing value or starting point.

___ unlocks creativity in decision making through a process of experiencing, ideation, and prototyping.