Question 1

It has been well documented that individuals escalate commitment to a failing course of action when they view themselves as responsible for the failure.

Accepted Answer

This phenomenon is known as the "sunk cost fallacy" and refers to the tendency to persist in a current course of action because of the investment already made, even if the future prospects for success are low. People feel responsible for the sunk costs and therefore continue to invest more in the hope of recouping their losses rather than cutting their losses and moving on.

Question 2

Outline the six steps in the rational decision-making model.

Accepted Answer

The answer of Outline the six steps in the rational...

Question 3

As the manager in charge,you must make a decision about the appropriateness of discontinuing research on a new drug.This new drug would save lives,but it is uncertain whether the company can develop it within a reasonable time frame and at a reasonable cost.Your firm has already spent a small fortune on researching this drug. Even though you believe that the company may never recoup its investment on this project,you decide to continue because the firm has already put so much effort into this project.You are guilty of:
A)escalation of commitment.
B)representative heuristic.
C)availability heuristic.
D)satisfying.

Accepted Answer

The manager is guilty of escalation of commitment, which refers to the tendency of decision-makers to persist with an investment of resources despite mounting evidence that it is failing. Despite the uncertainty of the success and cost-effectiveness of the new drug, the manager has decided to continue with the project just because the company has already invested a lot of money into it. This indicates that the manager is ignoring the rational analysis of the situation and is committed to the project due to past investment rather than its actual potential.

Question 4

Bob is making a decision to buy a new printer.He is reflecting on his previous purchase of office equipment,and based on the savings made,he believes that decision was sound.This is an example of hindsight bias.

Accepted Answer

This is an example of outcome bias, where Bob judges the quality of a decision based on its outcome rather than the decision-making process itself.

Question 5

As the manager in charge,you must make a decision about the appropriateness of discontinuing research on a new drug.This new drug would save lives,but it is uncertain whether the company can develop it within a reasonable time frame and at a reasonable cost.Your firm has already spent a small fortune on researching this drug. Early trials of the drug showed good results.Although dosage levels produced spurious effects,you are certain that time and effort will fix this.You decide to commit to the program based on this information.What decision-making bias may be affecting your decision:
A)overconfidence bias
B)anchoring bias
C)availability bias
D)confirmation bias

Accepted Answer

The answer of As the manager in charge,you must make...

Question 6

A satisficing solution is both satisfactory and sufficient.

Accepted Answer

A satisficing solution provides an acceptable outcome and is also sufficient to meet the criteria or requirements.

Question 7

As the manager in charge,you must make a decision about the appropriateness of discontinuing research on a new drug.This new drug would save lives,but it is uncertain whether the company can develop it within a reasonable time frame and at a reasonable cost.Your firm has already spent a small fortune on researching this drug. Your experience tells you that this project has merit.You decide to use ________ decision making and continue the project.
A)compulsive
B)satisficing
C)intuitive
D)rational

Accepted Answer

Intuitive decision making involves relying on one's experience and gut feeling, which aligns with the manager's belief in the project's merit despite uncertainties.

Question 8

It is now recognised that rational analysis has been overemphasised and that,in certain instances,relying on intuition can improve decision making.

Accepted Answer

Recent studies have shown that relying solely on rationality and analytical thinking may not always result in the best decision-making, and that intuition can play a valuable role in the process. Therefore, it is now recognised that overemphasising rational analysis is not always beneficial.

Question 9

Sarah is responsible for purchasing a new computer system for her department.Given the significant financial investment,Sarah has decided to use the rational decision-making model. The first step will be:
A)computing the optimal decision.
B)identifying decision criteria.
C)rating each alternative on each criterion.
D)defining the problem.

Accepted Answer

The first step in the rational decision-making model is to define the problem. Sarah needs to clearly identify the purpose for purchasing a new computer system, the needs of her department, and any constraints or limitations in the decision-making process. Without a clear understanding of the problem, it will be difficult to identify decision criteria or evaluate alternative options.

Question 10

Sarah's manager has informed her that the old computer software cannot accommodate their new customer load.Sarah is responsible for finding new software for her department.Sarah has to work out the functions that need to be carried out by the software and then look at all of the possible software programs to see how well they meet the weighted criteria.She then selects the alternative with the highest total score. Sarah's manager informing her of the need for new software exemplifies:
A)identification of decision criteria.
B)defining the problem.
C)rating each alternative on each criterion.
D)computing the optimal decision.

Accepted Answer

Sarah's manager informing her of the need for new software is an example of defining the problem. Defining the problem is the first step in the decision-making process and involves identifying the gap between the actual and desired state. It is the process of identifying, defining, and clarifying the problems or issues to be addressed.

Question 11

Explain the process of bounded rationality for the typical individual.

Accepted Answer

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Question 12

Unavailability bias occurs when judgements are made on information that is readily available.

Accepted Answer

The correct term for this concept is "availability bias," not "unavailability bias." Availability bias occurs when people rely on immediate examples that come to mind when evaluating a topic or decision.

Question 13

Jackson continues to put money into car repairs even though he knows the car is a 'lemon'.This is an example of the availability bias.

Accepted Answer

This is an example of the sunk cost fallacy, not availability bias. The sunk cost fallacy involves continuing an endeavor due to previously invested resources, while availability bias involves relying on immediate examples that come to mind.

Question 14

Intuitive decision analysis must operate independently of rational analysis.

Accepted Answer

Intuitive decision analysis and rational analysis should work together to produce effective decision-making. Rational analysis provides a structured framework for decision-making, while intuitive analysis considers an individual's instincts and experiences. The two approaches are complementary, and using them together can lead to better decision outcomes.

Question 15

Define the term 'escalation of commitment'.

Accepted Answer

The answer of Define the term 'escalation of commitment'....

Question 16

Which of the following is NOT an organisational constraint on decision making?
A)performance evaluation
B)personality
C)reward system
D)formal regulations

Accepted Answer

Personality is not an organisational constraint on decision making, as it refers to personal traits and characteristics of an individual, which are not controlled or influenced by the organization. The other options, performance evaluation, reward system, and formal regulations, are all organizational constraints that can affect decision making within the organization.

Question 17

Discuss at least four common biases and errors in decision making.

Accepted Answer

The answer of Discuss at least four common biases and...

Question 18

All rational decision makers can be expected to identify and select the same problems to solve.

Accepted Answer

Rational decision makers may have different priorities and perspectives, leading them to identify and select different problems to solve based on their individual goals and values.

Question 19

Intuitive decision making is a conscious process created out of experience.

Accepted Answer

Intuitive decision making is an unconscious process that relies on experience and instinct rather than deliberate, conscious reasoning.

Question 20

Sarah is responsible for purchasing a new computer system for her department.Given the significant financial investment,Sarah has decided to use the rational decision-making model. The decision criteria have been identified.The next step is to:
A)allocate weights to the criteria.
B)evaluate the alternatives.
C)develop possible alternatives.
D)select the best alternative.

Accepted Answer

The next step in the rational decision-making model is to allocate weights to the criteria. This involves assigning values to each decision criteria based on its relative importance. This step is important because it helps to identify which criteria are most important in the decision-making process and helps to ensure that the final decision is aligned with the organization's goals and objectives.

Quiz 6: Perception and Individual Decision Making