Question 1

Crisis environments exist when decision makers lack complete certainty regarding the outcomes of various courses of action, but they are aware of the probabilities associated with their occurrence.

Accepted Answer

Crisis environments are characterized by high levels of uncertainty and stress, where decision makers often lack both certainty about outcomes and clear probabilities associated with various courses of action, making decision-making highly challenging.

Question 2

Behavioral scientists are cautious about applying classical decision theory to many decision situations because they recognize that human beings have cognitive limitations that restrict their information-processing capabilities.

Accepted Answer

Behavioral scientists have found that humans have cognitive limitations, such as limited attention and memory, which can affect decision-making and make it challenging to apply classical decision theory to all decision situations.

Question 3

When dealing with risk environments, probabilities are assigned through objective statistical procedures rather than intuition.

Accepted Answer

In risk environments, probabilities can be assigned through both objective statistical procedures and subjective judgment or intuition, depending on the availability and reliability of data.

Question 4

Optimizing refers to the idea that, while individuals reason well and are logical, they have their limits with respect to interpreting and making sense of things within the context of their personal situations.

Accepted Answer

Optimizing refers to the process of making something as effective or functional as possible. The statement describes bounded rationality, which acknowledges that individuals aim to make rational decisions but are limited by their cognitive limitations and the information available to them.

Question 5

According to Herbert Simon, most human decision making, whether individual or organizational, is concerned with the discovery and selection of satisfactory alternatives; only in exceptional cases is it concerned with the discovery and selection of optimal decisions.

Accepted Answer

Herbert Simon's theory of satisficing suggests that most decision-making is focused on finding a good enough solution rather than the best possible solution. This is because humans have limited time, information, and cognitive capacity to analyze all possible options and outcomes. Therefore, the goal is to find a satisfactory option that will meet the needs and goals of the individual or organization, rather than an optimal one that may not be feasible or practical to achieve.

Question 6

Risk management focuses on anticipating risk in situations and factoring risk alternatives into the decision-making process.

Accepted Answer

Risk management involves identifying potential risks and developing strategies to mitigate or manage them. This requires anticipating different scenarios and considering the likelihood and impact of each risk. These risk alternatives are then factored into the decision-making process to ensure that the best possible outcome is achieved with minimal negative consequences.

Question 7

The behavioral decision model allows for an optimizing decision that gives the absolute best solution to the problem.

Accepted Answer

The behavioral decision model takes into account cognitive limitations and biases, which can affect the decision-making process. This means that the optimal solution may not always be reached, as the decision maker's cognitive limitations and biases may impact their ability to consider all available information and make the best decision.

Question 8

In the classical decision model, the manager faces a clearly defined problem, knows all possible action alternatives and their consequences, and then chooses the alternative that offers the optimum solution to the problem.

Accepted Answer

The classical decision model assumes that managers operate under conditions of certainty, where they have all the necessary information and can thus make the optimum decision by evaluating all possible alternatives and their outcomes.

Question 9

In the classical decision model, the problem is not clearly defined, knowledge of possible action alternatives and their consequences is limited, and the manager chooses a satisfactory solution to the problem.

Accepted Answer

In the classical decision model, it is assumed that the problem is clearly defined, knowledge of all possible action alternatives and their consequences is available, and the manager seeks the optimal solution to the problem.

Question 10

Behavioral decision theory models view the manager as acting in a world of complete certainty.

Accepted Answer

Behavioral decision theory models recognize that managers must make decisions in an environment of uncertainty, where outcomes are not always predictable and information may be incomplete or imperfect.

Question 11

Responses to uncertain environments seldom involve intuition, educated guesses, or hunches.

Accepted Answer

Responses to uncertain environments often involve intuition, educated guesses, or hunches, as these can be valuable tools for making decisions when there is incomplete information available.

Question 12

Classical decision theory models accept the notion of bounded rationality and suggest that people act only in terms of what they perceive about a given situation.

Accepted Answer

Classical decision theory assumes that individuals have access to all information, can process it without limitations, and make rational decisions, unlike bounded rationality which acknowledges cognitive limitations and incomplete information.

Question 13

Threats to a brand or the firm's reputation are referred to as reputation risks.

Accepted Answer

Reputation risks refer to potential harm to a brand or firm's reputation.

Question 14

Bounded rationality is choosing the first alternative that appears to give an acceptable or satisfactory resolution of the problem.

Accepted Answer

The answer of Bounded rationality is choosing the first alternative...

Question 15

Of the three decision-making environments uncertainty, certainty, and risk), risk environments are the most difficult for decision makers.

Accepted Answer

Risk environments allow for the use of probability outcomes, making them more manageable than uncertainty environments where probabilities are unknown, thus uncertainty environments are considered more difficult for decision-making.

Question 16

Behavioral decision theory models view the manager as acting in a world of complete certainty.

Accepted Answer

Behavioral decision theory models recognize that the manager acts in a world of uncertainty, and their decisions are influenced by various cognitive biases and heuristics.

Question 17

Classical decision theory appears to fit very well in today's chaotic world of globalizing high-tech organizations.

Accepted Answer

Classical decision theory assumes a rational, predictable decision-making process, which may not always be the case in the complex and rapidly changing environment of globalizing high-tech organizations. Therefore, other decision-making approaches and models are often used in conjunction with or instead of classical decision theory.

Question 18

Certain environments exist when managers have so little information that they cannot even assign probabilities to various alternatives and their possible outcomes.

Accepted Answer

The answer of Certain environments exist when managers have so...

Question 19

Intuition adds elements of flexibility and spontaneity to decision-making, thereby offering potential for creativity and innovation.

Accepted Answer

Intuition relies on connections between subconscious thoughts and experiences, which can offer unique insights and solutions that may not come from strictly logical or analytical processes. This can lead to creative and innovative decision-making.

Question 20

A key element in decision-making under risk and uncertainty is intuition.

Accepted Answer

Intuition plays a crucial role in decision-making under risk and uncertainty as it involves relying on instinct, experience, and perception to make quick and effective decisions in complex and unpredictable situations.

Quiz 9: Decision Making and Creativity

Crisis environments exist when decision makers lack complete certainty regarding the outcomes of various courses of action, but they are aware of the probabilities associated with their occurrence.

Behavioral scientists are cautious about applying classical decision theory to many decision situations because they recognize that human beings have cognitive limitations that restrict their information-processing capabilities.

When dealing with risk environments, probabilities are assigned through objective statistical procedures rather than intuition.

Optimizing refers to the idea that, while individuals reason well and are logical, they have their limits with respect to interpreting and making sense of things within the context of their personal situations.

According to Herbert Simon, most human decision making, whether individual or organizational, is concerned with the discovery and selection of satisfactory alternatives; only in exceptional cases is it concerned with the discovery and selection of optimal decisions.

Risk management focuses on anticipating risk in situations and factoring risk alternatives into the decision-making process.

The behavioral decision model allows for an optimizing decision that gives the absolute best solution to the problem.

In the classical decision model, the manager faces a clearly defined problem, knows all possible action alternatives and their consequences, and then chooses the alternative that offers the optimum solution to the problem.

In the classical decision model, the problem is not clearly defined, knowledge of possible action alternatives and their consequences is limited, and the manager chooses a satisfactory solution to the problem.

Behavioral decision theory models view the manager as acting in a world of complete certainty.

Responses to uncertain environments seldom involve intuition, educated guesses, or hunches.

Classical decision theory models accept the notion of bounded rationality and suggest that people act only in terms of what they perceive about a given situation.

Threats to a brand or the firm's reputation are referred to as reputation risks.

Bounded rationality is choosing the first alternative that appears to give an acceptable or satisfactory resolution of the problem.

Of the three decision-making environments uncertainty, certainty, and risk), risk environments are the most difficult for decision makers.

Behavioral decision theory models view the manager as acting in a world of complete certainty.

Classical decision theory appears to fit very well in today's chaotic world of globalizing high-tech organizations.

Certain environments exist when managers have so little information that they cannot even assign probabilities to various alternatives and their possible outcomes.

Intuition adds elements of flexibility and spontaneity to decision-making, thereby offering potential for creativity and innovation.

A key element in decision-making under risk and uncertainty is intuition.