Exam 9: Decision Making

Write an explanatory note on the sunk-cost trap.

How can managers overcome escalating commitment problems?

Which of the following statements about the normative model of decision making is true?

Explain at least four ways by which firms can overcome groupthink.

The decision process is directed toward changing the root causes of difficulties so that the symptoms are reduced or eliminated.

The advantage of scenario thinking is that the importance of one or two key criteria such as the cost of a raw material or the price of a substitute product can be clearly identified and properly dealt with.

When bounded rational decision makers focus on alternatives that are ''good enough'' rather than on finding the best possible solution, they engage in:

The ability of members of the group to think differently, and to express their opinions and findings is:

It is commonly believed that when using a group to make a decision, a simple agreement or consensus will be reached.

What helps to energize the escalation of commitment problem is the status quo trap, which is the deep-seated bias to make present decisions in order to justify past choices.

The "representativeness" heuristic can result from all of the following EXCEPT:

_____ occurs when a person relies on one piece of information as the key to decision making.

New, complex, or abstract problems require _____ decisions, wherein decision makers must search for alternatives and possibly craft a unique solution.

What is a confirming-evidence bias?

Cognitive diversity is the ability of members of the group to think differently, and to express their opinions and findings.

Research in psychology, management, and political science shows that people regularly make decision errors that are based on discernible emotional states.

The impact of bounded rationality is greatest when trying to make _____ decisions, and can be viewed along a continuum of rationality.