Exam 15: Decision Making

 The classical model of decision making seeks to maximize economic or other outcomes using a rational choice process.

 Define the theory of rational choice and list the steps involved in the rational decision-making process.

 The managers, who had bargained and built coalitions with other managers in order to arrive at a decision on how the division would be restructured, were following which model of decision making?

 List the actions that can help managers "de-bias" their judgments.

 Top management's decision on how to integrate a newly acquired firm is most likely a(n) _____ decision.

 Confirmation bias means that people tend to seek information that disconfirms a decision before seeking information that confirms a decision.

 Heuristics are the short-cuts that individuals use to save time when making complex decisions.

 Under conditions of _____, individuals have information about objectives, priorities, and potential courses of action, but they do not have all the information about the possible outcomes for each course of action.

 Bounded rationality refers to

 Peter is a senior manager in an organization that is currently laying off its employees. It is Peter's responsibility to convey this message to the laid-off employees. Harry is one among them with whom Peter had a conflict a year ago. Therefore, in an attempt to avoid any such conflicts again, Peter requested a human resources representative to convey the message instead. In this case, Peter used the _____ heuristic.

 The bounded rationality framework contends that individuals make decisions under conditions of certainty.

 _____ is the process of identifying issues and making choices from alternative courses of action.

 Differentiate between programmed and nonprogrammed decisions.

 Tom negotiated with the customer and priced the customer's order at a special discount within the bounds of established rules and guidelines.Tom has made a(n)  _____ decision.

 Vinita buys a stock assuming that she can make profit out of it. However, shortly thereafter the stock value drops and she loses money. Her financial planner thinks the stock value will drop further and advises her to sell the stock. However, the market value has dropped so much already that Vinita believes it is due to rebound; she doesn't want to sell at the lowest point and lose money. She holds onto the stock in hopes to regain her loss. Instead she loses more money. This phenomena is referred to as

 The act of choosing a solution that is good enough is called

 The board's decision to relocate company headquarters to another state was most likely a(n) _____ decision.

 The team members were reluctant to try a new format with which they were unfamiliar; the old format had served them well for many years. Their decision to stick with the old format is an example of the _____ bias.

 Which of the following models should managers use when making tough calls?

 Outline heuristics and its types.