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Questions and Answers
What is the first step in the decision-making process?
Which of the following best describes the purpose of identifying decision criteria?
How are weights typically assigned to decision criteria?
Which step follows developing alternatives in the decision-making process?
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What is the main goal of analyzing alternatives?
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What does selecting an alternative involve?
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Why is allocating weights to criteria important in the decision-making process?
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What might be considered when identifying a problem in the decision-making process?
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What does the overconfidence bias typically lead individuals to do?
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Which bias involves failing to adjust adequately for subsequent information after being fixated on initial information?
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The selective perception bias affects decision-makers by causing them to do what?
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Which bias leads decision-makers to disproportionately weigh recent events in their judgments?
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What does the sunk costs error lead people to incorrectly prioritize?
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Hindsight bias causes individuals to wrongly believe what about past events?
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What is the primary characteristic of immediate gratification bias?
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Which of the following is an example of representation bias?
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The framing bias affects decision-making by emphasizing which of the following?
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What does confirmation bias lead individuals to do when evaluating information?
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What does implementing the alternative typically involve?
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What is a key component of evaluating decision effectiveness?
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How does bounded rationality impact decision-making?
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What does intuitive decision-making rely on?
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Which type of decision is characterized by having clear goals and familiar scenarios?
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What defines a programmed decision?
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Which of the following is an example of a policy?
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Which of the following scenarios exemplifies an unstructured problem?
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What thinking style is characterized by a preference for using external data and facts?
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What might indicate a decision maker is utilizing bounded rationality?
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What does the concept of 'satisficing' imply for decision makers?
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What is the distinction between rules and policies in decision-making?
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What involvement during decision implementation can increase support from team members?
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What is a characteristic of unstructured problems?
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Study Notes
Decision-Making Process
- Identifying a problem: Recognizing a gap or an issue needing attention.
- Identifying decision criteria: Determining key factors influencing a decision.
- Allocating weights to criteria: Ranking the importance of each decision factor (usually on a scale).
- Developing alternatives: Generating different solutions or options to address the problem.
- Analyzing alternatives: Evaluating each option against the established criteria and weights.
- Selecting an alternative: Choosing the option that best meets the criteria, usually with the highest total score.
- Implementing the alternative: Putting the selected solution into action within the organization.
- Evaluating decision effectiveness: Assessing if the chosen solution solved the problem and met the desired goals.
Rational Decision Making
- Assumes decision makers are fully objective and logical.
- Relies on clear problem definition, specific goals, and knowledge of all possible alternatives and consequences.
- Often unrealistic in real-world scenarios.
Bounded Rationality
- Managers make decisions rationally but are limited by their ability to process information.
- Satisficing: Accepting solutions that are "good enough" rather than maximizing outcomes.
- Often used due to limitations in processing all information and alternatives.
Intuitive Decision-Making
- Relies on experience, feelings, and accumulated judgment.
- Can complement bounded rational decision making.
- Individuals experiencing intense emotions during decision-making often achieve higher performance, especially if they understand their feelings.
Types of Problems and Decisions
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Structured problems: Straightforward, familiar, and well-defined problems with clear goals, available information, and often occur repetitively.
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Programmed decisions: Repetitive decisions handled routinely.
- Procedures: Series of steps to address structured problems.
- Rules: Explicit statements outlining what can or cannot be done.
- Policies: Guidelines for making decisions, providing general parameters.
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Unstructured problems: New or unusual problems with ambiguous information.
Thinking Styles
- Linear thinking style: Relies on external data and facts processed through rational, logical thinking.
- Nonlinear thinking style: Relies on internal sources of information and processing them through internal insights, feelings, and hunches.
Common Decision-Making Biases
- Overconfidence Bias: Holding unrealistically positive views of oneself and one’s performance.
- Framing Bias: Selecting and emphasizing certain aspects of a situation while ignoring others.
- Representation Bias: Drawing analogies and seeing identical situations where none exist.
- Self-serving Bias: Quickly taking credit for successes and blaming outside factors for failures.
- Sunk Costs Errors: Forgetting current actions cannot influence past events and focusing only on future consequences.
- Immediate Gratification Bias: Choosing options that offer immediate rewards and avoid immediate costs.
- Hindsight Bias: Believing that an event could have been predicted after the outcome is known.
- Anchoring Effect: Fixating on initial information and ignoring subsequent information.
- Selective Perception Bias: Organizing and interpreting events based on biased perceptions.
- Confirmation Bias: Seeking information that confirms past choices while discounting contradictory information.
- Availability Bias: Losing objectivity by focusing on the most recent events.
- Randomness Bias: Creating unfounded meaning out of random events.
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Description
This quiz covers the essential steps of the decision-making process, including identifying problems, evaluating alternatives, and selecting solutions. It aims to provide a clear understanding of rational decision-making principles. Participants will learn how to apply these steps effectively in real-world scenarios.
