Podcast
Questions and Answers
What are decision criteria in decision-making?
What are decision criteria in decision-making?
- Weights assigned to each criterion
- Factors that are important and relevant to resolving the problem (correct)
- Factors that are irrelevant to resolving the problem
- Alternatives to resolve the problem
Why are weights assigned to each decision criterion?
Why are weights assigned to each decision criterion?
- To place the criteria in the correct priority order of their importance (correct)
- To make the decision-making process faster
- To make the decision-making process more complicated
- To eliminate some criteria from the decision-making process
What is the purpose of Step 2 in the decision-making process?
What is the purpose of Step 2 in the decision-making process?
- To analyze alternatives
- To identify decision criteria (correct)
- To allocate weights to the criteria
- To develop alternatives
What is the purpose of Step 3 in the decision-making process?
What is the purpose of Step 3 in the decision-making process?
What is the purpose of Step 4 in the decision-making process?
What is the purpose of Step 4 in the decision-making process?
What is the purpose of Step 5 in the decision-making process?
What is the purpose of Step 5 in the decision-making process?
In Exhibit 6-2, what is the weight assigned to the 'Memory and Storage' criterion?
In Exhibit 6-2, what is the weight assigned to the 'Memory and Storage' criterion?
What is the purpose of allocating weights to the criteria?
What is the purpose of allocating weights to the criteria?
According to the concept of Bounded Rationality, what do managers do when faced with making a decision?
According to the concept of Bounded Rationality, what do managers do when faced with making a decision?
What is the term for an increased commitment to a previous decision despite evidence that it may have been wrong?
What is the term for an increased commitment to a previous decision despite evidence that it may have been wrong?
What is the main difference between maximizing and satisficing?
What is the main difference between maximizing and satisficing?
What is the term for making decisions based on experience, feelings, and accumulated judgment?
What is the term for making decisions based on experience, feelings, and accumulated judgment?
According to Bounded Rationality, what do managers do when they cannot analyze all information on all alternatives?
According to Bounded Rationality, what do managers do when they cannot analyze all information on all alternatives?
What is the main assumption of Bounded Rationality?
What is the main assumption of Bounded Rationality?
What is the result of the escalation of commitment?
What is the result of the escalation of commitment?
What is the term for choosing the first alternative that satisfactorily solves the problem?
What is the term for choosing the first alternative that satisfactorily solves the problem?
What is a characteristic of a structured problem?
What is a characteristic of a structured problem?
What type of decision can be handled by a routine approach?
What type of decision can be handled by a routine approach?
What is a series of interrelated steps to respond to a structured problem?
What is a series of interrelated steps to respond to a structured problem?
What is an explicit statement that limits what a manager or employee can or cannot do?
What is an explicit statement that limits what a manager or employee can or cannot do?
What is the term for a decision that involves unclear goals and incomplete information?
What is the term for a decision that involves unclear goals and incomplete information?
What type of decision-making approach involves maximizing?
What type of decision-making approach involves maximizing?
What is the purpose of a procedure in decision-making?
What is the purpose of a procedure in decision-making?
What is the benefit of a rule in decision-making?
What is the benefit of a rule in decision-making?
What is the initial step in the decision-making process?
What is the initial step in the decision-making process?
What is the correct order of evaluating alternatives in the decision-making process?
What is the correct order of evaluating alternatives in the decision-making process?
What is the primary characteristic of rational decision making?
What is the primary characteristic of rational decision making?
What is the primary goal of a manager in the decision-making process?
What is the primary goal of a manager in the decision-making process?
What is the term for the idea that managers do not make perfectly rational decisions due to cognitive limitations and complexity?
What is the term for the idea that managers do not make perfectly rational decisions due to cognitive limitations and complexity?
What is the primary role of a manager in an organization?
What is the primary role of a manager in an organization?
What is the characteristic of a manager's decision-making process?
What is the characteristic of a manager's decision-making process?
What is the primary assumption of rational decision making?
What is the primary assumption of rational decision making?
What is the main characteristic of a situation where the decision maker is able to estimate the likelihood of certain outcomes?
What is the main characteristic of a situation where the decision maker is able to estimate the likelihood of certain outcomes?
What is the term for a guideline for making decisions?
What is the term for a guideline for making decisions?
What is the term for a situation where limited information prevents estimation of outcome probabilities?
What is the term for a situation where limited information prevents estimation of outcome probabilities?
What is the main difference between risk and uncertainty?
What is the main difference between risk and uncertainty?
What is the term for a situation where the decision maker is able to know the outcomes with absolute certainty?
What is the term for a situation where the decision maker is able to know the outcomes with absolute certainty?
What is the purpose of decision-making models?
What is the purpose of decision-making models?
What is a common challenge faced by decision makers in situations of uncertainty?
What is a common challenge faced by decision makers in situations of uncertainty?
What is the term for biases that can affect decision-making?
What is the term for biases that can affect decision-making?
Study Notes
Decision-Making Process
- The decision-making process involves five steps:
- Identifying decision criteria
- Allocating weights to the criteria
- Developing alternatives
- Analyzing alternatives
- Selecting an alternative
Decision Criteria
- Decision criteria are factors that are important to resolving the problem
- Examples of decision criteria include:
- Costs that will be incurred
- Risks likely to be encountered
- Outcomes that are desired
Allocating Weights to Criteria
- Decision criteria are not of equal importance
- Assigning a weight to each criterion places the items in the correct priority order of their importance in the decision-making process
Developing Alternatives
- Identifying viable alternatives that can resolve the problem
- Alternatives are listed without evaluation
Analyzing Alternatives
- Appraising each alternative's strengths and weaknesses
- An alternative's appraisal is based on its ability to resolve the issues identified in steps 2 and 3
Decision-Making Styles
- Rational decision making:
- Managers make consistent, value-maximizing choices with specified constraints
- Assumptions are that decision makers are perfectly rational, fully objective, and logical
- Bounded rationality:
- Managers make decisions rationally, but are limited by their ability to process information
- Assumptions are that decision makers will not seek out or have knowledge of all alternatives and will satisfice rather than maximize the outcome of their decision
- Intuitive decision making:
- Making decisions on the basis of experience, feelings, and accumulated judgment
- Can complement bounded rational decision making
Decision-Making Biases
- Biases affect decision making, including:
- Escalation of commitment: an increased commitment to a previous decision despite evidence that it may have been wrong
- Satisficing: choosing the first alternative encountered that satisfactorily solves the problem rather than maximizing the outcome of the decision
Decision-Making Conditions
- Structured problems:
- Involve goals that are clear
- Are familiar and easily and completely defined
- Programmed decisions:
- A repetitive decision that can be handled by a routine approach
- Uncertainty:
- Limited information prevents estimation of outcome probabilities for alternatives associated with the problem
Decision-Making Guidelines
- Policy:
- A general guide for decision making and action
- Rule:
- An explicit statement that limits what a manager or employee can or cannot do
- Procedure:
- A series of interrelated steps that a manager can use to respond to a structured problem
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Description
This quiz covers decision-making under uncertainty, including limited information, estimation of outcome probabilities, and intuition-based decision making.
