MGMT 1500 Chapter 7 Decision Making

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Questions and Answers

What is the conscious process involved in making choices among alternatives called?

Problem Solving

Critical Thinking

Rational Choice

Decision Making (correct)

Which of the following is NOT a reason why people often fail to apply rational choice decision making?

Limited information

Assumed politics

Optimistic bias

Cognitive ability (correct)

What role do emotions and intuition play in decision making?

They can hinder effective decision making. (correct)

They only influence senior management.

They have no impact on decision making.

They can support rational analysis.

Which of the following factors does NOT support creativity in the workplace?

Time constraints Signup and view all the answers

What was one consequence of the decision making failures at Target Canada?

17,600 people out of work Signup and view all the answers

Which of the following is a contingency that affects the optimal level of employee involvement?

Decision complexity Signup and view all the answers

Which aspect is crucial for effective scenario planning in decision making?

Identifying potential/unintended consequences Signup and view all the answers

What type of decision making can be negatively affected by biases and self-concept?

Rational choice decision making Signup and view all the answers

What behavior is associated with Prospect Theory when faced with losses?

Taking more risks Signup and view all the answers

What is one recommended way to improve decision evaluation?

Create a stop-loss mechanism Signup and view all the answers

Which of the following is a potential downside of employee involvement in decision-making?

Risk of conflict Signup and view all the answers

What should be avoided when evaluating a decision to ensure objectivity?

Involving the decision maker Signup and view all the answers

Why might a stop-loss be created in decision-making?

To minimize potential losses Signup and view all the answers

How does employee involvement contribute to better outcomes?

It leads to better identification of problems Signup and view all the answers

Which of the following is NOT a benefit of involving several people in the decision evaluation process?

Faster decision-making Signup and view all the answers

What effect can sunk costs have on decision-making?

Lead to continued investment despite losses Signup and view all the answers

What is a potential risk when decision-making processes become too complicated?

Slowing down the organization Signup and view all the answers

What is the term used to describe the tendency to interpret information in a way that confirms existing beliefs?

Confirmation bias Signup and view all the answers

What strategy helps prevent escalating commitment to a bad decision?

Revisiting decisions later when emotions have changed Signup and view all the answers

Which of the following is NOT one of the five challenges in problem identification?

Strategic alignment Signup and view all the answers

What does 'divine discontent' promote in decision-making?

A mindset of continuous improvement Signup and view all the answers

Which factor contributes to the escalation of commitment?

Sunk costs effect Signup and view all the answers

What should be done to identify root causes of problems effectively?

Ask 'why' multiple times Signup and view all the answers

What is a common bias seen after a decision has been made?

Underweighting negative outcomes Signup and view all the answers

Which approach is recommended to make choices more effectively?

Systematically evaluate alternatives Signup and view all the answers

Study Notes

Decision Making Overview

Involves a conscious process of choosing among alternatives to achieve a desired outcome.
Factors complicating decision making include limited information, cognitive ability, time constraints, and political influences.

Rational Choice Decision Making

Consists of identifying problems, evaluating alternatives, and assessing outcomes.
Emphasizes systematic evaluation against relevant factors rather than hasty decisions.

Decision Making Blunders: Target Canada Case

Target Canada suffered major financial losses leading to layoffs and a tarnished reputation due to poor decision making.

Challenges in Problem Identification

Problems often arise from ambiguous or conflicting information.
Common challenges include:
- Solution-focused mindset
- Decisive leadership styles
- Stakeholder framing
- Perceptual defense
- Mental models

Effective Problem Identification Strategies

Recognize and confront biases in problem identification.
Encourage open discussions and resist the need for premature conclusions.
Adopt a “divine discontent” norm to avoid complacency.
Engage in iterative questioning to uncover root causes.

Effective Decision-Making Techniques

Evaluate alternatives rigorously and avoid being overly decisive.
Reassess decisions when emotional states fluctuate.
Utilize scenario planning to foresee potential outcomes.

Decision Evaluation Problems

Biases such as confirmation bias can lead to flawed evaluations.
Common issues include:
- Underestimating negative outcomes of chosen options.
- Escalation of commitment, where individuals continue investing in poor decisions due to:
  - Self-justification effects
  - Self-enhancement effects
  - Prospect theory effects
  - Sunk cost effects

Managing Escalation of Commitment

Self-justification: Ignoring problems to uphold initial decisions.
Self-enhancement: Acknowledging issues while maintaining a favorable self-view.
Prospect theory: Increased risk-taking when losses are evident.
Sunk costs: Feeling reluctant to abandon efforts due to prior investments.

Improving Decision Evaluation

Segregate decision makers from evaluators to ensure unbiased feedback.
Involve multiple perspectives in the evaluation process.
Implement stop-loss strategies to limit losses.
Actively seek constructive feedback across social and factual domains.

Employee Involvement in Decision Making

Enhances problem identification and alternative generation.
Can, however, complicate decision-making processes, delay action, and create conflict if not managed properly.

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Description

This quiz explores the key concepts of decision making as outlined in Chapter 7 of MGMT 1500. Participants will delve into rational choice decision making, the impact of emotions and intuition, and various factors influencing decisions in the workplace. Enhance your understanding of how decision outcomes are evaluated and the common pitfalls of rational thinking.