, Chapter1IntroductiontoManagerialDecisionMaking Il̀ Il̀ Il̀ Il̀ Il̀ Il̀
Multiple choice Il`
1) An optimal search for alternatives should last:
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a. As long as needed to find the best solution. Il` Il` Il` Il` Il` Il` Il` Il`
b. As long as needed to find the first good enough solution. Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
c. As long as the cost of the search does not outweigh the value of the added information.
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d. As long as the cost of the search is within the appropriate limits set by the decision maker.
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Il` Ans: c Il`
Response: p. 2-3 Il` Il`
2) Rating alternatives on each of the decision criteria is considered the most difficult stage of the
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decision-making process, because:
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a. It assumes we have precisely defined our priorities.
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b. It requires us to forecast how each alternative solution will achieve each of our decision
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criteria. Il`
c. It requires us to compare all of the alternatives simultaneously.
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d. It is likely to fail if our problem is not defined correctly, and this failure will not be detected.
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Ans: b
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Response: p. 3 Il` Il`
3) In the interplay between system 1 and system 2 thinking, the key goal for managers is:
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a. To improve their use of system 1 thinking. Il` Il` Il` Il` Il` Il` Il`
b. To attempt to use system 2 thinking as much as possible. Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
c. To apply both systems in making decisions in order to perform a more thorough and
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
complex search for alternatives.
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d. To identify when they should move from system 1 to system 2 thinking. Ans: d
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Response: p. 4
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, 4) Which of the following is a typical characteristic of heuristics?
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a. They provide us with a simple way of dealing with complex problems. Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
b. They have the best likelihood of reaching an optimal solution to a problem.
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c. They are time and resource consuming. Il` Il` Il` Il` Il`
d. They are used mainly by irrational decision makers. Il` Il` Il` Il` Il` Il` Il`
Ans: aIl`
Response:p.6
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Questions 5-8 describe examples of heuristics outlined in the chapter. For each question, indicate which
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heuristic it describes:
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a. Therepresentativeness heuristic. Il̀ Il`
b. The availability heuristic. Il` Il`
c. The confirmation heuristic. Il` Il`
d. The affect heuristic. Il` Il`
5) Inner city crime in the U.S. gets considerable media coverage, such that every homicide is
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reported in the news. In contrast, a story of a person who died from a heart attack rarely makes
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
the news. This leads people to overestimate the frequency of deaths due to homicides relative
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to those due to heart failure.
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Ans: b Il`
I l ` Response:p.7- Il̀ Il̀
8
6) John is over seven feet tall. When asked whether John is a professional basketball player or a
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software programmer, many people predict the former, even though there are many more
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software programmers, even very tall ones, than professional basketball players.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Ans: a Il`
Response: p. 8-9 Il` Il`
, 7) After reading about the positive effect chocolate has on student performance, a teacher gives
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Il` each student in a class a chocolate bar before taking an exam. 15 out of 22 students in that class get
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` an A on the exam. The teacher therefore concludes that chocolate enhances performance. Ans: c
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Response: p. 9-10 Il` Il`
8) A common wisdom in politics is that the more an argument is repeated, the more it will be
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considered by the public as reliable and true.
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Ans: b Il`
I l ` Response:p.7- Il̀ Il̀
8
9) The affect heuristic can explain why
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a. People who live in California are assumed to be happier than people who live in the
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Midwest. Il`
b. Students predict they will be sadder after getting a bad grade on a test than they Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
actually are in these situations.
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c. People do not remember sad events from their early childhood. Il` Il` Il` Il` Il` Il` Il` Il` Il`
d. Stock prices go up on sunny days. Il` Il` Il` Il` Il` Il`
Ans: d Il`
Response:p.10
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True/False
10) Succumbing to heuristics is inevitable, and there is no way to make judgment less prone them.
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Rather, one can only be aware of the biasing effect heuristics have on one’s judgment.
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Ans: False Il`
Response:p.11
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Multiple choice Il`
1) An optimal search for alternatives should last:
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a. As long as needed to find the best solution. Il` Il` Il` Il` Il` Il` Il` Il`
b. As long as needed to find the first good enough solution. Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
c. As long as the cost of the search does not outweigh the value of the added information.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
d. As long as the cost of the search is within the appropriate limits set by the decision maker.
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Il` Ans: c Il`
Response: p. 2-3 Il` Il`
2) Rating alternatives on each of the decision criteria is considered the most difficult stage of the
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
decision-making process, because:
Il` Il` Il`
a. It assumes we have precisely defined our priorities.
Il` Il` Il` Il` Il` Il` Il`
b. It requires us to forecast how each alternative solution will achieve each of our decision
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
criteria. Il`
c. It requires us to compare all of the alternatives simultaneously.
Il` Il` Il` Il` Il` Il` Il` Il` Il`
d. It is likely to fail if our problem is not defined correctly, and this failure will not be detected.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Ans: b
Il` Il`
Response: p. 3 Il` Il`
3) In the interplay between system 1 and system 2 thinking, the key goal for managers is:
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
a. To improve their use of system 1 thinking. Il` Il` Il` Il` Il` Il` Il`
b. To attempt to use system 2 thinking as much as possible. Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
c. To apply both systems in making decisions in order to perform a more thorough and
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
complex search for alternatives.
Il` Il` Il` Il`
d. To identify when they should move from system 1 to system 2 thinking. Ans: d
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Response: p. 4
Il` Il` Il`
, 4) Which of the following is a typical characteristic of heuristics?
Il` Il` Il` Il` Il` Il` Il` Il` Il`
a. They provide us with a simple way of dealing with complex problems. Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
b. They have the best likelihood of reaching an optimal solution to a problem.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
c. They are time and resource consuming. Il` Il` Il` Il` Il`
d. They are used mainly by irrational decision makers. Il` Il` Il` Il` Il` Il` Il`
Ans: aIl`
Response:p.6
Il` Il̀ l̀I
Questions 5-8 describe examples of heuristics outlined in the chapter. For each question, indicate which
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
heuristic it describes:
Il` Il` Il`
a. Therepresentativeness heuristic. Il̀ Il`
b. The availability heuristic. Il` Il`
c. The confirmation heuristic. Il` Il`
d. The affect heuristic. Il` Il`
5) Inner city crime in the U.S. gets considerable media coverage, such that every homicide is
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il ` Il` Il`
reported in the news. In contrast, a story of a person who died from a heart attack rarely makes
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
the news. This leads people to overestimate the frequency of deaths due to homicides relative
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il ` Il`
to those due to heart failure.
Il` Il` Il` Il` Il` Il`
Ans: b Il`
I l ` Response:p.7- Il̀ Il̀
8
6) John is over seven feet tall. When asked whether John is a professional basketball player or a
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
software programmer, many people predict the former, even though there are many more
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
software programmers, even very tall ones, than professional basketball players.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Ans: a Il`
Response: p. 8-9 Il` Il`
, 7) After reading about the positive effect chocolate has on student performance, a teacher gives
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` each student in a class a chocolate bar before taking an exam. 15 out of 22 students in that class get
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` an A on the exam. The teacher therefore concludes that chocolate enhances performance. Ans: c
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Response: p. 9-10 Il` Il`
8) A common wisdom in politics is that the more an argument is repeated, the more it will be
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
considered by the public as reliable and true.
Il` Il` Il` Il` Il` Il` Il` Il`
Ans: b Il`
I l ` Response:p.7- Il̀ Il̀
8
9) The affect heuristic can explain why
Il` Il` Il` Il` Il`
a. People who live in California are assumed to be happier than people who live in the
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Midwest. Il`
b. Students predict they will be sadder after getting a bad grade on a test than they Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
actually are in these situations.
Il` Il` Il` Il` Il`
c. People do not remember sad events from their early childhood. Il` Il` Il` Il` Il` Il` Il` Il` Il`
d. Stock prices go up on sunny days. Il` Il` Il` Il` Il` Il`
Ans: d Il`
Response:p.10
Il` Il̀ Il̀
True/False
10) Succumbing to heuristics is inevitable, and there is no way to make judgment less prone them.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Rather, one can only be aware of the biasing effect heuristics have on one’s judgment.
Il` Il` Il ` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Ans: False Il`
Response:p.11
Il` Il̀ Il̀
