OAM 330 – MIDTERM QUESTIONS AND VERIFIED
ANSWERS
Organizational Behavior
systematic study of how people act in organizations
Goal of OB
understand and predict how people will behave
Decision Making
Making choices among alternative courses of action, including inaction
Why study decision making?
Decisions affect lives of others and change course of an organization
Decision Making Models/Theories List
1. Rational
2. Intuitive
3. Bounded Rationality
Rational Decision Making Theory
a series of steps if goal is to maximize outcome and make the best choice
What are the steps to Rational Decision Making Theory
1. Identify the problem
2. Establish decision criteria
3. Weigh decision criteria
4. Generate alternatives
5. Evaluate the alternatives
6. Choose the best alternative
7. implement the decision
8. Evaluate the decision
What are advantages of the Rational Decision Making Theory?
(1) Establishes decision criteria
,(2) Generates alternatives
What is decision criteria?
a set of parameters against which potential options will be evaluated
What are alternatives
ther possible solutions to a problem in the decision making process
What are assumption in the Rational Decision Making Theory
1. People completely understand decisions to be made
2. People know all available choice
3. People have no biases
4. People want to make optimal decision
Do people use the rational decision making model?
Nope, they use a consequential model (evaluate the consequences)
Why do people not use the rational decision making model?
(1) Too much info and (2) too many choices can lead to analysis paralysis
What is the Intuitive decision making model?
arriving at decisions without conscious reasoning
Why use the intuitive decision making model?
B/c when influenced by time pressures, constraints, uncertainty, and changing
conditions it is difficult to use rational decision making model
What process does the intuitive decision making model use?
Assessing only one option at a time
What is bounded rationality decision making theory?
recognizing limitations of decision making process
What process does bounded rationality use?
Satisficing
,what is Satisficing
finding the first acceptable alternative "good enough" based on limiting options to a
manageable set
Why is bounded rationality more commonly used?
Decision maker saves cognitive time and effort by accepting first choice that meets
minimum threshold
What are heuristics
mental short cut or rules of thumbs to make decisions quickly (anticipating outcomes)
What is a consequence of heuristics?
overreliance on heuristics can lead to predictable cognitive biases
what are cognitive biases?
errors in perception that lead to faulty decision making
what is bias?
statistical definition: tendency for people to over- or under-estimate the true parameter
what are the types of bias? (list)
1. availability bias
2. conjunction fallacy
3. representative bias
4. anchoring & adjustment bias
5. framing bias
6. confirmation bias
what is availability bias?
situation which info that is more readily available is viewed as more likely to occur
what can influence availability bias?
Events that are emotional, vivid, or more easily imagined also tend to be more available
in our memory
what is confunction fallacy
, people inaccurately judge that 2+ events are more likely to happen at once than one
event
what is representative bias
tendency to assess an event as more likely to occur based on our own stereotypes
what influences representative bias
Largely based on one's own personal experience or familiarity with a situation
what is a consequence of representative bias?
People tend to disregard or ignore potentially relevant info (sample sizes, base rates,
etc.)
what is anchoring & adjustment bias
tendency to rely too heavily on an initial figure and falling to adjust sufficiently
what can cause anchoring & adjustment bias?
Occurs even when numbers are arbitrary or irrelevant
why does anchoring & adjustment bias occur?
People are not good at perceiving things in absolute terms. Better at sensing relative
terms
what is framing bias
tendency to be influenced by the way that problems are presented
what causes framing bias?
Occurs to loss aversion → People are more sensitive to losses than wins
why does loss aversion happen?
When propositions are framed as losses, people engage in riskier behavior to avoid the
pain of dealing with a loss
what is confirmation bias
endency to process and analyze info that supports one's preexisting ideas or beliefs
ANSWERS
Organizational Behavior
systematic study of how people act in organizations
Goal of OB
understand and predict how people will behave
Decision Making
Making choices among alternative courses of action, including inaction
Why study decision making?
Decisions affect lives of others and change course of an organization
Decision Making Models/Theories List
1. Rational
2. Intuitive
3. Bounded Rationality
Rational Decision Making Theory
a series of steps if goal is to maximize outcome and make the best choice
What are the steps to Rational Decision Making Theory
1. Identify the problem
2. Establish decision criteria
3. Weigh decision criteria
4. Generate alternatives
5. Evaluate the alternatives
6. Choose the best alternative
7. implement the decision
8. Evaluate the decision
What are advantages of the Rational Decision Making Theory?
(1) Establishes decision criteria
,(2) Generates alternatives
What is decision criteria?
a set of parameters against which potential options will be evaluated
What are alternatives
ther possible solutions to a problem in the decision making process
What are assumption in the Rational Decision Making Theory
1. People completely understand decisions to be made
2. People know all available choice
3. People have no biases
4. People want to make optimal decision
Do people use the rational decision making model?
Nope, they use a consequential model (evaluate the consequences)
Why do people not use the rational decision making model?
(1) Too much info and (2) too many choices can lead to analysis paralysis
What is the Intuitive decision making model?
arriving at decisions without conscious reasoning
Why use the intuitive decision making model?
B/c when influenced by time pressures, constraints, uncertainty, and changing
conditions it is difficult to use rational decision making model
What process does the intuitive decision making model use?
Assessing only one option at a time
What is bounded rationality decision making theory?
recognizing limitations of decision making process
What process does bounded rationality use?
Satisficing
,what is Satisficing
finding the first acceptable alternative "good enough" based on limiting options to a
manageable set
Why is bounded rationality more commonly used?
Decision maker saves cognitive time and effort by accepting first choice that meets
minimum threshold
What are heuristics
mental short cut or rules of thumbs to make decisions quickly (anticipating outcomes)
What is a consequence of heuristics?
overreliance on heuristics can lead to predictable cognitive biases
what are cognitive biases?
errors in perception that lead to faulty decision making
what is bias?
statistical definition: tendency for people to over- or under-estimate the true parameter
what are the types of bias? (list)
1. availability bias
2. conjunction fallacy
3. representative bias
4. anchoring & adjustment bias
5. framing bias
6. confirmation bias
what is availability bias?
situation which info that is more readily available is viewed as more likely to occur
what can influence availability bias?
Events that are emotional, vivid, or more easily imagined also tend to be more available
in our memory
what is confunction fallacy
, people inaccurately judge that 2+ events are more likely to happen at once than one
event
what is representative bias
tendency to assess an event as more likely to occur based on our own stereotypes
what influences representative bias
Largely based on one's own personal experience or familiarity with a situation
what is a consequence of representative bias?
People tend to disregard or ignore potentially relevant info (sample sizes, base rates,
etc.)
what is anchoring & adjustment bias
tendency to rely too heavily on an initial figure and falling to adjust sufficiently
what can cause anchoring & adjustment bias?
Occurs even when numbers are arbitrary or irrelevant
why does anchoring & adjustment bias occur?
People are not good at perceiving things in absolute terms. Better at sensing relative
terms
what is framing bias
tendency to be influenced by the way that problems are presented
what causes framing bias?
Occurs to loss aversion → People are more sensitive to losses than wins
why does loss aversion happen?
When propositions are framed as losses, people engage in riskier behavior to avoid the
pain of dealing with a loss
what is confirmation bias
endency to process and analyze info that supports one's preexisting ideas or beliefs
