UARK MGMT 2103 - Exam 3 questions and solutions

UARK MGMT 2103 - Exam 3 questions and
solutions

Rational Model of Decision Making - answersexplains how mangers should make decisions ji ji ji ji ji ji ji ji ji ji ji




-it assumes that managers are completely objective and possess all information for their decisions
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-4 stages ji




Stage 1 - answersidentifying the problem or opportunity (determining the actual vs. desired)
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Stage 2 - answersgenerate alternative solutions (both the obvious and the creative)
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-brainstorming is a common technique ji ji ji ji




-decision makers are encouraged to slow down when making decisions that leads them to identify a broader
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set of alternatives
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Stage 3 - answersevaluate alternatives and select a solution on several criteria...
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-Is it ethical? (if not, don't consider it?)
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-Is it feasible? (if time is an issue, costs are high, resources are limited, new tech is needed, or customers are
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resistant, for instance then the alternative is not feasible)
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-Will it remove the causes and solve the problem?
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Stage 4 - answersimplement and evaluate the solution chosen ji ji ji ji ji ji ji ji




-if effective, it should eliminate/significantly reduce the difference between the problem state and the desired
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outcome
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-if not, with the problem was incorrectly identified or the solution was inappropriately conceived or executed
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Non-Rational Models of Decision Making - answersexplain how managers actually make decisions these ji ji ji ji ji ji ji ji ji ji ji ji




models typically build on assumptions that decision making is uncertain, that decision makers do not
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possess complete information, managers struggle to make optimal decisions
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Normative Model - answers"satisfactory is good enough" ji ji ji ji ji ji ji




-to describe the process that managers actually use when making decisions which is guided by a decision
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maker's bounded rationality
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Intuition Model - answersconsists of judgements, insights or decision that "come to mind on their own, without
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explicit awareness of the evoking cues and of course without explicit evaluation of the validity on those cues"
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2 Forms of Intuition - answers-Holistic Hunch
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-Automated Experience ji




Automated Experience - answersrepresents a choice based on a familiar situation and a partially ji ji ji ji ji ji ji ji ji ji ji ji ji




subconscious application of learned information related to it
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Holistic Hunch - answersa judgement based on the subconscious integration of information stored in
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memory
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, Bounded Rationality - answersrepresents the notion that decision makers are "bounded" or restricted by a
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variety of constraints when making decisions
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Satisficing - answersconsists of choosing a solution that meets some minimum qualifications and thus is
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"good enough"
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Explicit Knowledge - answersinformation that can easily be put into words
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Tactic Knowledge - answersinformation we gain through experience that is difficult to express and formalize
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8 Common Decision-Making Biases - answers1. Confirmation Bias
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2. Overconfidence Bias
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3. Availability Bias
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4. Representativeness Bias
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5. Anchoring Bias
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6. Hindsight Bias
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7. Framing Biasji ji




8. Escalation of Commitment Bias
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Confirmation Bias - answerspertains to how we selectively gather information and the 2 components ji ji ji ji ji ji ji ji ji ji ji ji ji




1. subconsciously decides something even before investigating why it is the right decision
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2. seeks info that supports/confirms the decision while discounting info that does not
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Overconfidence Bias - answersresults in overestimating our skills relative to those of others and ji ji ji ji ji ji ji ji ji ji ji ji ji




overestimating the accuracy of our predictions
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Availability Bias - answersa decision maker's tendency to base decisions on information readily available in ji ji ji ji ji ji ji ji ji ji ji ji ji ji




memory
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Representativeness Bias - answersleads us to look for information that supports previously formed ji ji ji ji ji ji ji ji ji ji ji ji




stereotypes
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Anchoring Bias - answersoccurs when decision makers are influenced by the first information they receive
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about a decision, even if it is irrelevant
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Hindsight Bias - answersoccurs when knowledge of an outcome influences our belief about the probability
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that we could have predicted the outcome earlier
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Framing Bias - answersrelates to the manner in which a question is posed or framed, it leads us to change the
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way we interpret alternatives
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Escalation of Commitment Bias - answersthe tendency to hold to an ineffective course of action even when it
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is unlikely the bad situation can be reversed
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Decision Making - answersentails identifying and choosing from among alternate solutions that lead to a
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desired state of affairs
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Evidence-Based Decision Making - answersthe process of conscientiously using the best available data and ji ji ji ji ji ji ji ji ji ji ji ji ji




evidence when making managerial decision
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-it holds the promise of helping avoid decision making biases and improving performance while reducing
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costs
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