, Chapter 1 Introduction to Managerial Decision Making
Multiple choice
1) An optimal search for alternatives should last:
a. As long as needed to find the best solution.
b. As long as needed to find the first good enough solution.
c. As long as the cost of the search does not outweigh the value of the added information.
d. As long as the cost of the search is within the appropriate limits set by the decision maker.
Ans: c
Response: p. 2-3
2) Rating alternatives on each of the decision criteria is considered the most difficult stage of the
decision-making process, because:
a. It assumes we have precisely defined our priorities.
b. It requires us to forecast how each alternative solution will achieve each of our decision
criteria.
c. It requires us to compare all of the alternatives simultaneously.
d. It is likely to fail if our problem is not defined correctly, and this failure will not be detected.
Ans: b
Response: p. 3
3) In the interplay between system 1 and system 2 thinking, the key goal for managers is:
a. To improve their use of system 1 thinking.
b. To attempt to use system 2 thinking as much as possible.
c. To apply both systems in making decisions in order to perform a more thorough and
complex search for alternatives.
d. To identify when they should move from system 1 to system 2 thinking. Ans: d
Response: p. 4
, 4) Which of the following is a typical characteristic of heuristics?
a. They provide us with a simple way of dealing with complex problems.
b. They have the best likelihood of reaching an optimal solution to a problem.
c. They are time and resource consuming.
d. They are used mainly by irrational decision makers.
Ans: a
Response: p. 6
Questions 5-8 describe examples of heuristics outlined in the chapter. For each question, indicate which
heuristic it describes:
a. The representativeness heuristic.
b. The availability heuristic.
c. The confirmation heuristic.
d. The affect heuristic.
5) Inner zcity zcrime zin zthe zU.S. zgets zconsiderable zmedia zcoverage, zsuch zthat zevery zhomicide
zis zreported zin zthe znews. zIn zcontrast, za zstory zof za zperson zwho zdied zfrom za zheart zattack
zrarely zmakes zthe znews. zThis zleads zpeople zto zoverestimate zthe zfrequency zof zdeaths zdue
zto zhomicides zrelative zto zthose zdue zto zheart zfailure. z
Ans: zb
zResponse: zp.
z7-8 z
6) John zis zover zseven zfeet ztall. zWhen zasked zwhether zJohn zis za zprofessional zbasketball
zplayer zor za zsoftware zprogrammer, zmany zpeople zpredict zthe zformer, zeven zthough
zthere zare zmany zmore zsoftware zprogrammers, zeven zvery ztall zones, zthan zprofessional
zbasketball zplayers. zAns: za z
Response: zp. z8-9 z
, 7) After zreading zabout zthe zpositive zeffect zchocolate zhas zon zstudent zperformance, za zteacher
zgives zeach zstudent zin za zclass za zchocolate zbar zbefore ztaking zan zexam. z15 zout zof z22
zstudents zin zthat zclass zget zan zA zon zthe zexam. zThe zteacher ztherefore zconcludes zthat
zchocolate zenhances zperformance. zAns: zc z
Response: zp. z9-10 z
8) A zcommon zwisdom zin zpolitics zis zthat zthe zmore zan zargument zis zrepeated, zthe zmore
zit zwill zbe zconsidered zby zthe zpublic zas zreliable zand ztrue. z
Ans: zb
zResponse: zp.
z7-8 z
9) The zaffect zheuristic zcan zexplain zwhy z
a. People zwho zlive zin zCalifornia zare zassumed zto zbe zhappier zthan zpeople zwho
zlive zin zthe zMidwest. z
b. Students zpredict zthey zwill zbe zsadder zafter zgetting za zbad zgrade zon za ztest
zthan zthey zactually zare zin zthese zsituations. z
c. People zdo znot zremember zsad zevents zfrom ztheir zearly zchildhood. z
d. Stock zprices zgo zup zon zsunny zdays. z
Ans: zd
Response: zp. z10
True/False
10) Succumbing zto zheuristics zis zinevitable, zand zthere zis zno zway zto zmake zjudgment zless zprone zthem. z
Rather, z zone z zcan z zonly z zbe z zaware z zof z zthe z zbiasing z ze z
Ans: zFalse
zResponse: zp.
Multiple choice
1) An optimal search for alternatives should last:
a. As long as needed to find the best solution.
b. As long as needed to find the first good enough solution.
c. As long as the cost of the search does not outweigh the value of the added information.
d. As long as the cost of the search is within the appropriate limits set by the decision maker.
Ans: c
Response: p. 2-3
2) Rating alternatives on each of the decision criteria is considered the most difficult stage of the
decision-making process, because:
a. It assumes we have precisely defined our priorities.
b. It requires us to forecast how each alternative solution will achieve each of our decision
criteria.
c. It requires us to compare all of the alternatives simultaneously.
d. It is likely to fail if our problem is not defined correctly, and this failure will not be detected.
Ans: b
Response: p. 3
3) In the interplay between system 1 and system 2 thinking, the key goal for managers is:
a. To improve their use of system 1 thinking.
b. To attempt to use system 2 thinking as much as possible.
c. To apply both systems in making decisions in order to perform a more thorough and
complex search for alternatives.
d. To identify when they should move from system 1 to system 2 thinking. Ans: d
Response: p. 4
, 4) Which of the following is a typical characteristic of heuristics?
a. They provide us with a simple way of dealing with complex problems.
b. They have the best likelihood of reaching an optimal solution to a problem.
c. They are time and resource consuming.
d. They are used mainly by irrational decision makers.
Ans: a
Response: p. 6
Questions 5-8 describe examples of heuristics outlined in the chapter. For each question, indicate which
heuristic it describes:
a. The representativeness heuristic.
b. The availability heuristic.
c. The confirmation heuristic.
d. The affect heuristic.
5) Inner zcity zcrime zin zthe zU.S. zgets zconsiderable zmedia zcoverage, zsuch zthat zevery zhomicide
zis zreported zin zthe znews. zIn zcontrast, za zstory zof za zperson zwho zdied zfrom za zheart zattack
zrarely zmakes zthe znews. zThis zleads zpeople zto zoverestimate zthe zfrequency zof zdeaths zdue
zto zhomicides zrelative zto zthose zdue zto zheart zfailure. z
Ans: zb
zResponse: zp.
z7-8 z
6) John zis zover zseven zfeet ztall. zWhen zasked zwhether zJohn zis za zprofessional zbasketball
zplayer zor za zsoftware zprogrammer, zmany zpeople zpredict zthe zformer, zeven zthough
zthere zare zmany zmore zsoftware zprogrammers, zeven zvery ztall zones, zthan zprofessional
zbasketball zplayers. zAns: za z
Response: zp. z8-9 z
, 7) After zreading zabout zthe zpositive zeffect zchocolate zhas zon zstudent zperformance, za zteacher
zgives zeach zstudent zin za zclass za zchocolate zbar zbefore ztaking zan zexam. z15 zout zof z22
zstudents zin zthat zclass zget zan zA zon zthe zexam. zThe zteacher ztherefore zconcludes zthat
zchocolate zenhances zperformance. zAns: zc z
Response: zp. z9-10 z
8) A zcommon zwisdom zin zpolitics zis zthat zthe zmore zan zargument zis zrepeated, zthe zmore
zit zwill zbe zconsidered zby zthe zpublic zas zreliable zand ztrue. z
Ans: zb
zResponse: zp.
z7-8 z
9) The zaffect zheuristic zcan zexplain zwhy z
a. People zwho zlive zin zCalifornia zare zassumed zto zbe zhappier zthan zpeople zwho
zlive zin zthe zMidwest. z
b. Students zpredict zthey zwill zbe zsadder zafter zgetting za zbad zgrade zon za ztest
zthan zthey zactually zare zin zthese zsituations. z
c. People zdo znot zremember zsad zevents zfrom ztheir zearly zchildhood. z
d. Stock zprices zgo zup zon zsunny zdays. z
Ans: zd
Response: zp. z10
True/False
10) Succumbing zto zheuristics zis zinevitable, zand zthere zis zno zway zto zmake zjudgment zless zprone zthem. z
Rather, z zone z zcan z zonly z zbe z zaware z zof z zthe z zbiasing z ze z
Ans: zFalse
zResponse: zp.
