TEST BANK For Judgment in Managerial Decision
Making, 8th Edition Max H. Bazerman Don A. Moore
Explain the following terms?
confidence - ANSWER:The certainty with which we express judgments and decisions.
Has surprisingly low correlation with accuracy, the extent to which JD's are correct.
People tend to be overconfident, esp when judgments are hard to make.
E.g.: confidence of eyewitness bears little relationship to accuracy... Review of 43
studies showed insignificant relationship.
E.g.: NASA estimate of "catastrophic failure" as 1/100,000 launches in Challenger
Explosion
calibration - ANSWER:Another way of measuring the relation between accuracy and
confidence. The degree to which confidence matches accuracy over many
judgments. Perfect calibration occurs when the proportion of accurate judgments is
identical to the expected probability of being correct. Example: weather forecasters
have near perfect calibration, while medical diagnoses are confidently predicted but
not strongly calibrated with actual probability.
relation between accuracy and confidence in general knowledge questions -
ANSWER:Surprisingly low correlation between the two - little to no relationship. In
general, confidence of eyewitness bears little relationship to accuracy
(Deffenbacher). No problem in judgment and decision making is more prevalent and
more potentially catastrophic than overconfidence. Confidence of judgment may
determine what course to take. Practical consequences - challenger explosion had
1/100,000 chance of occurring according to estimates
resolution - ANSWER:The ability to distinguish between correct and incorrect
answers. Way of evaluating relation b/n confidence and accuracy
calibration vs. confidence - ANSWER:Confident witnesses deemed more credible
than unconfident ones. Accurate witnesses deemed more credible than inaccurate
ones. Errors reduce the effect of confidence (same for credibility and guilt). No errors
lead to more credibility and greater conviction.
Example: witness testimony - confident witness loses more credibility by making a
collateral error than does a witness who expresses uncertainty regarding the
erroneous testimony.
reducing overconfidence - ANSWER:Intense feedback, or considering why one may
be wrong.
better than average effect - ANSWER:Viewing oneself as better than average is
common in tasks that lack unambiguous feedback. Examples: 93% of drivers rate
themselves as more skilled than the median (88% above median in terms of driving
, safety); 68% of university faculty (UNL) rated themselves in top 25% of teaching
ability; 87% of MBA students at Stanford rate academic performance above median.
Downing effect - ANSWER:Tendency of people with a below average IQ to
overestimate IQ, and of people with an above average IQ to underestimate their IQ.
Also, men tend to overestimate while women underestimate (both by 5 points).
"Unskilled people reach erroneous conclusions and make unfortunate choices but
their incompetence robs them of the metacognitive ability to realize it." "The more
you know, the more you focus on what you don't know."
planning fallacy and why it occurs - ANSWER:Question: why does everything take
longer to finish and cost more than we think it will? The tendency to hold a confident
belief that one's own project will proceed as planned, even while knowing that the
vast majority of similar projects have run late. The planning fallacy is failing to think
realistically about where you fit in the distribution of people like you. "People who
have information about an individual case rarely feel the need to know the statistics
of the class to which the case belongs" (Kahneman). Examples: Denver international
airport (16 months late and cost overrun of $2 billion), and Sydney Opera House (6
years late and cost overrun of $95 million). Has a robust effect on a wide variety of
tasks, including tax form completion, school work, furniture assembly, and computer
programming.
Possible explanations for why it may happen: wishful thinking (people think tasks will
be finished quickly and easily because that is what they want to be the case), self
serving bias (by taking credit for tasks that went well but blaming delays on outside
influences, people can discount past evidence of how long a task should take), focal
biases (people focus on the event or activity, neglecting key sources of information),
and anchoring and adjustment (anchor on the best case and under-adjust).
Reducing or increasing the planning fallacy: consider why one might be wrong
(reduce) or effect is amplified in team settings (increase).
types of questions used in questionnaire design - ANSWER:Open ended: lets
participant answer in their own words; useful when research is explanatory; but
must decide how to code data and avoid bias.
Fixed choice: participant uses answers that you come up with; difficult to use when
researcher is unaware of possible answers to questions. Types: simple dichotomy
(two choices - yes or no), determinant choice (highest level of statistics class taken at
NU - 100 level, 200 level, 300 level), and frequency determination (how often - every
day, 5-6 times a week, 1-2 times a week, less than once a week, never)
Likert type scales: taking any question and converting it into a statement ("I consider
myself a sports fan." Can have varying scales (5 and 7 degrees are typical). Also have
to decide on having odd vs. even number of options (depends on hypothetical
neutrality or indifference).
Making, 8th Edition Max H. Bazerman Don A. Moore
Explain the following terms?
confidence - ANSWER:The certainty with which we express judgments and decisions.
Has surprisingly low correlation with accuracy, the extent to which JD's are correct.
People tend to be overconfident, esp when judgments are hard to make.
E.g.: confidence of eyewitness bears little relationship to accuracy... Review of 43
studies showed insignificant relationship.
E.g.: NASA estimate of "catastrophic failure" as 1/100,000 launches in Challenger
Explosion
calibration - ANSWER:Another way of measuring the relation between accuracy and
confidence. The degree to which confidence matches accuracy over many
judgments. Perfect calibration occurs when the proportion of accurate judgments is
identical to the expected probability of being correct. Example: weather forecasters
have near perfect calibration, while medical diagnoses are confidently predicted but
not strongly calibrated with actual probability.
relation between accuracy and confidence in general knowledge questions -
ANSWER:Surprisingly low correlation between the two - little to no relationship. In
general, confidence of eyewitness bears little relationship to accuracy
(Deffenbacher). No problem in judgment and decision making is more prevalent and
more potentially catastrophic than overconfidence. Confidence of judgment may
determine what course to take. Practical consequences - challenger explosion had
1/100,000 chance of occurring according to estimates
resolution - ANSWER:The ability to distinguish between correct and incorrect
answers. Way of evaluating relation b/n confidence and accuracy
calibration vs. confidence - ANSWER:Confident witnesses deemed more credible
than unconfident ones. Accurate witnesses deemed more credible than inaccurate
ones. Errors reduce the effect of confidence (same for credibility and guilt). No errors
lead to more credibility and greater conviction.
Example: witness testimony - confident witness loses more credibility by making a
collateral error than does a witness who expresses uncertainty regarding the
erroneous testimony.
reducing overconfidence - ANSWER:Intense feedback, or considering why one may
be wrong.
better than average effect - ANSWER:Viewing oneself as better than average is
common in tasks that lack unambiguous feedback. Examples: 93% of drivers rate
themselves as more skilled than the median (88% above median in terms of driving
, safety); 68% of university faculty (UNL) rated themselves in top 25% of teaching
ability; 87% of MBA students at Stanford rate academic performance above median.
Downing effect - ANSWER:Tendency of people with a below average IQ to
overestimate IQ, and of people with an above average IQ to underestimate their IQ.
Also, men tend to overestimate while women underestimate (both by 5 points).
"Unskilled people reach erroneous conclusions and make unfortunate choices but
their incompetence robs them of the metacognitive ability to realize it." "The more
you know, the more you focus on what you don't know."
planning fallacy and why it occurs - ANSWER:Question: why does everything take
longer to finish and cost more than we think it will? The tendency to hold a confident
belief that one's own project will proceed as planned, even while knowing that the
vast majority of similar projects have run late. The planning fallacy is failing to think
realistically about where you fit in the distribution of people like you. "People who
have information about an individual case rarely feel the need to know the statistics
of the class to which the case belongs" (Kahneman). Examples: Denver international
airport (16 months late and cost overrun of $2 billion), and Sydney Opera House (6
years late and cost overrun of $95 million). Has a robust effect on a wide variety of
tasks, including tax form completion, school work, furniture assembly, and computer
programming.
Possible explanations for why it may happen: wishful thinking (people think tasks will
be finished quickly and easily because that is what they want to be the case), self
serving bias (by taking credit for tasks that went well but blaming delays on outside
influences, people can discount past evidence of how long a task should take), focal
biases (people focus on the event or activity, neglecting key sources of information),
and anchoring and adjustment (anchor on the best case and under-adjust).
Reducing or increasing the planning fallacy: consider why one might be wrong
(reduce) or effect is amplified in team settings (increase).
types of questions used in questionnaire design - ANSWER:Open ended: lets
participant answer in their own words; useful when research is explanatory; but
must decide how to code data and avoid bias.
Fixed choice: participant uses answers that you come up with; difficult to use when
researcher is unaware of possible answers to questions. Types: simple dichotomy
(two choices - yes or no), determinant choice (highest level of statistics class taken at
NU - 100 level, 200 level, 300 level), and frequency determination (how often - every
day, 5-6 times a week, 1-2 times a week, less than once a week, never)
Likert type scales: taking any question and converting it into a statement ("I consider
myself a sports fan." Can have varying scales (5 and 7 degrees are typical). Also have
to decide on having odd vs. even number of options (depends on hypothetical
neutrality or indifference).
