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