Chapter 7 Multiple Choice Questions

Multiple Choice Questions
56. When confronted with a choice, people with strong prior beliefs tend to make their decisions based on
their beliefs even if their beliefs are false. This is known as ____.
A. prior-hypothesis bias
B. narrow-minded perception
C. tunnel vision bias
D. the curse of knowledge
E. single-vision stereotyping
When confronted with a choice, decision makers with strong prior beliefs tend to make their decision
based on their beliefs, even if evidence shows those beliefs are wrong.
AACSB: Analytical Thinking

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 07-01 How do people know when they're being logical or illogical?
Topic: Decision making
57. A choice made from among available alternatives is a ____.
A. decision
B. plan
C. goal
D. consensus
E. value statement
A decision is a choice made from among available alternatives.

Blooms: Remember
Difficulty: 1 Easy
Topic: Group decision making
58. George, a longtime hotel manager, was meeting with Sally, a new manager, and telling her about a
recent decision related to whether or not to fire a front desk employee who has had customer service
issues. George discussed the four stages of the decision process. He said, "I first identified the problem,
and then, I gathered alternative solutions. I then evaluated each choice and selected a solution. I then
implemented my decision to add training. Finally, I followed up with an evaluation of what I set in
place." With this decision, George is using the ______.
A. employee relations model

B. focused decision-making model
C. interpersonal-decision agenda
D. solutions agenda
E. rational decision-making model
Typically there are four stages in rational decision making (see Figure 7.1): Stage 1: Identify the
problem or opportunity; Stage 2: Think up alternative solutions; Stage 3: Evaluate alternatives and select
a solution; and Stage 4: Implement and evaluate the solution chosen.
AACSB: Knowledge Application

Blooms: Apply
Difficulty: 3 Hard
59. The model of decision making that explains how managers should make decisions, assuming managers
will make logical decisions that will be the optimum in furthering the organization's best interests, is
known as the ____.
A. employee relations model

B. focused decision-making model
C. interpersonal-decision agenda
D. solutions agenda
E. rational decision-making model
The rational model of decision making, also called the classical model, explains how managers should
make decisions; it assumes managers will make logical decisions that will be the optimum in furthering
the organization's best interests.

Blooms: Remember
Difficulty: 1 Easy
60. Alex is the R&D manager with Digital Copier. The company is having a problem with one of its most
popular copiers jamming. The vice president of marketing told Alex that "we need to quickly discover
how to make this a desirable situation. You need to determine the underlying cause of the problem and
perhaps even make improvements to the copier." This is an example of ____.
A. synergy
B. diagnosis
C. analytics
D. feasibility
E. MBO
Whether you're confronted with a problem or an opportunity in the first stage of the model, the decision
you're called on to make is how to make improvements, or how to change conditions from the present to
the desirable. This is a matter of diagnosis, which is analyzing the underlying causes.

Blooms: Apply
Difficulty: 3 Hard
Topic: Diagnosis
61. Leon is an investment portfolio manager. While sitting in a training workshop, the facilitator mentioned
that "your female investors make trades much less often than men because they ____."
A. take longer to make decisions because of their busy lives

B. do more research, and tend to base their investment decisions on considerations other than just
numbers
C. rely strictly on intuition
D. are overcoming problems with the glass ceiling
E. endeavor to involve their family in decisions and it takes longer to get agreement
According to LouAnn DiCosmo, "the basic reason female investors make trades much less often than
men is that women do a lot more research, and tend to base their investment decisions on considerations
other than just numbers."

Blooms: Apply
Difficulty: 3 Hard
Topic: Diagnosis
62. In the third step of rational decision making (evaluating alternatives and select a solution), you need to
evaluate each alternative not only according to cost and quality but also according to the following
questions: _____
A. Is it efficient and how will it affect our marketing strategy?

B. Is it feasible, effective, and efficient?
C. Is it ethical and will it hurt diversity?
D. Is it ethical, feasible, and effective?
E. Is it feasible and profitable?
In the third step of rational decision making (evaluating alternatives and selecting a solution), you need
to evaluate each alternative not only according to cost and quality but also according to these questions:
(1) Is it ethical? (2) Is it feasible? (3) Is it effective?

Blooms: Understand
63. Jose, the sales manager, is working on the problem of increasing sales by using the rational model of
decision making. In the first step he identified the problem of his employees needing more training. In
the second step he thought of alternative solutions; and in step three he evaluated alternatives and
selected a solution. In the fourth step, Jose needs to _____.
A. do more research to look at types of training

B. select a contingency plan
C. implement and evaluate the training program chosen
D. determine how costly the solution will be
E. set up a diversity and synergy training plan to increase the chances of success
In the fourth step of the rational model of decision making, Jose needs to implement and evaluate the
training program chosen.

Blooms: Apply
Difficulty: 3 Hard
64. The rational model of decision making is also called the ____ model.
A. focused
B. analytical
C. decision
D. classical
E. logical
The rational model of decision making is also called the classical model.

Blooms: Remember
Difficulty: 1 Easy
65. Doug is using rational decision making, and the chosen alternative that was implemented does not
appear to be working. To correct the situation, the possibilities Doug should consider _____.
A. give it more time, change it slightly, try another alternative, or start over
B. give it more time or do not change anything
C. do nothing
D. give it more time, cut costs, or increase organization synergy
E. do nothing or start over
Some possibilities to try using rational decision making if the action is not working include giving it
more time, changing it slightly, trying another alternative, or starting over.

Blooms: Apply
Difficulty: 3 Hard
66. Difficulties that inhibit the achievement of goals are known as _____.
A. objectives
B. synergies
C. values
D. problems
E. alternatives
Difficulties that inhibit the achievement of goals are known as problems.

Blooms: Remember
Difficulty: 1 Easy
67. Patricia is the owner of a floral shop. A successful global candle company approached her about selling
its products in her shop. Patricia knows this product and company can help her exceed her existing
goals. This defines a(n) ____.
A. problem
B. opportunity
C. synergy
D. ethical dilemma
E. diagnosis
Opportunities are situations that present possibilities for exceeding existing goals.

Blooms: Apply
Difficulty: 3 Hard
68. With the community interested in eating healthy, Sue Ellen, a restaurant owner, is considering adding
more vegetarian dishes to her menu. This decision is uncertain and risky, and she finally decides to goes
with her gut feelings. This is an example of _______.
A. rational decision making

B. MBO
C. nonrational decision making
D. analytics
E. a code of ethics
Nonrational models of decision making explain how managers make decisions; they assume that
decision making is nearly always uncertain and risky, making it difficult for managers to make optimal
decisions.

Blooms: Apply
Difficulty: 3 Hard
69. The idea that proposes that the ability of decision makers to be rational is limited by numerous
constraints, such as complexity, time, cognitive capacity, values, skills, habits, and unconscious reflexes,
is known as _____.
A. rational decision making

B. MBO
C. nonrational decision making
D. analytics
E. bounded rationality
The bounded rationality concept suggests that the ability of decision makers to be rational is limited by
numerous constraints, such as complexity, time, cognitive capacity, values, skills, habits, and
unconscious reflexes (see Figure 7.2). Because of such constraints, managers don't make an exhaustive
search for the best alternative. Instead, they follow the satisficing model in which managers seek
alternatives until they find one that is satisfactory, not optimal.

Blooms: Remember
Difficulty: 1 Easy
Topic: Bounded rationality
70. Susanne, the CEO of national IT manufacturer, was approached by Simple Phones, a new company that
is marketing a new type of phone, to partner with the company on a project. The partnership is uncertain
since the company and technology are new. Susanne is uncertain what to do because she is limited by
numerous constraints, such as the uncertainty and complexity of the technology, the management
success of Simple Phones, and time, since other companies are interested in the partnership. This is an
example of _____.
A. an ethical dilemma
B. bounded rationality
C. groupthink
D. a bounded dilemma
E. limited scope
The bounded rationality concept suggests that the ability of decision makers to be rational is limited by
numerous constraints, such as complexity. The problems that need solving are often exceedingly
complex, beyond understanding.

Blooms: Apply
Difficulty: 3 Hard
Topic: Bounded rationality
71. Paula, the controller of Tasty Pizza, is purchasing several new delivery vehicles. Paula has numerous
work responsibilities, so she has limited time to shop for cars. Because of the time constraints, she
cannot make an extensive search for the best alternative but instead needs to look for cars until she finds
one that is satisfactory. Paula is following the _____ model.
A. dilemma
B. rational
C. limited focus
D. satisficing
E. limited scope
Because of constraints (here, a time constraint), managers don't make an exhaustive search for the best
alternative. Instead, they follow the satisficing model in which managers seek alternatives until they find
one that is satisfactory, not optimal.

Blooms: Apply
Difficulty: 3 Hard
Topic: Satisficing
72. Chad and his partner, John, have decided to update their computer network, although they have no
expertise in this area. During a meeting with John, Chad commented that "Our decision is limited by
numerous constraints, such as our understanding of the complexity of technology, time and money,
imperfect information, and our conflicting goals." These limitations are hindrances to _____.
A. satisficing
B. rational decision making
C. intuitive decision making
D. MBO
E. nonrational decisions
The ability of decision makers to be rational is limited by numerous constraints, such as complexity,
time and money, imperfect or too much information, conflicting goals, and their cognitive capacity,
values, skills, habits, and unconscious reflexes (see Figure 7.2).

Blooms: Apply
Difficulty: 3 Hard
73. Sal has been in the landscaping business for over 40 years, and when Donovan, his business partner,
suggested adding snow removal as an extra service, Sal responded with "My gut feeling is to say yes
because of my experience in the past and what I have seen other companies do over the years, both
successfully and not." Sal's response to Donovan is known as _____.
A. a knowledge dilemma
B. a business reaction
C. a knee-jerk reaction
D. unbounded rationality
E. intuition
Intuition is making a choice without the use of conscious thought or logical inference. It may be based
on expertise or feelings.

Blooms: Apply
Difficulty: 3 Hard
Topic: Intuition
74. Olivia, the owner of a small city newspaper, started her business two years ago, believing that there was
still enough demand for her product. However, because people are busy and with the availability of
news online, she has seen the demand for her paper drop steadily. Olivia made a decision to change the
original direction of the company and focus more on an Internet news service. By demonstrating that
managers need to think and act as if their company is an unfinished prototype, won't be ruined by new
ideas and focusing on facts, Olivia is relying on _____.
A. a decision tree
B. a knowledge dilemma
C. the knee-jerk reaction theory
D. evidence-based decision making
E. intuition
Pfeffer and Sutton identify seven implementation principles for companies committed to doing what it
takes to profit from evidence-based management, including treat your organization as an unfinished
prototype. Leaders need to think and act as if their organization is an unfinished prototype that won't be
ruined by dangerous new ideas or impossible to change because of employee or management resistance.

Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 07-03 How can I improve my decision making using evidence-based management and business analytics?
Topic: Evidence-based decision making
75. Despite your best intentions, it's hard to bring the best evidence to bear on your decisions because of
such reasons as ____.
A. it is too expensive; it's not ethical and there's not enough good evidence
B. it will hurt diversity and synergy within your organization
C. there's no competition or there's too much competition
D. there's too much evidence; there's not enough good evidence and the side effects outweigh the cure
E. people are trying to mislead you and it will not allow MBO
Despite your best intentions, it's hard to bring the best evidence to bear on your decisions. Reasons
include (1) there's too much evidence, (2) there's not enough good evidence, (3) the evidence doesn't
quite apply, (4) people are trying to mislead you, (5) you are trying to mislead you, (6) the side effects
outweigh the cure, and (7) stories are more persuasive anyway.

Blooms: Understand
Learning Objective: 07-02 What guidelines can I follow to be sure that decisions I make are not just lawful but ethical?
Topic: Evidence-based decision making
76. Style Mart uses time-series forecasts, such as past holiday sales and the strength of store sales this year
to predict future sales based on patterns of historical data. This is an application of ___.
A. analytics
B. the synergy trend
C. decisions by trends
D. focused trend
E. Big Data
Analytics, or business analytics, is the term used for sophisticated forms of business data analysis. In
one example of analytics in gambling, data-mining software was used to analyze vast amounts of casino
customer data to target profitable patrons.

Blooms: Apply
Difficulty: 3 Hard
Topic: Analytics
77. A data-mining technique used to predict future behavior and anticipate the consequences of change is
known as ___.
A. data digging
B. the decision tree
C. decisions by trends
D. predictive modeling
E. GIGO
Predictive modeling is a data-mining technique used to predict future behavior and anticipate the
consequences of change. Companies such as Capital One look well beyond basic statistics, using data
mining and predictive modeling to identify potential and most profitable customers. Thus, Capital One
conducts more than 30,000 experiments a year, with different interest rates, incentives, direct-mail
packaging, and other variables to evaluate which customers are most apt to sign up for credit cards and
will pay back their debt.

Blooms: Remember
Difficulty: 1 Easy
Topic: Analytics
78. ABC Medical Technology, a fast-growing global research firm, has accumulated so much client
information that conventional database management systems cannot handle its customer needs.
Therefore, it purchased very sophisticated analysis software and supercomputing-level hardware. For the
company's work with hospitals and university medical schools, ABC has been noted in publications as
"real pioneers for innovation and productivity." This vast amount of data is known as ____.
A. cyber-age databases
B. mega IT
C. super data
D. new age computing
E. Big Data
Big Data refers to stores of data so vast that conventional database management systems cannot handle
them and so very sophisticated analysis software and supercomputing-level hardware are required.
Attracting a lot of attention in science, business, medicine, and technology, the concept of big data has
been dubbed "the next frontier for innovation, competition, and productivity."

Blooms: Apply
Difficulty: 3 Hard
Topic: Analytics
79. The combination of how an individual perceives and responds to information reflects his or her ____.
A. location on the introvert/extrovert scale

B. decision-making style
C. time orientation
D. Big Data perception
E. ambiguity index
Decision-making style reflects the combination of how an individual perceives and responds to
information. A team of researchers developed a model of decision-making styles based on the idea that
styles vary along two different dimensions: value orientation and tolerance for ambiguity.

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 07-04 How do I decide to decide?
Topic: Decision making styles
80. The process of studying large amounts of data of a variety of types to uncover hidden patterns, unknown
correlations, and other useful information is known as ____.
A. cyber-age research
B. mega research
C. super market data mining
D. new age computing
E. Big Data analytics
Big data analytics is the process of examining large amounts of data of a variety of types to uncover
hidden patterns, unknown correlations, and other useful information.

Blooms: Remember
Difficulty: 1 Easy
Topic: Analytics
81. Debbie likes working in the banking industry because there is a lot of structure and certainty, and the
daily work is routine. Debbie probably _____.
A. has a high tolerance for ambiguity

B. has a large need for ambiguity
C. has a low tolerance for ambiguity
D. is in the middle ambiguity range
E. thrives on ambiguity
Some people desire a lot of structure in their lives (a low tolerance for ambiguity) and find ambiguous
situations stressful and psychologically uncomfortable. In contrast, others do not have a high need for
structure and can thrive in uncertain situations (a high tolerance for ambiguity, like Debbie).

Blooms: Apply
Difficulty: 3 Hard
82. Dave is a salesperson who takes a long time to make decisions. He loves sales because he responds well
to the pressure he faces in the many new or uncertain situations as a salesperson. Like most successful
salespeople, he is high in his tolerance for ambiguity. Dave represents a person with a(n) _____ style.
A. directive
B. conceptual
C. ambiguous
D. behavioral
E. analytical
A person with an analytical style has a much higher tolerance for ambiguity than someone with a
directive style, and tends to focus on tasks and technical concerns in the workplace. People with this
style like to consider more information and alternatives than those following the directive style. Analytic
individuals are careful decision makers who take longer to make decisions but who also respond well to
new or uncertain situations.

Blooms: Apply
Difficulty: 3 Hard
83. Marie is a small-business owner who loves to take risks. She also enjoys going out and meeting
customers and potential clients—the social aspect of her job. Marie relies on intuition and discussions
with others to acquire information. As an interior decorator, Marie utilizes her imaginative strengths,
taking a broad perspective to problem solving, and she likes to consider many options and future
possibilities. Marie represents a person with a(n) _____ style.
A. directive
B. conceptual
C. ambiguous
D. behavioral
E. analytical
People with a conceptual style have a high tolerance for ambiguity and tend to focus on the people or
social aspects of a work situation. They take a broad perspective to problem solving and like to consider
many options and future possibilities. Conceptual types adopt a long-term perspective and rely on
intuition and discussions with others to acquire information. They also are willing to take risks and are
good at finding creative solutions to problems. However, a conceptual style can foster an indecisive
approach to decision making.

Blooms: Apply
Difficulty: 3 Hard
84. Mandy, a server in a popular family restaurant, is the most popular employee with both customers and
employees, and as a result, she usually receives the most tips. She is always ready to lend a hand when
asked, and with her warm personality and supportive nature, people confide in her. Mandy does have a
problem telling people no, and has a tendency to avoid conflict, concerned about hurting others or
getting people mad. Mandy represents a person with a(n) _____ style.
A. directive
B. conceptual
C. ambiguous
D. behavioral
E. analytical
People with a behavioral style have a low tolerance for ambiguity and tend to focus on the people or
social aspects of a work situation. The behavioral style is the most people oriented of the four styles.
People with this style work well with others and enjoy social interactions in which opinions are openly
exchanged. Behavioral types are supportive, receptive to suggestions, warm, and prefer verbal to written
information. Although they like to hold meetings, people with this style have a tendency to avoid
conflict and to be concerned about others. This can lead behavioral types to adopt a wishy-washy
approach to decision making and to have a hard time saying no.

Blooms: Apply
Difficulty: 3 Hard
85. Sam is the production manager of a busy shoe factory. He was chosen because prior to his promotion he
had proven himself to be very efficient, and as a department manager he had a logical and practical
approach to solving problems. Sam has a reputation for being decisive and getting things done. Most of
the employees like Sam, but they feel his style is autocratic, as he likes to do things by the book. Sam
represents a person with a(n) ______ style.
A. directive
B. conceptual
C. ambiguous
D. behavioral
E. analytical
A person with a directive style has low tolerance for ambiguity and tends to focus on tasks and technical
concerns in the workplace. He or she tends to be autocratic, to exercise power and control, and to focus
on the short run.

Blooms: Apply
Difficulty: 3 Hard
86. Scott has a bachelor's degree in ethics and human resources, and has extensive experience working with
employees and managers regarding ethics, especially in the area of ethical dilemmas. With his
background of dealing with legal issues, he has assisted extensively in determining if decisions are both
ethical and lawful. With Scott's background, he is a top candidate for the company's new _____.
A. board of directors position

B. values specialist
C. ethical dilemma watchdog
D. decision tree manager
E. ethics officer
An ethics officer is someone trained about matters of ethics in the workplace, particularly about
resolving ethical dilemmas.
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Topic: Ethics officer
87. A decision tree is ____.
A. a structure of problem-solving ideas, with its roots based on the organization's mission
B. the hierarchy that must be followed when getting decisions approved
C. a graph of decisions and their possible consequences
D. a location used by Chinese philosopher Confucius in times of intense pressure
E. an organization's decision network
A decision tree is a graph of decisions and their possible consequences; it is used to create a plan to
reach a goal. Decision trees are used to aid in making decisions.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Topic: Decision tree
88. Is the proposed action legal? If yes, does the proposed action maximize shareholder value? If yes, is the
proposed action ethical? If no, would it be ethical not to take the proposed action? These are four
questions that managers of all organizations should ask when confronted with a decision on an action
according to _____.
A. Maslow's hierarchy of needs

B. the stakeholder's value statement
C. Frank Gilbreth's code of ethical conduct
D. Bagley's ethical decision tree
E. the Sarbanes-Oxley Act of 2002
According to Bagley's ethical decision tree, when confronted with any proposed action for which a
decision is required, a manager should ask the following questions: (1) Is the proposed action legal? (2)
If yes, does the proposed action maximize shareholder value? (3) If yes, is the proposed action ethical?
(4) If no, would it be ethical not to take the proposed action? (See Figure 7.4.)
AACSB: Ethics
Blooms: Understand
89. Patty, the CEO of an oil drilling company, and her top management team recently discovered that their
facilities are damaging an Asian beach and the local wildlife. They understand that they need to decide
if temporarily closing or not closing the facility is unethical. They then consider the four questions: Is
not temporarily closing the facility legal? If yes, does this proposed action maximize shareholder value?
If yes, is not temporarily closing the facility ethical? If no, would it be ethical not to take the proposed
action? These are suggested questions according to _____.
A. Bagley's ethical decision tree

B. Maslow's hierarchy of needs
C. the stakeholder's value statement
D. Frank Gilbreth's code of ethical conduct
E. the Sarbanes-Oxley Act of 2002
According to Bagley's ethical decision tree, when confronted with any proposed action for which a
decision is required, a manager should ask the following questions: (1) Is the proposed action legal? (2)
If yes, does the proposed action maximize shareholder value? (3) If yes, is the proposed action ethical?
(4) If no, would it be ethical not to take the proposed action? (See Figure 7.4.)
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
90. The decision was made by BP and Halliburton executives regarding not taking action with the oil well
blowout preventer that experts believe would have prevented the Deepwater Horizon oil rig explosion
and fire off the coast of Louisiana, since company management believed that there would be no great
negative consequences as a result of their decision. This is an example of ___.
A. satisficing
B. panic
C. the curse of knowledge
D. relaxed avoidance
E. relaxed change
In relaxed avoidance, a manager decides to take no action in the belief that there will be no great
negative consequences.
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 07-05 Trying to be rational isn't always easy. What are the barriers?
Topic: Decision making barriers
91. Dwight, a hotel general manager, is having serious problems—a substance abuse issue—with one of his
housekeeping employees. He knows that because of the seriousness of the issue he needs to talk with the
employee. However, his assistant manager asks Dwight if he would like him to deal with it. Dwight
knows this is not the best option, but agrees, knowing it is the easy way out. This is an example of
_____.
A. relaxed avoidance
B. relaxed change
C. defensive avoidance
D. panic
E. intuition
In relaxed change, a manager realizes that complete inaction will have negative consequences but opts
for the first available alternative that involves low risk.
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
92. With defensive avoidance, a manager can't find a good solution and follows by ____.
A. doing nothing
B. doing anything to get rid of the problem
C. choosing the first available alternative that involves low risk
D. procrastinating, passing the buck, or denying the risk of any negative consequences
E. perhaps getting the police or legal authorities involved
In defensive avoidance, a manager can't find a good solution and follows by (1) procrastinating, (2)
passing the buck, or (3) denying the risk of any negative consequences.

Blooms: Remember
Difficulty: 1 Easy
93. Ace Manufacturing has high turnover continually due to issues with the corporate office. Paul, the plant
manager, is frustrated and cannot find a solution to stop it. At first he offered raises to many of the good
employees who were leaving, but after a while, Paul started blaming those who were leaving, saying,
"they are poor-quality employees and they are to blame for leaving." Paul is engaged in ____.
A. panic
B. relaxed change
C. blind avoidance
D. defensive avoidance
E. delayed change
In defensive avoidance, a manager can't find a good solution and follows by (1) procrastinating, (2)
passing the buck, or (3) denying the risk of any negative consequences. Paul is passing the buck, hoping
someone else will make a decision.

Blooms: Apply
Difficulty: 3 Hard
94. Orlando, the manager of a camera store, believes that his store may be closed by corporate in the near
future, so he cannot sleep well at night and he is dealing with severe anxiety, irritability, and has been ill
several times this month. Several times Orlando has missed important details in his job, and he almost
got in an automobile accident this morning. Orlando is experiencing ____.
A. panic
B. management by avoidance
C. inward attack
D. blind avoidance
E. an outer defensive avoidance
In panic, a manager is so frantic to get rid of the problem that he or she can't deal with the situation
realistically. Troubled by anxiety, irritability, sleeplessness, and even physical illness, if you're
experiencing this reaction, your judgment may be so clouded that you won't be able to accept help in
dealing with the problem or to realistically evaluate the alternatives.

Blooms: Apply
Difficulty: 3 Hard
95. How high priority is this situation? How believable is the information about the situation? How quickly
must I act on the information about the situation? These are three questions concerning ways to evaluate
_____.
A. outcomes, credibility, ethics

B. priorities, reliability, service
C. analytics, heuristics, credibility
D. importance, credibility, urgency
E. profitability, reliability, efficiency
Three ways to help you decide whether to decide are to evaluate the following: (1) Importance: "How
high priority is this situation?" (2) Credibility: "How believable is the information about the situation?"
(3) Urgency: "How quickly must I act on the information about the situation?"

Blooms: Understand
96. Gregory was talking with Tom, his assistant manager, saying, "When I make a decision on which
employee to pick to do a project, I use three simple factors, which I call my decision making "rules of
thumb." I consider their attitude and knowledge, and how hard they work." Gregory's rules of thumb,
which he uses in decision making, are known as _____.
A. thought steps
B. decision steps
C. planning model
D. the domino effect
E. heuristics
Heuristics are rules of thumb, or strategies, that simplify the process of making decisions.

Blooms: Apply
Difficulty: 3 Hard
Topic: Heuristics
97. Readily available information may not present a complete picture of a situation due to ____.
A. availability bias
B. information bias
C. the representativeness effect
D. anchoring and adjustment bias
E. confirmation bias
Availability bias—managers use information readily available from memory to make judgments.
Managers tend to give more weight to more recent behavior. This is because of the availability bias,
whereby managers use information readily available from memory to make judgments.

Blooms: Understand
Topic: Heuristics
98. When Dave, the sales manager, is deciding on who will train the new sales trainee, he tries not to look at
just the recent sales numbers but also checks past sales reports to determine who is the most productive.
This way he is not affected by the ______ bias.
A. sunk-cost
B. adjustment
C. representativeness
D. availability
E. escalation of commitment
Availability bias comes from managers using information readily available from memory to make
judgments. Dave is reviewing past sales reports, not relying on his memory, to avoid availability bias.

Blooms: Apply
Difficulty: 3 Hard
Topic: Heuristics
99. Paul, the store manager, recently had to fire Sue, an employee who graduated from North College. He
felt that Sue was not well trained at her school. So when Steven, also a graduate from North College,
applied for Sue's old position, he did not want to consider hiring him, feeling Steven also probably did
not receive the proper training. Paul was affected by _____ bias.
A. blind
B. training
C. confirmation
D. representativeness
E. adjustment
Representativeness bias is the tendency to generalize from a small sample or a single event. The bias
here is that just because something happens once, that doesn't mean it is representative, or that it will
happen again or will happen to you.

Blooms: Apply
Difficulty: 3 Hard
Topic: Heuristics
100. When people seek information to support their point of view and discount data that do not, this is
______ bias.
A. blind
B. overconfidence
C. confirmation
D. representativeness
E. framing
Confirmation bias is when people seek information to support their point of view and discount data that
do not.

Blooms: Remember
Difficulty: 1 Easy
Topic: Heuristics
101. Malik and his managers spent a large sum of money on the new training program, and they feel that
there has been little improvement as a result of the investment. The training is scheduled to continue for
two more months, and Malik feels that with all the money already spent on the project, it is too costly to
simply abandon it. This is known as ______.
A. blind bias
B. a training trap
C. confirmation bias
D. sunk-cost bias
E. a catch-22 effect
The sunk-cost bias, or sunk-cost fallacy, is when managers add up all the money already spent on a
project and conclude it is too costly to simply abandon it. Most people have an aversion to "wasting"
money. Especially if large sums have already been spent, they may continue to push on with an iffy-
looking project to justify the money already sunk into it.

Blooms: Apply
Difficulty: 3 Hard
Topic: Heuristics
102. Phillip and Meg are selling their home. They listed their house three months ago at an extremely high
selling price, a price they randomly chose. They do not want to come down on their price to reflect what
the marketplace shows their home is really worth. This is an example of ______.
A. blind bias
B. ego bias
C. confirmation bias
D. sunk-cost bias
E. anchoring and adjustment bias
Anchoring and adjustment bias is the tendency to make decisions based on an initial figure. Managers
will often give their employees a standard percentage raise in salary, even though the raise may be
completely out of alignment with what other companies are paying for the same skills. This is an
instance of the anchoring and adjustment bias, the tendency to make decisions based on an initial figure.

Blooms: Apply
Difficulty: 3 Hard
Topic: Heuristics
103. The predisposition in which people's subjective confidence in their decision making is greater than their
objective accuracy is ____.
A. confidence bias
B. overconfidence bias
C. hindsight bias
D. predisposition bias
E. the tunnel vision effect
Overconfidence bias is the bias in which people's subjective confidence in their decision making is
greater than their objective accuracy. For instance, with experienced investment advisers whose
financial outcomes simply depended on luck, behavioral psychologist Daniel Kahneman found "the
illusion of skill is not only an individual aberration; it is deeply ingrained in the culture of the industry."

Blooms: Remember
Difficulty: 1 Easy
Topic: Heuristics
104. In the political ads for Representative Joe Smith, the Democratic candidate, he is portrayed by the
Republican-sponsored ads as being dishonest and poor at his job. Yet, the ads for Joe Smith, which are
paid for by the Democratic supporters, describe him as being caring, honest, and a hard worker. The
sponsors of these advertisements know that ads can affect whom voters choose on Election Day. This
tendency of decision makers, the voters in this case, to be influenced by how a situation or problem is
presented to them is known as ____.
A. framing bias
B. stirring the waters
C. goal displacement
D. overconfidence bias
E. the fog effect
Framing bias is the tendency of decision makers to be influenced by the way a situation or problem is
presented to them. For instance, customers have been found to prefer meat that is framed as "85% lean
meat" instead of "15% fat," although of course they are the same thing.

Blooms: Apply
Difficulty: 3 Hard
Topic: Framing effects
105. Peter, the owner, is even more committed to making the used copier, which he recently purchased, work
even though it keeps jamming and people have been telling him about other problems they have been
having with it. Peter is affected by ______.
A. the framing effect

B. the narrow focus bias
C. the anchoring and commitment bias
D. the escalation of commitment bias
E. the fog effect
You need to be aware of the escalation of commitment bias, whereby decision makers increase their
commitment to a project despite negative information about it.

Blooms: Apply
Difficulty: 3 Hard
Topic: Heuristics
106. The prospect theory suggests that ____.
A. decision makers are influenced by the way a situation or problem is framed

B. decision makers have too much confidence in their own abilities
C. decision makers tend to make judgments based on an initial impression
D. decision makers can't abandon an idea that costs too much money
E. decision makers find the notion of an actual loss more painful than giving up the possibility of a gain
Scholars have advanced what is known as the prospect theory, which suggests that decision makers find
the notion of an actual loss more painful than giving up the possibility of a gain. We see a variant of this
in the tendency of investors to hold on to their losers, but cash in their winners.

Blooms: Remember
Difficulty: 1 Easy
Topic: Heuristics
107. The tendency of people to view events as being more predictable than they really are known as _____.
A. framing bias
B. hindsight bias
C. sunk-cost bias
D. narrow focus bias
E. the fog effect
Hindsight bias is the tendency of people to view events as being more predictable than they really are.

Blooms: Remember
Difficulty: 1 Easy
Topic: Heuristics
108. Having a greater pool of knowledge, gaining different perspectives, gaining intellectual stimulation,
having a better understanding of decision rationale, and having a deeper commitment to the decision are
advantages of ____.
A. group decision making

B. deeper commitment to the decision
C. less thought required
D. a quicker decision
E. more flexibility in the final decision
Advantages of group decision making include (1) a greater pool of knowledge, (2) different
perspectives, (3) intellectual stimulation, (4) better understanding of decision rationale, and (5) deeper
commitment to the decision.

Blooms: Understand
Learning Objective: 07-06 How do I work with others to make things happen?
109. Goal displacement, satisficing, and groupthink are ____.
A. advantages of group decision making

B. disadvantages of individual decision making
C. disadvantages of group decision making
D. problems with synergy
E. a normal aspect of all groups
Disadvantages of group decision making include (1) groupthink, (2) satisficing, and (3) goal
displacement.

Blooms: Understand
110. Greg, Donna, and Paul are on the five-member Benefits Task Force that is researching options for the
new benefits package. Over lunch, Greg, Donna, and Paul decided that adding Choice Health Club is a
good idea, and that they plan on voting to agree to add it without ever researching and accurately
assessing the decision. This is an example of ____.
A. groupthink
B. heuristics
C. the Delphi technique
D. group marketing
E. goal displacement
Groupthink occurs when group members strive to agree for the sake of unanimity and thus avoid
accurately assessing the decision situation. Here the positive team spirit of the group actually works
against sound judgment.

Blooms: Apply
Difficulty: 3 Hard
111. Satisficing is the tendency of ____.
A. people to view events as being more predictable than they really are
B. decision makers to be influenced by the way a situation or problem is presented to them
C. a group to settle on a decision that is "good enough"
D. people to see events based on what has happened in the past
E. group members to agree for the sake of unanimity and thus avoid accurately assessing the decision
situation
Because most people would just as soon cut short a group meeting, the tendency is to seek a decision
that is "good enough" rather than to push on in pursuit of other possible solutions. Satisficing can occur
because groups have limited time, lack the right kind of information, or are unable to handle large
amounts of information.

Blooms: Remember
Difficulty: 1 Easy
Topic: Satisficing
112. The Safety Committee at Office Supply Mart was formed to help make the stores a safer place, and
some of the suggestions were going to be costly. However, when the vice president of accounting
announced the recent report on company profits were much lower than expected, a new secondary goal
was established to meet new profit expectations. Having to consider this new goal as a committee is an
example of ____.
A. goal bumping
B. groupthink
C. secondary placement
D. satisficing
E. goal displacement
Although the primary task of the meeting may be to solve a particular problem, other considerations
may rise. Goal displacement occurs when the primary goal is subsumed by a secondary goal.

Blooms: Apply
Difficulty: 3 Hard
113. Regarding decision making, research has found that ____.
A. individuals acting alone make better decisions than groups

B. group decisions seldom are of the quality of individual decisions
C. groups tend to be less productive than the best individuals working on projects
D. groups make better decisions than most individuals acting alone
E. neither individuals acting alone nor groups make better-quality decisions
Although groups don't make as high-quality decisions as the best individual acting alone, research
suggests that groups make better decisions than most individuals acting alone.

Blooms: Understand
114. When it comes to decision making, it is accurate to say that groups _____.
A. take less time to make decisions, and their decision-making accuracy is higher
B. take less time to make decisions, and the larger the group, lower the quality of the decision
C. have higher decision-making accuracy when group members know a good deal about the relevant
issues
D. that are larger make higher-quality decisions
E. take less time to make decisions, and are more confident about their choices than individuals are
Groups take more time to make decisions; the larger the group, the lower the quality of the decision;
groups are more confident about their judgments and choices than individuals are; and decision-making
accuracy is higher when group members know a good deal about the relevant issues.

Blooms: Remember
115. Roberta, the computer department manager at IT Mart, is considering if she should use a group to
develop a plan to help employees sell extended warranties on technology sales. Roberta should consider
having the group make this decision if ______.
A. time is of the essence

B. it will increase acceptance of the plan
C. group members are not knowledgeable and need to learn more
D. group members are overly confident about decision making
E. the decision making group is exceptionally large
Managers should use practical guidelines to determine if group decision making will be helpful. These
guidelines recommend use of groups when it can increase quality, when it can increase acceptance, or
when it can increase development (see Table 7.3). If people can be developed through their
participation, managers may want to involve those whose development is most important.

Blooms: Apply
Difficulty: 3 Hard
116. A technique used to help groups generate multiple ideas and alternatives for solving problems is known
as _____.
A. groupthink
B. Big Data
C. MBO
D. brainstorming
E. framing
Brainstorming is a technique used to help groups generate multiple ideas and alternatives for solving
problems.

Blooms: Understand
117. The Delphi technique is a group process that uses physically dispersed experts who fill out
questionnaires to ____.
A. form a diversity plan

B. anonymously generate ideas
C. cut costs and increase efficiency
D. develop a synergy agenda
E. generate sales
The Delphi technique is a group process that uses physically dispersed experts who fill out
questionnaires to anonymously generate ideas; the judgments are combined and in effect averaged to
achieve a consensus of expert opinion.

Blooms: Remember
Difficulty: 1 Easy
118. Doug, a new manager, commented to a friend, "I am excited about different aspects of my new job. The
company computers have entered the field of decision making. The network not only collects
information more quickly, but the system also reduces the roadblocks when I need a group consensus."
Doug is referring to _____.
A. the Delphi technique

B. collaborative management
C. brainwriting
D. a computer-aided decision-making system
E. brainstorming
As in nearly every other aspect of business life, computers have entered the area of decision making,
where they are useful not only in collecting information more quickly but also in reducing roadblocks to
group consensus.

Blooms: Apply
Difficulty: 3 Hard
119. A computer-based information system that provides a flexible tool for analysis and helps managers
focus on the future is known as a(n) _____.
A. IT synergy web
B. collaborative IT system
C. group-web
D. flexible computing system
E. decision support system
A decision support system is a computer-based information system that provides a flexible tool for
analysis and helps managers focus on the future.

Blooms: Remember
Difficulty: 1 Easy
Topic: Technology

Chapter 7 Multiple Choice Questions

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Multiple Choice Questions

AACSB: Analytical Thinking

57. A choice made from among available alternatives is a ____.

A decision is a choice made from among available alternatives.

AACSB: Analytical Thinking

A. employee relations model

AACSB: Knowledge Application

A. employee relations model

AACSB: Analytical Thinking

AACSB: Knowledge Application

A. take longer to make decisions because of their busy lives

AACSB: Analytical Thinking

A. Is it efficient and how will it affect our marketing strategy?

AACSB: Analytical Thinking

A. do more research to look at types of training

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Knowledge Application

Difficulties that inhibit the achievement of goals are known as problems.

AACSB: Analytical Thinking

AACSB: Analytical Thinking

A. rational decision making

AACSB: Knowledge Application

A. rational decision making

AACSB: Analytical Thinking

AACSB: Knowledge Application

AACSB: Knowledge Application

AACSB: Knowledge Application

AACSB: Knowledge Application

AACSB: Knowledge Application

AACSB: Analytical Thinking

AACSB: Knowledge Application

AACSB: Analytical Thinking

AACSB: Knowledge Application

A. location on the introvert/extrovert scale

AACSB: Analytical Thinking

AACSB: Analytical Thinking

A. has a high tolerance for ambiguity

AACSB: Knowledge Application

AACSB: Knowledge Application

AACSB: Knowledge Application

AACSB: Knowledge Application

AACSB: Knowledge Application

A. board of directors position

87. A decision tree is ____.

A. Maslow's hierarchy of needs

A. Bagley's ethical decision tree

AACSB: Analytical Thinking

AACSB: Knowledge Application

AACSB: Knowledge Application

A. outcomes, credibility, ethics

AACSB: Analytical Thinking

AACSB: Knowledge Application

AACSB: Analytical Thinking

AACSB: Knowledge Application

AACSB: Knowledge Application

AACSB: Analytical Thinking

AACSB: Knowledge Application

AACSB: Knowledge Application

AACSB: Analytical Thinking

AACSB: Knowledge Application

A. the framing effect

AACSB: Knowledge Application

106. The prospect theory suggests that ____.