Deck 10: Judgment, Decision Making and Problem Solving

Question 1

Which of the following is considered a rational, logical approach to decision-making and is rooted in economics and mathematics?

A) Relying on heuristics
B) Calculating expected utility
C) Reacting to sunk costs
D) Calculating expected value
E) Flipping a two-headed coin

Answer 1

D

Question 2

While walking down the street, Buford is approached by a stranger, who makes the following offer: "Let's flip a coin. If it's heads, I'll give you $1,000. If it's tails, you give me your wristwatch." Buford figures that his wristwatch is only worth $600, but it was a gift from his grandmother that he cherishes, so he decides not to accept the stranger's offer. Buford's decision can be best characterized as based on:

A) The sunk cost effect
B) The availability bias
C) The gambler's fallacy
D) Expected value
E) Expected utility

Answer 2

E

Question 3

One disadvantage of using expected utility as a tool for making decisions is that it can only be applied in situations involving monetary values.

Answer 3

False

Question 4

When trying to decide who to hire, Gladys, a personnel manager, subjectively assesses how important several traits are. She figures that, on a scale of 1-10, competence is 9, tidiness is a 6, and warmth is a 5. Using those numbers, she rates several job candidates and hires the "best" one. Which of the following best characterizes the tool Gladys used to make her decision:

A) Expected value
B) Expected utility
C) Bounded rationality
D) The availability bias
E) Intuition

Question 5

_______________ are rules of thumb, or shortcuts people use to make decisions.

A) Analytics
B) Logic machines
C) Sunk costs
D) Heuristics
E) Groupthinks

Question 6

The notion of bounded rationality suggests that people are not innately logical and, instead, rely on mental shortcuts to make decisions.

Question 7

Prospect theory argues that people place a higher value on not losing something than they do on gaining something.

Question 8

Which of the following occurs as a result of people's aversion to losses?

A) The sunk cost effect
B) The availability heuristic
C) The representative heuristic
D) The illusory superiority effect
E) Hindsight bias

Question 9

Some time ago, Martha invested half of everything she owns into starting a new hamster-sitting business. After one year, however, the company is losing big time! That said, Martha decides that she has invested too much to quit now. She sells her car, and then her house in a desperate attempt to save her company. As a result, all evidence suggests that Martha has fallen victim to ____________.

A) Hindsight bias
B) Confirmation bias
C) The conjunction fallacy
D) The sunk cost effect
E) Illusory correlation

Question 10

Micky is considering a trip to Las Vegas and is trying to decide whether to drive or fly there. The previous week he binge-watched Lost, Sully, and Castaway, all of which featured plane crashes. As a result, he decides to drive to Vegas. As a result, Micky has fallen victim to __________________.

A) Hindsight bias
B) Confirmation bias
C) The availability heuristic
D) The sunk cost effect
E) Illusory correlation

Question 11

According to the text, the fallacy known as a hasty generalization stems from:

A) Hindsight bias
B) Confirmation bias
C) The availability heuristic
D) The sunk cost effect
E) Illusory correlation

Question 12

The gambler's fallacy stems from which of the following?

A) Hindsight bias
B) Confirmation bias
C) The availability heuristic
D) The sunk cost effect
E) The representativeness heuristic

Question 13

Fifi and Mimi are playing a coin-flipping game. Whenever the coin lands on heads, Fifi wins $1. If tails are flipped, Mimi wins $1. For the first 20 flips, the coin has landed on heads. "Time to switch," Fifi says, believing that tails are due to win. "You have heads, and I'll take tails." After switching, the coin, once again, lands on heads. In this example, Fifi has fallen victim to _____________.

A) The illusory superiority effect
B) Optimism bias
C) The gambler's fallacy
D) The sunk cost effect
E) The representativeness heuristic

Question 14

The representative heuristic leads us to misjudge random events.

Question 15

Todd's horoscope predicted that he would soon travel to a faraway land. That night, while playing the board game Risk, he ended up capturing territory on the Asian continent, a faraway land. He smiles knowingly. Todd's example illustrates:

A) Hindsight bias
B) Confirmation bias
C) The availability heuristic
D) The sunk cost effect
E) The representativeness heuristic

Question 16

Which of the following biases leads people to resist policies and behaviors that are new?

A) Hindsight bias
B) Confirmation bias
C) Status quo bias
D) Anchoring bias
E) Media bias

Question 17

Tammy and Peter are asked to consider their addresses (note: Tammy's address is 6868 Sycamore Lane. Peter's address is 1400 Center Street), and then to estimate the distance between their homes. Tammy guesses 6000 miles. Peter guesses 2000 miles. This example best illustrates _________________.

A) The anchoring heuristic
B) Confirmation bias
C) The availability heuristic
D) The sunk cost effect
E) The representativeness heuristic

Question 18

Suzette just purchased a fitness center membership for a whopping $3,000. But that's okay, because she is certain that she will lose weight, meet friends, and get in great shape. This example best illustrates ________________.

A) Hindsight bias
B) Confirmation bias
C) The availability heuristic
D) Optimism bias
E) The "hot hand" fallacy

Question 19

Which of the following is not a characteristic of groups that are prone to groupthink:

A) Overconfidence
B) Close-mindedness
C) Intolerance for disagreement within the group
D) Social loafing
E) All of the above are characteristics of groups prone to groupthink

Question 20

Assigning someone the role of devil's advocate is an ineffective way to prevent groupthink because it leads to hostility at best and anchoring effects at worst.

Question 21

Social loafing refers to people's tendency to use the opinions of people they admire as a shortcut when making difficult decisions.

Question 22

Which of the following is NOT a way to reduce social loafing?

A) Get people to identify with the group
B) Hold people accountable for their work
C) Be authoritarian in your leadership style
D) Build rapport within the group

Question 23

According to the textbook, intuition is a faulty decision-making tool and, thus, it should be avoided.

Question 24

According to your textbook, the first step in complex problem-solving should be to:

A) Define the problem
B) Analyze the problem
C) Generate possible solutions
D) Establish criteria to determine what standards must be met in order for the problem to be considered resolved

Question 25

Expected value and expected utility are often referred to as normative or prescriptive models because they suggest how decisions should be made, while the notion of bounded rationality is descriptive because it suggests how decisions are made.

Question 26

A cognitive bias that involves overestimating one's strengths and underestimating one's weaknesses is:

A) Gambler's fallacy
B) Prospect theory
C) Optimism bias
D) Confirmation bias
E) Illusory superiority

Question 27

Confirmation bias refers to a tendency to:

A) Attend to information that contradicts our point of view
B) Attend to information that reinforces our point of view
C) Do the opposite of what someone wants us to do
D) Seek out information that disconfirms our point of view

Question 28

Consider the following description: Linda is 31 years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in anti-nuclear demonstrations. Which inference about Linda would a person who committed a conjunction fallacy be most likely to draw?

A) Linda is a bank teller.
B) Linda is active in the feminist movement.
C) Linda is a bank teller who is active in the feminist movement.
D) Linda was a philosophy major.
E) Linda is so outspoken that she has trouble making friends.

Question 29

Think of a problem that you are facing at home or at work. Based on the steps for problem-solving presented in you book, discuss how you might go about addressing the problem.

Question 30

What is meant by the term "bounded rationality"? How does it apply to decision-making? Provide an example of a time that you demonstrated bounded rationality.

Question 31

What role do emotions and intuition play in decision-making? Should we ignore our hunches? Why or why not?

Question 32

Compare and contrast two of the biases/heuristics discussed in the text. Provide examples of times that you succumbed to such biases/heuristics.

Question 33

Compare and contrast expected value to expected utility. How can they be useful when making decisions? Are there weaknesses to these approaches? If so, please discuss.

Question 34

Think of a "dumb" decision that you made in the past. Based on what you've learned in this chapter, explain the type(s) of error(s) you made in problem solving or decision making. Explain what you would do differently in a similar situation in the future.