Question 1

Decision makers construct simplified models that extract the essential features from problems without capturing all their complexity. That is, they operate within the confines of ________.
A) optimal decision making
B) intuitive decision making
C) bounded rationality
D) rationality
E) common sense

Accepted Answer

Bounded rationality refers to decision makers constructing simplified models that extract the essential features from problems without capturing all their complexity. This is because decision makers have limited cognitive resources, and making decisions that are completely rational and exhaustive is often not feasible. Optimal decision making and rationality assume that decision makers can gather and process all information relevant to their decisions, which is not always possible. Intuitive decision making involves relying on gut feelings and instinct, which may not always lead to the best decision. Common sense is also not always reliable and may be influenced by biases and heuristics. Therefore, C is the only choice that accurately describes this concept.

Question 2

A satisficing decision maker ________.
A) looks for complete information
B) seeks solutions that are satisfactory and sufficient
C) identifies all the relevant options to solutions
D) analyzes all the possible options in an unbiased manner
E) chooses the optimal solution

Accepted Answer

A satisficing decision maker looks for solutions that are satisfactory and sufficient rather than aiming for the optimal solution. They make decisions based on the available information and options within a reasonable amount of time and effort. They prioritize finding a feasible solution rather than the best possible one. Therefore, option B accurately defines a satisficing decision maker.

Question 3

Which of the following statements is true regarding the hindsight bias?
A) It indicates a tendency to fixate on initial information and fail to adequately adjust for subsequent information.
B) It indicates that we seek out information that reaffirms our past choices, and we discount information that contradicts them.
C) It indicates our tendency to base judgments on information readily available.
D) It indicates our tendency to believe falsely, after the outcome is known, that we would have accurately predicted it.
E) It indicates our tendency to draw a general impression about an individual on the basis of a single characteristic, such as intelligence.

Accepted Answer

The hindsight bias refers to our tendency to believe, falsely, that we would have accurately predicted an outcome after the fact. It is a psychological phenomenon in which individuals tend to think that an event was more predictable than it actually was before the event took place. This bias can be seen in situations where people say "I knew it all along" or "I could have told you that would happen."

Question 4

Which of the following types of biases in decision making represents the tendency of decision makers to prefer a sure thing?
A) hindsight bias
B) bounded rationality
C) escalation of commitment
D) selective perception
E) risk aversion

Accepted Answer

Risk aversion refers to the tendency of decision makers to prefer a sure thing rather than take a risk on an uncertain outcome.

Question 5

The ________ bias can explain why managers doing performance appraisals give more weight to recent employee behaviors than to behaviors of 6 or 9 months earlier.
A) self-serving
B) availability
C) distinction
D) confirmation
E) hindsight

Accepted Answer

The availability bias refers to the tendency to give more weight to information that is most easily available or most recently occurred, which can explain why managers may give more weight to recent employee behaviors in performance appraisals.

Question 6

Which of the following is an example of a shortcut used in judging others?
A) hindsight bias
B) confirmation bias
C) stereotyping
D) framing effect
E) availability bias

Accepted Answer

Stereotyping is a shortcut used in judging others by categorizing them into specific groups based on preconceived notions or generalizations, rather than taking the time to understand their individual traits or characteristics.

Question 7

In the real world, what do people typically do when making a decision about a problem?
A) follow the rational decision-making model
B) seek the optimal decision
C) obtain complete information about all possible alternatives before making a decision
D) evaluate all the possible options in an unbiased and objective manner
E) find a satisfactory and sufficient solution

Accepted Answer

In the real world, people typically use bounded rationality while making decisions. It involves finding a satisfactory and sufficient solution that meets their needs rather than seeking the optimal decision. People rarely have complete information about all possible alternatives, and evaluating options in an unbiased and objective manner is challenging due to cognitive biases. Therefore, finding a solution that works well enough is a more practical approach to decision-making.

Question 8

The ________ bias is a tendency to fixate on initial information and fail to adequately adjust for subsequent information.
A) hindsight
B) confirmation
C) anchoring
D) availability
E) self-serving

Accepted Answer

Anchoring bias refers to the tendency of relying too heavily on the initial information when making subsequent judgments or decisions.

Question 9

________ refers to staying with a decision even when there is clear evidence it's wrong.
A) Escalation of commitment
B) Hindsight bias
C) Satisficing
D) Selective perception
E) Availability bias

Accepted Answer

Escalation of commitment refers to the tendency to continue investing time, money, or effort into a decision or project, even in the face of mounting evidence that it's not going to be successful. This can often be driven by the desire to avoid admitting failure, or to recoup sunk costs.

Question 10

Which of the following types of biases indicates that we selectively seek out information that reaffirms our past choices, and we discount information that contradicts them?
A) overconfidence bias
B) availability bias
C) confirmation bias
D) anchoring bias
E) hindsight bias

Accepted Answer

Confirmation bias is the tendency to favor information that confirms our preexisting beliefs or values while ignoring or discrediting information that goes against them. This can lead to a distorted perception of reality and prevent us from making fully informed decisions.

Question 11

The group later learns that the drug will be very expensive to manufacture, but the group decides to continue the project so that all the resources already spent on it will not have been wasted. This is an example of ________.
A) availability bias
B) hindsight bias
C) escalation of commitment
D) satisficing
E) fundamental attribution error

Accepted Answer

This situation exemplifies escalation of commitment, where a group continues to invest resources in a project even when the costs outweigh the benefits, to avoid feeling like the previous investments were wasted.

Question 12

The ________ bias is typically associated with negotiation.
A) confirmation
B) distinction
C) anchoring
D) hindsight
E) availability

Accepted Answer

The anchoring bias refers to the tendency for people to rely too heavily on the first piece of information presented (the "anchor") when making decisions or negotiating. In negotiation, this can lead to being too rigid in one's position and being unwilling to consider alternatives outside of the initial proposal.

Question 13

In a study conducted by Amos Tversky and Daniel Kahneman, the two showed that when asked to guess the percentage of African nations which are members of the United Nations, people who were first asked "Was it more or less than 10%?" guessed lower values (25% on average) than those who had been asked if it was more or less than 65% (45% on average). This example best represents the ________
A) anchoring bias
B) contrast effect
C) confirmation bias
D) availability bias
E) hindsight bias

Accepted Answer

This example best represents the anchoring bias, where people's judgment is affected by the initial information or anchor they are given. In this case, the different anchor values (10% vs 65%) influenced the participants' guesses, resulting in lower or higher estimates.

Question 14

________ is a highly complex and highly developed form of reasoning that is based on years of experience and learning.
A) Contrast effect
B) Halo effect
C) Intuition
D) Selective perception
E) Emotional intelligence

Accepted Answer

Intuition is a highly complex and highly developed form of reasoning that is based on years of experience and learning. It uses stored knowledge, expertise, and patterns recognition to make judgments and decisions quickly and effectively, without conscious reasoning. Intuition is often used by professionals such as doctors, firefighters, and military personnel who need to make quick decisions in high-pressure situations.

Question 15

Tom knows that the title insurance company made a mistake on his property title. Because of their mistake, his neighbor now has access to an easement road through the 25 acres located at the back of his property. He can't use the acreage for pasture, because his neighbor insists that the gates remain open. The title company has offered a $40,000 settlement. Tom has decided to take the settlement rather than possibly lose in court if he were to sue the title company for more money. Tom's decision is based on ________.
A) hindsight bias
B) availability bias
C) risk aversion
D) randomness error
E) escalation of commitment

Accepted Answer

Tom's decision to take the settlement rather than risk losing in court indicates that he is risk-averse. He is prioritizing avoiding the possibility of a negative outcome (losing in court and potentially receiving less than the settlement offer) over the possibility of a positive outcome (receiving more than the settlement offer in court). Hindsight bias, availability bias, randomness error, and escalation of commitment do not apply to Tom's situation.

Question 16

Which of the following terms best represents the tendency of people to base their judgments on information that they can easily obtain?
A) representative bias
B) availability bias
C) confirmation bias
D) anchoring bias
E) escalation of commitment

Accepted Answer

The availability bias is the tendency to rely on information that is easiest to recall or readily available in making judgments or decisions. This can lead to overestimating the frequency or importance of certain events or information simply because it is more easily accessible in memory.

Question 17

Which of the following statements is true regarding the rational decision-making model?
A) The rational decision-making model takes into consideration the limited information-processing capability of individuals.
B) Rational decision-making models involve constructing simplified models that extract the essential features from problems without capturing all their complexity.
C) The rational decision-making model involves satisficing; seek solutions that are satisfactory and sufficient.
D) The rational decision-making model assumes that an individual is able to identify all the relevant options in an unbiased manner.
E) The rational decision-making process is an unconscious one created from distilled experience.

Accepted Answer

The rational decision-making model assumes that an individual is able to identify all the relevant options in an unbiased manner. This means that the decision-maker is assumed to have all relevant information available to them and can evaluate each option objectively. However, this assumption may not always hold true in practice.

Question 18

What form of decision making are you using if you decide to continue the project because you feel that the project has merit?
A) optimization
B) intuitive
C) rational
D) satisficing
E) bounded rationality

Accepted Answer

This decision-making process is based on intuition, or a gut feeling, rather than systematic analysis or objective criteria. It is not based on optimization, where the best possible outcome is pursued, or rational decision making, where information is gathered and analyzed to make the best decision. It is also not based on satisficing, where an acceptable solution is chosen, or bounded rationality, where limited time and resources constrain the decision-making process.

Question 19

We tend to accept at face value information that is consistent with our preconceived views, while we are critical and skeptical of information that challenges these views. This represents the ________ bias.
A) distinction
B) impact
C) hindsight
D) confirmation
E) self-serving

Accepted Answer

The confirmation bias refers to our tendency to seek out and accept information that confirms our beliefs while rejecting or discounting information that goes against our beliefs. It is a common cognitive bias that can lead to individuals being closed-minded and resistant to changing their views based on new evidence.

Question 20

While negotiating salary with your prospective employer, if you suggest an initial target salary of $55,000, your employer will consider $50,000 to $60,000 a reasonable range for negotiation, but if you mention $55,650, your employer is more likely to consider $55,000 to $56,000 the range of likely values for negotiation. In this example your employer is exhibiting the ________ bias.
A) availability
B) anchoring
C) hindsight
D) confirmation
E) impact

Accepted Answer

The employer is exhibiting the anchoring bias, which occurs when the employer is influenced by the initial suggestion (anchor) provided by the job candidate. In this scenario, the anchor was $55,000, which influenced the employer's perception of what is a reasonable range for negotiation. However, when the anchor was adjusted to a more precise number ($55,650), the employer's perception of the range of likely values also became more precise.

Quiz 5: Perception and Individual Decision Making

Decision makers construct simplified models that extract the essential features from problems without capturing all their complexity. That is, they operate within the confines of ________.

A satisficing decision maker ________.

Which of the following statements is true regarding the hindsight bias?

Which of the following types of biases in decision making represents the tendency of decision makers to prefer a sure thing?

The ________ bias can explain why managers doing performance appraisals give more weight to recent employee behaviors than to behaviors of 6 or 9 months earlier.

Which of the following is an example of a shortcut used in judging others?

In the real world, what do people typically do when making a decision about a problem?

The ________ bias is a tendency to fixate on initial information and fail to adequately adjust for subsequent information.

________ refers to staying with a decision even when there is clear evidence it's wrong.

Which of the following types of biases indicates that we selectively seek out information that reaffirms our past choices, and we discount information that contradicts them?

The group later learns that the drug will be very expensive to manufacture, but the group decides to continue the project so that all the resources already spent on it will not have been wasted. This is an example of ________.

The ________ bias is typically associated with negotiation.

________ is a highly complex and highly developed form of reasoning that is based on years of experience and learning.

Which of the following terms best represents the tendency of people to base their judgments on information that they can easily obtain?

Which of the following statements is true regarding the rational decision-making model?

What form of decision making are you using if you decide to continue the project because you feel that the project has merit?

We tend to accept at face value information that is consistent with our preconceived views, while we are critical and skeptical of information that challenges these views. This represents the ________ bias.