Concept of bounded rationality

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Reference no: EM133215229

Assignment:

Question 1. Anna is a manager at a franchise restaurant. She is under a lot of pressure from headquarters to increase her monthly profits, but she is not sure what would be the solution. She decides to use a rational decision-making model to determine the best path for a solution. The problem has already been defined by headquarters. Now Anna has to:

a. Generate alternative solutions

b. Evaluate the alternative solutions

c. Identify additional opportunities

d. Evaluate the solution

Question 2. Overlooking unethical behavior that is performed by the supplier of a well-known company is likely an example of:

a. Slippery slope

b. Undervaluing outcomes

c. Ill-conceived goals

d. Indirect blindness

Question 3. Looking to purchase a vehicle, you have completed extensive research on different models. In the beginning of the negotiation process the sales person informs you of the vehicle's full sticker price. The sales person is hoping to benefit for which of the following decision-making biases?

a. Confirmation bias

b. Distortion of consequences bias

c. Anchoring bias

d. Endowment bias

Question 4. Last month, Mary began showing up a few minutes late to work. Since her manager has said nothing about this she figured it was no big deal so she didn't make any adjustments on her time sheets. She has now started to show up 15-20 minutes late for work several times each week, and she continues to record her work hours on her timesheet as if she had arrived on time. Her behavior is an example of which ethical challenge:

a. Slippery slope

b. Motivated blindness

c. Undervaluing outcomes

d. Utilitarianism

Question 5. A new software company has agreements with several large companies to license their software. After many months of development, the new software has been released and sold. In recent weeks, two companies have asked about the software's security features since their internal reports show some potential for hackers to access company emails. Top management is less certain that there is a problem and continues to push for the software to be sold in order to reach their sales goals. This is an example of which ethical barrier:

a. Ill-conceived goals

b. Indirect blindness

c. Motivated blindness

d. Slippery slope

Question 6. Which of the following biases is likely to be evident in entrepreneurs who start new ventures, despite the high rate of new business failures for similar ventures?

a. Representativeness

b. Overconfidence

c. Escalation of commitment

d. Framing

e. Confirmation

Question 7. According to the concept of bounded rationality, which of the following factors prevent decision-makers from being truly rational?

a. They have complete information about alternatives and consequences.

b. System 2 thinking when system 1 thinking is needed.

c. People tend to overthink decisions.

d. Time limitations which spur the need to satisfice rather than optimize decisions.

Question 8. First Bank was fined millions of dollars for fraud when it was found to have created fraudulent customer accounts for their clients. Top management at the bank had created a quota system that incentivized bank managers and employees to cross-sell multiple financial products to their clients. Failure to meet those quotas resulted in severe repercussions, including termination in some cases. To meet these expectations, hundreds of fake accounts were created. This example best describes which ethical challenge?

a. Ill conceived goals

b. Indirect blindness

c. Undervaluing outcomes

d. Utilitarianism

Question 9. Intuitive decision making is most likely to be appropriate in all of the following situations EXCEPT:

a. When the decision-maker has deep expertise on the matter.

b. When the stakes are high.

c. When clear decision criteria are lacking.

d. When decisions need to be made quickly.

Question 10. Van recently inherited his favorite uncle's summer home six months ago. With no need for the summer home he decided to sell it. Despite his research on its market value, he has priced the home at 30% above market value given his attachment to his uncle and associated memories about the summer home. This would be an example of which cognitive bias?

a. Endowment effect

b. Controllability bias

c. Confirmation bias

d. Sunk cost fallacy

Reference no: EM133215229

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