Quiz — Chapter 24: Decision-Making Under Uncertainty

25 questions. Multiple choice unless otherwise noted. Answer key at the end.

1. "Resulting" (Duke) refers to:

a) The process of evaluating outcomes before making a decision b) The cognitive error of judging decision quality by outcome quality rather than reasoning quality c) A technique for identifying the most likely result of a decision d) The tendency to focus on results rather than processes in management

2. The distinction between aleatory and epistemic uncertainty is:

a) Aleatory uncertainty can be reduced with more information; epistemic uncertainty cannot b) Epistemic uncertainty is about the future; aleatory uncertainty is about the past c) Aleatory uncertainty is fundamental/irreducible; epistemic uncertainty arises from lack of knowledge and can be reduced d) Aleatory uncertainty applies to individual decisions; epistemic uncertainty applies to organizational decisions

3. The availability heuristic (Tversky & Kahneman) causes errors because:

a) The most available examples are often the most representative ones b) Memorable and recent events are judged as more probable than base rates support c) Availability of information reduces rather than increases decision quality d) People prioritize information that is available over information that is relevant

4. In a well-known demonstration of anchoring, participants who spun a wheel landing on 65 (vs. 10) before estimating the percentage of African countries in the UN:

a) Showed no effect — the wheel spin was obviously random b) Estimated significantly lower percentages than the group who spun 10 c) Estimated significantly higher percentages than the group who spun 10 d) Were more accurate than the group who spun 10

5. The most accurate description of confirmation bias in decision-making is:

a) The tendency to confirm decisions publicly before private doubts are resolved b) Seeking, interpreting, and remembering information that confirms preexisting beliefs at every stage of information processing c) Requiring external confirmation before committing to a decision d) The preference for decisions that can be confirmed with quantitative data

6. The sunk cost fallacy involves:

a) Underestimating the costs of a future decision b) Overestimating the costs of abandoning a current course of action c) Allowing irretrievable past investments to influence forward-looking decisions d) Calculating the total cost of a project including overhead and indirect costs

7. Kahneman & Tversky's prospect theory finds that, compared to equivalent gains, losses are:

a) Evaluated similarly — cognitive impact is symmetric b) Approximately 2–2.5 times more impactful psychologically c) Less impactful for large amounts, but more impactful for small amounts d) More impactful only when the loss involves irreversible harm

8. Calibration in decision-making means:

a) Adjusting decisions to account for known cognitive biases b) The correspondence between stated confidence levels and actual accuracy rates c) Aligning decisions with organizational strategy and objectives d) Calibrating the weight given to different information sources

9. Gerd Gigerenzer's research on "fast and frugal" heuristics suggests that:

a) Simple decision rules are always inferior to complex analysis b) Simple decision rules are adaptive in domains with environmental regularities and can outperform complex algorithms with incomplete data c) Fast decisions are inherently less accurate than deliberate ones d) Heuristics are useful primarily for simple decisions; complex decisions always require analysis

10. Gary Klein's pre-mortem technique involves:

a) Analyzing previous failures before beginning a new project b) Imagining the decision has failed and working backward to identify what went wrong c) Consulting external experts before committing to a high-stakes decision d) Reviewing the decision criteria before the decision is made to prevent post-hoc rationalization

11. The primary mechanism by which groupthink produces poor decisions is:

a) Reducing the efficiency of group deliberation through excessive debate b) Causing group members to underperform relative to their individual capabilities c) Suppressing dissent and critical analysis through conformity pressure, producing premature convergence d) Introducing too many perspectives, making consensus difficult to achieve

12. The inside view vs. outside view distinction (Kahneman) refers to:

a) Internal vs. external stakeholder perspectives on a decision b) The inside view focuses on features of this specific situation (producing overconfidence); the outside view asks what base rates apply to situations like this c) Individual vs. organizational perspectives on risk d) Short-term vs. long-term considerations in decision-making

13. Philip Tetlock's research on superforecasters finds that unusually accurate forecasters share which practice?

a) Access to superior information sources not available to average forecasters b) Higher domain expertise than typical experts c) Disciplined probability thinking, active disconfirmation, and belief updating with new information d) Use of large computational models to aggregate data

14. According to prospect theory, people tend to be risk-averse in which domain?

a) Potential losses — they accept certain losses to avoid gambles b) Potential gains — they prefer a certain gain to a favorable gamble c) Both gains and losses equally d) High-probability events only

15. "Steelmanning" the opposition refers to:

a) Assembling the most compelling arguments for your preferred option b) Presenting an extreme version of the opposing position to make it easier to dismiss c) Constructing the strongest possible version of the opposing argument d) Using data and evidence to support your preferred position

16. The planning fallacy is most effectively corrected by:

a) Breaking the project into smaller components and estimating each individually b) Adding a percentage buffer to the original estimate c) Using outside-view reference class data (how long similar projects typically take) d) Consulting with team members to validate the timeline

17. Loss aversion explains which of the following behaviors?

a) Investors holding losing stocks too long, hoping to avoid realizing the loss b) Investors selling winning stocks too early, locking in gains before they disappear c) The tendency to prefer familiar options over novel ones d) Both a) and b)

18. Scott Page's research on diversity and complex problem-solving finds that:

a) Individual cognitive ability is the primary driver of group problem-solving success b) Cognitively diverse groups (different mental models, frameworks) outperform homogeneous groups of individually smarter people on novel, complex problems c) Diverse groups are better at generating ideas but worse at evaluating them d) The optimal group size for complex decisions is three to five people

19. Bezos's regret minimization framework asks:

a) Which choice will I regret the most if things go wrong? b) Looking back at age 80, which choice would I regret more — acting or not acting? c) How much regret would each option produce for people affected by the decision? d) Which option minimizes the risk of producing outcomes I would regret?

20. The chapter distinguishes three sources of decision difficulty. Which pairing is correct?

a) Information problem → gather more data; values conflict → seek consensus; fear avoidance → face the fear b) Information problem → gather more data; values conflict → clarify values and priorities; fear avoidance → address the emotional obstacle c) Information problem → use a decision framework; values conflict → gather data; fear avoidance → consult others d) All three are best addressed by gathering more information and consulting experts

21. Gilovich and Medvec's research on regret found that:

a) Regrets of action and inaction are equally prevalent over time b) In the short term, regrets of action predominate; in the long term, regrets of inaction predominate c) In the short term, regrets of inaction predominate; in the long term, regrets of action predominate d) Regrets of action predominate regardless of time horizon

22. The recognition heuristic (Gigerenzer) works well when:

a) The decision-maker has high expertise in the domain b) The options being compared differ on many measurable dimensions c) Recognition is correlated with the criterion being judged d) All options are equally recognizable

23. Which of the following is the most effective intervention for groupthink?

a) Increasing group cohesion to reduce interpersonal conflict b) Having the leader present their preferred option first to guide discussion c) Designating a devil's advocate role or having the leader announce their position after others d) Limiting deliberation time to reduce the opportunity for dissent

24. A decision journal improves decision-making primarily by:

a) Creating accountability through written commitment b) Enabling comparison of reasoning quality to outcomes, improving calibrated learning from experience c) Reducing cognitive load by externalizing decision information d) Building confidence through documentation of past decision successes

25. The chapter states that knowledge of cognitive biases provides only "modest protection" against them. The most effective debiasing practices include:

a) Studying more research on biases to increase awareness b) Pre-mortems, steelmanning, decision journals, and reference class forecasting — active structural interventions c) Working with trained cognitive coaches to identify and correct biases in real time d) Slowing down decision-making to allow System 2 (deliberate) thinking to override System 1 (automatic)

Answer Key