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Applied Decisions
| Term | Definition |
|---|---|
| Harold has an external locus of control. He failed his last management test. How is Harold most likely to respond to his failing grade? | He knows that the professor usually gives really hard tests. |
| Which of the following Big Five traits has been shown to predict decisiveness in individuals? | emotional stability |
| Because the media gives much more attention to air accidents than to car accidents, many people believe that flying is more dangerous than driving. These people are using which of the following? | An availability heuristic |
| __________ involves solving problems by choosing a solution that meets some minimum standard of acceptance. | Satisficing |
| Decisions regarding whether to invest in a new technology or enter a new market are which types of decisions? | Nonprogrammed |
| Which of the following refers to people’s tendency to make different decisions based on how the problem or solution is presented? (Here’s a hint: politicians do this all the time in order to make their argument sound more appealing.) | Framing |
| Intuition is made up of ____________. | both a and b - feelings and expertise |
| Escalation of commitment also called the sunk-cost trap refers to the tendency to stick to an ineffective course of action when it is unlikely that the bad situation can be reversed. | true |
| The rational decision making model proposes that people optimize when they make decisions. Optimizing assumes that decision makers have time constraints on their decisions. | false |
| In the Vroom-Yetton Decision Making Model it is recommended that when time is limited a manager should use a consensus (i.e., group) approach to decision making. | false |
| Making supervisors aware that decisiveness is important to the organization and having their direct reports rate them on their level of decisiveness has been shown to increase their overall decisiveness. | true |
| The Garbage Can Model of decision making states that managers often don’t know what they want until they have some idea of what they can get. | true |
| Ratings agencies (e.g., Moody’s) used statistical models to make _____________appear to be ____________ to investors. | uncertainty; risk |
| In the past 10 years there has been an explosion of data, and much of this data is readily available to businesses. Which of the following are potential risks of having “too much data”? | all the above - Selective attention, We see patterns where they do not exist, There is no quality control |
| Most television personalities who get paid to make predictions (e.g., political pundits) are _________. | hedgehogs |
| When it comes to prediction in decision making, Silver suggests that we are better served to focus more on _________ than __________. | process; results |
| Why are computer based weather forecasts WORSE than climatology when predicting more than 7 days out? | all the above - Computers are oversensitive to data, Computers mistake “noise” for “signal,” Computers see patterns too easily |
| What characteristics of computers make them good at predicting weather and playing chess? | both a and b - Follow simple rules, Computational power |
| In order for a test or instrument to be valid it must first be reliable. | true |
| Qualitative data is superior to quantitative data. | false |
| Google’s algorithms for determining search results are published and regulated by the federal government. | false |
| According to Dr. Shiv, “Emotionals” are typically more decisive than “Vulcans”. | true |
| According to Nate Silver, success in baseball and poker requires high skill, but not luck. | false |
| Local weather forecasts are typically more accurate than those from the National Weather Service. | false |
| Humans add value to weather forecasts, above and beyond what can be gleaned from computer forecasts alone. | true |
| Group decision making is superior to individual decision making when under time constraints. | false |
| When there is an excess of fear in the economy you have a bubble. | false |
| High cohesiveness is one factor than can contribute to groupthink. | true |
| Which of the following tools is used to optimize within Excel (hint: it is used for cluster analysis)? | solver |
| Which of the following is an example of supervised machine learning? | naive bayes |
| If your clusters are difficult to interpret which of the following might improve your interpretation? | all of the above - Try a different number of clusters, Try using k-medians instead of k-means, Try using Manhattan Distance instead of Euclidean Distance |
| Which technique allows you to segment customers into groups? | cluster analysis |
| When you begin a cluster analysis how many clusters should you start with? | A number large enough to show meaningful differences but small enough to be useful |
| What tool in Excel allows you to see which “offers” were purchased by which “customers” in matrix form? | pivottable |
| You own a restaurant and are interesting in classifying comments from your virtual customer comment box. You want to know if the comments are about the food or the customer service. What technique would be best for this purpose? | naive bayes |
| What is likely to happen if you don’t hold out a set of data to use as a “test” set to build your naïve Bayes model; and instead you use all of the data. | The model will over fit and be appear perfect |
| If you try to run a k-means cluster analysis with 4 clusters and only 2 of the clusters seem clear for interpretation what is likely your first step to correct this? | Change to 3 or 5 clusters |
| Which of the following can be thought of as “exploratory data mining”? | cluster analysis |
| Optimization is used in cluster analysis to determine cluster centers. | true |
| Manhattan Distance is the shortest distance between two points “as the crow flies”. | false |
| Cluster analysis using k-means is an example of supervised machine learning. | false |
| If you have two independent events, you can calculate the joint probability by multiplying the probability of each event together. | true |
| Which of the following is NOT an indicator that bubble may be coming and you should invest in more conservative assets. | high volatility |
| Mark Zuckerberg wears the same outfit everyday. Nick Saban eats the same thing for breakfast and lunch everyday. These are examples of adopting what "C" that reduces potential decision making fatigue? | consistency |
| Dr. Crosby points out that "passive investment may not be as passive as you'd imagined and may subject you to all of the same return-chasing behavior present in active approaches". What does he mean by this? | the stocks included in index funds are chosen by humans |
| According to Dr. Crosby, the best use of a financial advisor is the following ____________. | as a behavioral coach |
| Historically speaking passive investing produced greater long term returns for investors than active investing. | true |
| Within the world of investing we are better able to estimate probabilities of returns in the near term (next week) than the long term (25 years from now). | false |
| Which of the following factors has been demonstrated to have the greatest impact on wealth creation via investing? | investor behavior |
| Which of the following is NOT one of the 4 C's of Rule-Based Behavioral Investing? | control |
| ________ can lead to short term success but __________ is required to beat the market over the long term | luck; a systematic approach |
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