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Chapter 12

BUS 272 Chapter 12 Vocab.docx

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Business Administration
BUS 272
Zorana Svedic

BUS 272: Chapter 12 Vocab 1) Decision (pg 432) – the choice made from two or more alternatives 2) Rational (pg 432) – refers to choices that are consistent and value-maximizing within specified constraints 3) Rational decision-making model (pg 432) – a six-step decision-making model that describes how individuals should behave in order to maximize some outcome 4) Bounded rationality (pg 434) – limitations on a person’s ability to interpret, process, and act on information 5) Satisficing (pg 434) – to provide a solution that is both satisfactory and sufficient 6) Intuitive decision making (pg 434) – a non-conscious process created out of a person’s many experiences 7) Overconfidence bias (pg 437) – error in judgement that arises from being far too optimistic about one’s own performance 8) Anchoring bias (pg 437) – a tendency to fixate on initial information, from which one then fails to adequately adjust for subsequent information 9) Confirmation bias (pg 437) – the tendency to seek out information that reaffirms past choices and to discount information that contradicts past judgments 10) Availability Bias (pg 438) – the tendency for people to base their judgements on information that is readily available to them rather than complete data 11) Escalation of commitment (pg 438) – an increased commitment to a previous decision despite negative information 12) Randomness error (pg 438) – the tendency of individuals to believe that they can predict the outcome of random events 13) Risk aversion (pg 438) – the tendency to prefer a sure gain of a moderate amount over a riskier outcome, even I the riskier outcome might have a higher expected payoff 14) Hindsight bias (pg 439) – the tendency to believe falsely, after an outcome of an event is actually known, that one could have accurately predicted that outcome 15) Knowledge management (KM) (pg 439) – the process of organizing and distribu
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