Listed here are several examples of bad, or at least questionable, decisions. Evaluate the decision maker€™s approach or logic. In which of the six decision steps might the decision maker have gone wrong? How would you respond in the final decision situation?
a. Mr. and Mrs. A recently bought a house, the very first one they viewed.
b. Firm B has invested five years and $6 million in developing a new product. Even now, it is not clear whether the product can compete profitably in the market. Nonetheless, top management decides to commercialize it so that the development cost will not be wasted.
c. You are traveling on a highway with two traffic lanes in each direction. Usually traffic flows smoothly, but tonight traffic moving in your direction is backed up for half a mile. After crawling for 15 minutes, you reach the source of the tie-up: a mattress is lying on the road, blocking one lane. Like other motorists before you, you shrug and drive on.
d. The sedative thalidomide was withdrawn from drug markets in 1962 only after it was found to be the cause of over 8,000 birth defects worldwide. (An exception was the United States, where the use of thalidomide was severely restricted.)
e. A couple, nervous about boarding their airline flight on time, patiently wait together in one of three baggage check-in lines.
f. While devoting himself to successfully leading his company, the CEO€™s marriage broke up.
g. Each year, State F allocates $400,000 to provide special ambulance service for heart attack victims and $1,200,000 for improvements in highway safety (better lighting, grading, and the like). The former program saves an estimated 20 lives per year; the latter saves 40 lives. Recently the ambulance budget was cut by 40 percent, and the highway safety budget increased by 10 percent.
h. In August 2001, the Federal Emergency Management Agency judged the two likeliest natural catastrophes to be a massive earthquake in San Francisco and a hurricane in New Orleans causing its levees to be breached. In August 2005, Hurricane Katrina struck New Orleans flooding the city and causing an estimated $125 billion in economic damage.
i. Mr. G is debating how to spend his summer vacation. Should he spend a quiet week at home, go to the beach, or go to the mountains, where his parents and several other relatives live? Unable to make up his mind, he decides to list the pros and cons of each option. The points he cares about are
(1) Relaxation and quiet,
(2) Some exercise, and
(3) Seeing family and old friends.
With respect to these points, he ranks the alternatives as shown in the table:

Now he is ready to compare the options. Which is his better choice: home or beach? Since home ranks higher than beach on two of the three points, he gives it two pros and one con and judges it the better choice. What about home versus mountains? Mountains versus beach?
j. €œAfter 9/11, to do nothing would constitute an abject surrender to terrorism. On the other hand, the United States cannot fight multiple wars against terrorist factions everywhere in the world. The only sane alternative, then, is to identify and stop terrorists from operating in the United States, even if this means sacrificing important civilliberties.€

Transcribed Image Text:

Relasation 1st 2nd 3rd Exercise Family/Friends Home Beach Mountains 3rd 1st 2nd 2nd 3rd 1st