Decision Trap
Identify the Decision Trap in this example: A company continues to invest money into a failing project because they've already spent a significant amount on it and they hope to recoup their losses.
Sunk cost - Despite new evidence suggesting that the project will not be profitable, the company keeps investing due to the amount already "sunk" into the project, rather than cutting their losses and reallocating resources to more promising opportunities. This is a common cognitive bias where past investments unduly influence current decisions, even when those past investments cannot be recovered.
Which should be the first step when making a decision?
Define the opportunity or problem
Which of the following actions would LEAST contribute to enabling effective decision-making in an organization that follows Principle-Based Management?
A) Implementing a system where decision rights are clearly defined and communicated to all employees.
B) Encouraging employees to make decisions based on their personal preferences rather than the organization's shared values and principles.
C) Providing employees with access to relevant information and training to improve their knowledge and decision-making skills.
D) Creating a culture that values critical thinking and constructive challenge to foster better decision-making.
Select the option that is least likely to contribute to effective decision-making.
B- "Encouraging employees to make decisions based on their personal preferences rather than the organization's shared values and principles," would least contribute to effective decision-making in an organization that follows Principle-Based Management. Decisions should be aligned with the organization's values and principles to ensure consistency, integrity, and long-term value creation. Personal preferences may not always align with these objectives and could lead to suboptimal decision-making.
Which of the following is most likely to be an obstacle to effective decision-making in an organization that practices Principle-Based Management?
A) A culture that encourages open dialogue and the challenging of ideas to improve outcomes.
B) Decision rights that are clearly defined and understood by all members of the organization.
C) A lack of access to relevant and timely information needed to make informed decisions.
D) Regular feedback and accountability mechanisms that help individuals learn from their decisions.
Identify the option that represents an obstacle to effective decision-making.
C - "A lack of access to relevant and timely information needed to make informed decisions," is an obstacle to effective decision-making. Without the necessary information, employees cannot make decisions that are well-informed and aligned with the organization's goals and values, which is essential in a Principle-Based Management environment.
How old is Singapore this year?
59
Men can participate in artistic swimming competition in Olympics games. True or False?
True