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Indian Institute of Management Calcutta

Executive
Executive Post
Post Graduate
Graduate Program
Program in
in Management
Management
Term
5,
2015-16
Term 5, 2015-16
29 December 2015

Roll #
(No name please)

Course: Intuitive Decision Making


Mid-term Examination
Maximum marks: 40. All questions carry equal marks. Time: 1 hr. 30 mins.
Instructions
1. Read each question and think about it carefully before you figure out your approach to the
answer. Write your answer below each question in the space provided and indicate the word
count below.
2. Your answers are expected to demonstrate that you have understood the concepts, theories,
models et cetera taught in this course and can apply the relevant ones correctly. Explain yourself
with the use of appropriate concepts that are part of the syllabus of this course. Use of concepts
that are outside this course, even if appropriate, shall not merit marks.
3. Write your answer briefly but lucidly. Remember, your instructor is not clairvoyant. He can
understand only what you write, not what you mean. Quality and clarity of explanation will be
important factors in assessment.
4. This examination is open book, open notes, open laptops and open Internet. Collusion,
communication, signalling explicit or tacit may lead to disqualification from the examination.
5. Write your roll # in the top right hand corner of each sheet. Do not write your name. It will avert
any bias positive or negative on the part of your instructor. If you write your name, please be
prepared to lose 1 mark.
6. This question paper is being e-mailed to you. Open and save it as a MS Word document (NO
OTHER FORMAT) with the file name <your complete roll #_IIMC PGPEX IDM Mid-term
Exam_2015-12-29>. Write IDM Mid-term Exam in Subject line of e-mail and send your answer
paper as attachment to pgpex@iimcal.ac.in. The time stamp on your email will be treated as proof
of timely submission.

IIMC PGPEX, IDM Mid-term Exam 29 Dec 2015

Indian Institute of Management Calcutta


Executive
Executive Post
Post Graduate
Graduate Program
Program in
in Management
Management
Term
5,
2015-16
Term 5, 2015-16
Q1.

Many commercial and almost all government organisations practise annual performance
appraisal. How can average performers get better than average performance ratings? Can
you highlight one or two strategies employees can adopt to game the system (manipulate it to
ones advantage)? (In 150 words.)

Answer:
We recall recent events readily compared to those in the distant past. This encourages us give
greater weightage to recent events that we recall easily. It is called Recency bias and it is fuelled by
Availability heuristic. Knowing this natural predisposition, an employee can work more diligently in the
last two quarters before performance appraisal is due, and take it relatively easy in quarters 1 and 2.
His supervisor is likely to consider his performance more favourably in this situation, and the
employee is likely to gain a good performance rating.
Another method can be to leverage the supervisors Affect heuristic. By behaving agreeably, and
pleasantly as much as possible in the last 1-2 quarters, the employee may be able to create a
favourable impression of a co-operative and enthusiastic person.
Affect heuristic allows us to recall pleasant episodes readily and give greater weightage to them. An
employee who has displayed a pleasant and enthusiastic disposition is likely to be credited with
better performance that would be due on rational and rigorous evaluation.
It is reasonable to assume that he would not have made gross errors of judgement and that his
performance would have given the supervisor no cause for regret.
Observations:
1. Attempting to leverage Anchoring by highlighting good work done, especially in recent past, may
cause the boss to adjust his assessment using favourable information.
2. Halo effect is also admissible. In this approach a person good behaviour or excellent performance
in one field may create a halo and a favourable rub-off on other accomplishments even of they
are not so great. To do this the employee may make a deliberate and concerted effort to create a
positive impression in one or two specific areas that tends to show him/her as more intelligent,
accomplished, or capable.
Marking protocol:
Availability bias based answers: 7
Affect based answers: 7
Anchoring:

Any two together: 10

IIMC PGPEX, IDM Mid-term Exam 29 Dec 2015

Indian Institute of Management Calcutta


Executive
Executive Post
Post Graduate
Graduate Program
Program in
in Management
Management
Term
5,
2015-16
Term 5, 2015-16
Q2.

It is well known that large and complex software implementation projects are often delayed
even though their timelines are diligently estimated to last several months, sometimes a
couple of years. One of the reasons is clients ask for changes midway. Assuming they dont
and projects are run more or less according to agreed plans, do you think the majority would
be completed on schedule? Why? Why not? Explain using an appropriate concept in the IDM
syllabus. (In 150 words.)

Answer:
The reason for delays in execution of large and complex projects is planning fallacy. It arises from a
combination of base rate neglect and over optimism. Both of these tendencies focus ones attention
on the current project and the future. It also leads to systematic neglect of what has happened in the
past, for example, how long similar projects took and what caused delays.
Over optimism acting simultaneously leads to discounting the effect of obstacles and uncertainties
and allotting greater weightage to reasons for the project going smoothly.
These biases undermine accurate and realistic assessment of how projects will be executed and the
time they will take. Planning fallacy occurs because optimistic plans are often fallacious in judgement.
Observations:
Planning fallacy occurs as a result of optimism bias. Some academics have suggested it may be the
result of self-serving or impression management bias. It occurs when people make estimates of time,
cost and risks for their projects. It doesnt seem to occur when estimating these factors for other
peoples projects.
Anchoring heuristic does not appear to influence planning fallacy.

Marking protocol:
Planning fallacy: 8
Optimism bias without mention of planning fallacy: 8
Planning fallacy coupled with over optimism, self-serving, or impression management bias: 10
For mention of other biases such as anchoring, etc.: 3 marks
Explaining appropriately how confirmation bias may impact planning: 4 marks.
Non-heuristic and biases explanations: 2

IIMC PGPEX, IDM Mid-term Exam 29 Dec 2015

Indian Institute of Management Calcutta


Executive
Executive Post
Post Graduate
Graduate Program
Program in
in Management
Management
Term
5,
2015-16
Term 5, 2015-16
Q3.

As the Chief of Procurement of your company, you wish to develop long-term relationship with
XYZ Ltd, a supplier. They make a technologically advanced product that will enhance the
reliability and performance of the equipment your firm makes. There are only two other
companies in the world that make equivalent products. You would like to obtain fair price and
commercial terms from the supplier. Equally, you are interested in a co-operative relationship in
which XYZ will develop new products for the next generation equipment your firm intends to
manufacture over the next year or so.
Would you ensure that you and your team members behave in a courteous, warm, and friendly
manner with representatives and senior managers of XYZ? Why? What heuristic would you
hope to leverage in managers of XYZ by your behaviour? Explain in no more than 150 words.

Answer:
Courteous, warm and friendly behaviour (it is not obsequious) creates a good feeling in other
person(s). They tend to develop a liking for people who behave in a warm and friendly manner. This
favourable and pleasant impression easily translates to trust.
We use Affect heuristic to store and recall experiences. Friendly behaviour triggers this heuristic in
others. When they like us, they tend to trust us. When they trust us, they are likely to co-operate.
Courteous and friendly behaviour is, therefore, likely to help our company set the stage for interest
based (as opposed to position based) negotiation of commercial terms. It is likely to foster free and
frank discussion of issues and their amicable resolution. It is also likely to encourage long-term
partnership with the vendor in which the partner may be willing to invest significant resources.

Observations:
1. Affect may or may not trigger representativeness heuristic. This second order heuristic may not
have a noticeable impact, if any.
2. Affect is unlikely to trigger framing effect. Affect heuristic impacts perception of risk-benefit. That
is why framing effect is unlikely.
Marking protocol:
Affect heuristic creates trust properly explained: 10
Proportionate marks for quality of explanation.

IIMC PGPEX, IDM Mid-term Exam 29 Dec 2015

Indian Institute of Management Calcutta


Executive
Executive Post
Post Graduate
Graduate Program
Program in
in Management
Management
Term
5,
2015-16
Term 5, 2015-16
Q4.

Write TRUE or FALSE against each of the following statements. Each statement carries one
(1) mark.

1. Bewildering variety of choices often leave consumers dissatisfied with their purchases because of
loss aversion.
TRUE
2. We know System 2 uses heuristics to make rapid judgements. Heuristics, or thumb rules, are
solely the result of human evolution over hundreds of thousands of years.
FALSE
3. We tend to avoid people who are brusque but honest and of high integrity, because of Availability
bias.
FALSE
4. Most advertisements feature smiling human models. Advertisers try to leverage Affective bias to
favourably influence consumers.
TRUE
5. Superstitions are irrational beliefs in coincidence of unrelated factors. For example, a journey will
turn out to be unsuccessful if a black cat crosses ones path. They arise from confirmation bias.
TRUE
6. Status quo bias results from framing effect when we perceive choices between gains.
TRUE
7. Concept of human beauty differs from one culture to another. This is most likely the result of Affect
heuristic.
TRUE
8.

Indoctrination is a systematic process of creating confirmation bias in subjects.


TRUE

END

IIMC PGPEX, IDM Mid-term Exam 29 Dec 2015

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