Decision Making Questions for NABARD Grade A 2025 | Set-1

Correct Answer – A. Evaluation of decision

Explanation:

Most models of decision making include six essential steps that it is recommended managers should follow when making decisions.

1) Identify and diagnose the problem.

2) Identify alternative solutions.

3) Evaluate alternatives.

4) Choose an alternative.

5) Implement the decision.

6) Evaluate the decision.

Correct Answer – D. Psychological style

Explanation- There are countless perspectives and tactics to effective decision-making. However, there are a few key points in decision-making theory that are central to understanding how different styles may impact organizational trajectories. Decision-making styles can be divided into three broad categories:

• Psychological: Decisions derived from the needs, desires, preferences, and/or values of the individual making the decision. This type of decision-making is centered on the individual deciding.
• Cognitive: This is an integrated feedback system between the individual/organization deciding, and the broader environment’s reactions to those decisions. This type of decision-making process involves iterative cycles and constant assessment of the reactions and impacts of the decision.
• Normative: In many ways, decision making (particularly in groups, such as within an organization) is about communicative rationality. This is to say that decisions are derived based on the ability to communicate and share logic, using firm premises and conclusions to drive behavior.

Correct Answer – C. Anchoring trap

Explanation-Anchoring Trap:When considering a decision, the mind gives disproportionate weight to the first information it receives. Initial impressions, estimates or data anchor subsequent thoughts and judgments. In business, a common anchor is a past event or trend. While relying on such may lead to a reasonably accurate estimate of future numbers, it also tends to give too much weight to past events and not enough to other factors. Especially in markets with rapid changes, historical anchors can lead to poor forecasts and misguided choices.

Correct Answer: D. They must be treated each time as if they were new

Explanation-Structured decisions are those that can be programmed. They are essentially repetitive, routine and involve a definite procedure for handling them so that they do not have to be treated each time as if they were new.

Correct Answer – C. Bounded rationality theory

Explanation- The theory of bounded rationality holds that an individual’s rationality is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision. This theory was proposed by Herbert A. Simon as a more holistic way of understanding decision-making. Bounded rationality shares the view that decision-making is a fully rational process; however, it adds the condition that people act based on limited information. Because decision-makers lack the ability and resources to arrive at the optimal solution, they instead apply their rationality to a set of choices that have already been narrowed down by the absence of complete information and resources.

Correct Answer – C. Criterion of pessimism

Explanation- Maximin Criterion: This criterion, also known as the criterion of pessimism, is used when the decision-maker is pessimistic about the future. Maximin implies the maximization of minimum payoff. The pessimistic decision-maker locates the minimum payoff for each possible course of action. The maximum of these minimum payoffs is identified, and the corresponding course of action is selected.

Correct Answer – A. Low-level management

Explanation-Programmed decisions are generally repetitive and routine and are obviously the easiest for managers to make. It is for these reasons that such managerial problems are relegated to the supervisory or low-level management. The supervisors fall in the first entry ring of management. It gives persons of this level a slight morale boost. Decisions implemented by the supervisors might feel elated, but when compared to managers at the higher levels, the supervisory level decisions are pretty straightforward and simple because of their structured nature. These decisions are in fact routine decisions and they require little deliberation from the top management’s point of view.

Correct Answer – A. Autocratic (A2)

Explanation-

The framework poses seven “yes/no” questions, which you need to answer to find the best decision-making process for your situation.

As you answer each of the questions, you work your way through a decision tree until you arrive at a code (A1, A2, C1, C2, or G2). This code identifies the best decision-making process for you and your team. (Note that, in some scenarios, one need not answer all the questions.)

The following codes represent the five decision-making processes that are described by the model:

• Autocratic (A1): You use the information that you already have to make the decision, without requiring any further input from your team.
• Autocratic (A2): You consult your team to obtain specific information that you need, and then you make the final decision.
• Consultative (C1): You inform your team of the situation and ask for members’ opinions individually, but you do not bring the group together for a discussion. You make the final decision.
• Consultative (C2): You get your team together for a group discussion about the issue and to seek their suggestions, but you still make the final decision by yourself.
• Collaborative (G2): You work with your team to reach a group consensus. Your role is mostly facilitative, and you help team members to reach a decision that they all agree on.

In general, a consultative or collaborative style is most appropriate when:

(i) You need information from others to solve a problem.

(ii) The problem cannot be easily defined.

(iii) Team members’ buy-in to the decision is important.

(iv) You have enough time available to manage a group decision.

An autocratic style is most appropriate when:

(i) You have greater expertise on the subject than others.

(ii) You are confident about acting alone.

(iii) The team will accept your decision.

(iv) There is little time available.

Correct Answer – C. Peter Drucker

Explanation-According to Peter Drucker: “Whatever a manager does, he does through decision-making.” This clearly suggests that decision-making is necessary in planning, organizing, directing, controlling, and staffing, essentially making it the primary function of management. One of the greatest skills a leader can have is the ability to make effective business decisions. However, research demonstrates that despite the vast sums spent implementing decisions, organizations only realize the benefits half of the time. The challenge then is how to make effective business decisions.

Correct Answer – E. None of these

Explanation-An important concept in the field of decision making is the OODA Loop or the Observe-Orient-Decide-Act loop. This refers to the strategic advantage that a decision maker gets over his or her opponent when he or she observes the situation and orients themselves and then decides and acts accordingly. This concept was introduced primarily in combat and strategic warfare where it was believed that a combatant’s “edge” over his or her opponent happens when the OODA loop is fully functional. The term and the concept were proposed by the military strategist and member of the United States Air Force, Colonel John Boyd.