Question: People are usually influenced by some common decision-making errors and biases, which ultimately lead to poor decisions. Following are some of such errors and
People are usually influenced by some common decision-making errors and biases, which ultimately lead to poor decisions. Following are some of such errors and biases: Overconfidence, Immediate gratification, Anchoring effect, Selective Perception, Confirmation, Framing, Availability, representation, randomness, sunk costs etc. Define each bias/error and illustrate with example according to the following format: Bias/error Overconfidence Immediate gratification Anchoring effect Selective Perception Confirmation Framing Availability Representation Randomness sunk costs Definition Example
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Solution SNo Bias Error Definition Example 1 Overconfidence Bias It is the error which happens when people take confidential decisions considering their own abilities like driving or teaching then it is less fairly reasonable for the situation Person who gets lost during a long trip by refusing to use the help of navigation maps 2 Gratification Bias It involves with the decisions involving the tendency to reduce the future benefits by caving into short term highs Consuming a high calorie diet rather than a healthy snack which is healthy 3 Anchoring Effect Bias This error happens when people depend too much on the preexisting knowledge or decided based on the first information they get A person seeing a good product which costs 1500 and another worst product costing 150 where he would prone to consider the second shirt as his preference 4 Selective Perspective Bias The tendency of not noticing things or instantly forgetting the stimuli which causes the emotional contradict of ones prior belief A teacher ignoring a students poor attainment because he might be the favorite student of theirs 5 Confirmation Bias It is the tendency of the people to prefer information which validates their current beliefs A person strongly believing that righthanded people are more innovative than the lefthanded people 6 Framing Bias When people make decision based on the way of information presented as differed to the facts When someone says Q3s results were better where Earnings per Share EPS were 122 but in Q2 it is not up to the predicted mark which resulted the EPS to be only 123 per share 7 Availability Bias Errors made when someone decides things based on the examples which comes readily to their mind which are less representative than the actual case Deciding to use the trains after seeing a flight accident 8 Representative bias The error happens when the decision is made considering the ... View full answer
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