Problem$-$Solving Application$$Cognitive Bias Partly to Blame for California Wildfire

A disastrous wildfire that hit northern California in $2018$ has been linked to faulty equipment maintained by large utility company Pacific Gas & Electric $($PG&E$).$ This activity is important because it examines whether a link between the wildfire and PG&E$$s decision$-$making exists.

The goal of this activity is for you to evaluate PG&E$$s decision$-$making process regarding maintenance of the equipment linked to the fire and consider whether PG&E should have acted differently.

Read about the California wildfire and the possible link to poor equipment maintenance. Then, using the three$-$step problem$-$solving approach, answer the questions that follow.

In late November $2018,$ a wildfire took hold in a dangerously dry area of California$$s Sierra Nevada foothills. Possibly sparked by the malfunction of an electrical power line that initially affected a single customer, it soon burst out of control. Later known as the Camp Fire, the blaze became the deadliest and most destructive in California$$s history. Before being contained two weeks later, it had roared through $154,000$ acres of land and destroyed the entire town of Paradise. At least $85$ people were killed, and hundreds left homeless; nearly $16,000$ buildings were burned$\mathrm{.}1$

The malfunctioning tower, left in place $25$ years longer than intended, belonged to Pacific Gas & Electric $($PG&E$),$ a utility company with a history of safety problems. According to the New York Times, $$Five of the $10$ most destructive fires in California since $2015$ have been linked to PG&E$$s electrical network. Regulators have found that in many fires, PG&E violated state law or could have done more to make its equipment safer.$$ The company$$s interim CEO admitted errors and promised change, but Governor Gavin Newsom told an interviewer that the company, which recently filed for bankruptcy under the burden of responsibility for tens of billions of dollars of damage from the fire, could not be trusted$\mathrm{.}2$

State investigators probing earlier disasters that implicated PG&E$,$ including many hundreds of fires, heard from employees that the company routinely looked the other way when they complained about outdated equipment and flawed reports. Finding the company had spent millions of dollars less on operations and maintenance than authorized, California$$s Public Utilities Commission concluded it was prioritizing the bottom line over safety. PG&E was also accused of undertaking repairs and improvements only after a fire or explosion had occurred, instead of conducting needed maintenance on a timely basis. $$Some people believe that you run equipment to failure,$$ said one former state regulator. $$They believe $$run to failure$$ to save money. This $[$the Camp Fire$]$ is the danger of run to failure.$$ The company had earlier announced some steps to incentivize safety but they were short$-$lived, and at the time of the Camp Fire it was in court, pushing back against legal principles that would hold the utility liable for damage caused by its equipment even when it acted properly$\mathrm{.}3$

PG&E$,$ which has already come through one bankruptcy proceeding, was also fighting to expand the protection of a new law allowing utilities to pay for the costs of fires by raising fees to customers. The company and other utilities claim that their rates will increase anyway because banks will be less willing to lend them money, and that climate change and increased development of remote areas have made fires more likely and harder to fight. Meanwhile the company$$s stock dropped $60$ percent, its credit rating was downgraded, and it may face criminal charges relating to the fire if it is found to have behaved in a $$reckless$$ manner. It is now seeking new directors and advice on preventing future disasters. Larry, a PG&E manager, chooses not to have his team maintain an electrical tower in Sacramento because he remembers another, similar PG&E tower in San Diego that did not fail until it was $2$ years older than the Sacramento tower. The other tower was the first one he was responsible for, and the one he remembers best. Which of the following is not one of the biases that may explain Larry$$s decision?

Multiple Choice

availability

framing

representativeness

anchoring

overconfidence