In the workplace, employees might assume a bias against white males when they see that several women and minorities have been hired recently. Either way, the problem is not put in the proper context. Representative bias is when a decision maker wrongly compares two situations because of a perceived similarity, or, conversely, when he or she evaluates an event without comparing it to similar situations. On the Saturday before a Super Bowl, far fewer people are sure of the outcome of the event, but on the Monday following, many more are willing to claim they were positive the winning team was indeed going to emerge the winner.īecause we construct a situation where we fool ourselves into thinking we knew more about an event before it happened, hindsight bias restricts our ability to learn from the past and makes us overconfident about future predictions. Hindsight bias is the tendency we have to believe that we’d have accurately predicted a particular event after the outcome of that event is known. In the instance of confirmation bias, each of those people would look to find scientific papers and evidence that supports their theories, rather than making a full examination of the situation. For example, two people on social media may be arguing the existence of climate change. We seek out information that reaffirms our past choices and tend to put little weight on those things that challenge our views. The rational decision making process assumes that we gather information and data objectively, but confirmation bias represents the gathering of information that supports one’s initial conclusions. Anchors are a common issue in negotiations and interviews. Similarly, if a manager asks you for an expected starting salary, your answer will likely anchor the manager’s impending offer. As soon as that number is stated, the manager’s ability to ignore that number is compromised, and subsequent information suggesting the average salary for that type of job is $80,000 will not hold as much strength. For example, a manager may be interviewing a candidate for a job, and that candidate asks for a $100,000 starting salary. The anchoring bias is the tendency to fix on the initial information as the starting point for making a decision, and the failure to adjust for subsequent information as it’s collected. Interestingly, studies have also shown that those individuals with the weakest intelligence and interpersonal skills are the most likely to exhibit overconfidence in their decision making, so managers should watch for overconfidence as a bias when they’re trying to make decisions or solve problems outside their areas of expertise. Overconfidence of one’s “correctness” can lead to poor decision making. Similarly, when they state they’re 100% sure, they’re usually right about 70–85% of the time. Studies have shown that when people state they’re 65–70% sure they’re right, those people are only right 50% of the time. The overconfidence bias is a pretty simple one to understand-people are overly optimistic about how right they are. Here are some of the more common ones you’re likely to see: Overconfidence Bias You only need to scroll through social media and look at people arguing politics, climate change, and other hot topics to see biases in action. Common distortions in our review of data and alternatives are called biases. These are the types of decisions that are most likely going to be subjected to decision making heuristics, or biases.Īs we become more embroiled in the rational decision making model-or, as we discussed, the more likely bounded rationality decision making model-some of our attempts to shortcut the collection of all data and review of all alternatives can lead us a bit astray. A nonprogrammed decision is one that is more unusual and made less frequently. A programmed decision is one that is very routine and, within an organization, likely to be subject to rules and policies that help decision makers arrive at the same decision when the situation presents itself. There are two types of decisions-programmed and non-programmed. Compare various biases and errors in decision making.
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