Managerial Decision Making

Sheila Mccoy : Biases and Judgment-Business Judgement Issues. The question we where asked by Professor Gilbertson, was to focus on a decision and evaluate it using any two of the following biases that where listed below. I chose availability heuristic biases related to representative heuristic. The availability heuristic is based upon convenience.The simplest heuristic to us is based upon available memory(Tversky and Kahnemann,1973).What people remember will often guide their decision. Like anyone who has touched a hot stove will remember to avoid repeating the experience in the future This is true because of the biases of the following(Tversky& Kahnemann,1973): 1. ease of recall 2. memory structure, 3. presumed associations. (Bazeman,2006). These three biases allow decision to be made quickly with satisfactory results almost always. Errors occur in using the availability heuristic when memory is hazy or memory structure is flawed and when presumed association are erroneoudly based (O'Toole,1993).

Ease of recall might be based on factors such a vividness of the experiment, and time proximty to the past events. Ease of recall is affected by retrievability, which is a function of memory structure (Bazeman, 2006). Events, which people understand in proper context, are easier to retrieve then events that are not understood properly.

Representative heuristic is based upon perceived similarities with previously formed judgment (Nisbett & Ross, 1980) People generally classify others by how much the resemble, by behavior or appearance, other people previously sterotyped (Bazerman, 2006).
. insensitivity to base rates .insensitivity sample size
.insensitivity misconception of chance insensitivity regression of the means insensitivity conjunction fallacy. The key to avoiding mistakes based on using the representative