Question

In Thinking, Fast and Slow, you learn about several biases including the (1) availability bias, (2) anchoring effect, (3) hindsight bias, and (4) focusing illusion.

a. For each of these biases, discuss (one at a time) how each could affect your decision making as a manager or employee (choose the role - manager or employee - you feel is more appropriate for the discussion).

b. How can being aware of these biases help you in your role as a manager or employee (choose the role - manager or employee - you feel is more appropriate for the discussion)?

Answer 1

a) As a manager, the role is really challenging and it is often affected by these biases as follows-

-Availability bias: Managers always overstates the facts. They think that there is more beyond the information available and research for all likelihood and then take the decisions. Sometimes, the research may go false and thus the decision taken will also go wrong.

-The anchoring effect is also called cognitive biases; it is the common tendency of any person t relay on what was heard for the first time. The whole decision will be taken based on the first-hand information and the additional points will be vomited. This will pave a way for incomplete decision making.

-Hindsight bias: This is opposite to the overconfidence biases. Managers always compare the situation, decision making that occurred in the past and they act very carefully due to the failure of the decision in the past. This makes then obvious in decision making.

-Focusing illusion is also a type of cognitive biases. Here, the past actions or trend is taken into account and expected to happen the same in the future. But in reality, the future is always unexpected.

b) It is necessary for the manager to overcome these biases and take a proper step in decision making. I order to avoid biases or to beware of such biases, the manager may practice some self-assessment that if he influences with any kind of biases. if yes, then the manager should take the necessary steps to avoid the chances of occurring the biases in the decisionmaking. In order to do that, the manager can use the below steps.

-participate multiple people in decision making

-Have feedback or review of the formulated decisions.

-Verify more data sources

-find our maximum alternatives

-review with peers.