Do Bias Influence your Decision Making
Answers to the six questions
1. The Answer should lie between 2,000and 100,000.
2. F
3. Yes; after investing 90 million, we might as well finish the project
4. 100,000
5. 7
6. Alternative B; A sure gain of $500 and Alternative C; a 50 percent chance of losing $1,000
There is a considerable difference between the answers I provided and those provided by the book. From the answers I provided, it is clear that they were based on emotions as opposed to making decisions in a logical way. For instance, my figure of between 2,000 and 100,000 is very small compared to the book answer, which is roughly 800,000,000,000,000 times the distance between the earth and the Sun. My answer was based on the thinness of the sheet, not taking account of the effect of doubling such thinness 100 times. This is affirmed by the second answer, in which case I did not realize each of the figures was different from the others.
One other thing I found interesting is the effect of earlier information while making a decision. If someone has prior knowledge of a situation, it is more likely that his or her decisions will be based on that knowledge. Known as the primacy effect, early information has a dramatic effect compared to information obtained later. Another fascinating thing that I learned is that people hate losing more than they enjoy winning. For this reason, people make decisions that will be of great benefit to them, not taking into account chances of increasing their odds (Daft, 2015). Apparently, human people and especially entrepreneurs are known to be rational, which means that they will make a decision that has more benefits and least consequences. While it is hard to admit, it is clear that I am not different from what the book describes. For instance, I regard to continue investing even after losing the 90 million it is true that most people will not see a problem is losing the remaining 10 million,
References
Daft, R. L. (2015). Organization Theory and Design. Boston: Cengage Learning.
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