BY BHAVESHBRUNICADEEPAK

KANEKIRAN

LISETTEMONICA

GROUP - 3

MANAGERIAL BIASES

OUR TOPICS . . .

Escalation of Commitment Bias

Hindsight Bias

Self Serving Bias

Sunk Costs Bias

Randomness Bias

Escalation of Commitment Bias

Definition Tendency to invest additional resources in an

apparently losing proposition, influenced by effort, money, and time already invested

The term is also used to describe poor decision-making in business, government, information systems in general, software project management in particular, politics, and gambling

Ex-1 United States commitment to military conflicts

Ex-2 when parties engage in a bidding war

Hindsight Bias

Definition It is the inclination to see events that have

occurred as more predictable than they in fact were before they took place.

It has been shown that examining possible alternatives may reduce the effects of this bias.

Self Serving Bias

DefinitionIt occurs when people attribute their successes to internal or personal factors but attribute their failures to situational factors beyond their control

The term "self-serving bias" is most often used to describe a pattern of biased causal inference, in which praise or blame depend on whether success or failure was achieved

Ex-1 A student who gets a good gradeEx-2 In Workplace

Sunk Costs Bias

DefinitionThese are costs that cannot be recovered once they have been incurred

Sunk Costs greatly affect the decisions, because humans are inherently loss aversive and thus normally act irrationally when making economic decisions

Ex-1 Pre-ordering movie tickets

Overly optimistic probability bias

Randomness Bias

It’s the tendency people have to seek patterns where none exist and to invent the existence of unjustified causal relationships.

In simple terms, it’s the tendency of people to make sense out of events which are so random in nature that not enough should be read into them.

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