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19 views

Assignment 13

Uploaded by

samuelmakuthuluka
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1

Cognitive Biases in Decision Making: Personal Experiences

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PERSONAL EXPERIENCES 2

Introduction

Cognitive biases are regular distorts in appraisal or estimation procedures and are,

therefore, standard in an issue. This essay will discuss three decision-making situations involving

me and the associated cognitive biases: the Anchoring and Adjustment heuristic, the Availability

heuristic, and the Framing effect.

Scenario 1: Anchoring and Adjustment Heuristic

Description of the Situation

When buying the first car for my family, I first went to a certain car-selling company. I

was offered a model at $20000, which I found incredibly expensive. Even though I was later

offered the price of $18,000, my initial focal (anchor) was $20,000.

Definition of the Heuristic

The anchoring and Adjustment heuristic is composed of heuristics that involve basing

decision-making on the initial received data, termed the anchor. However, the anchor exists even

when the point of reference has no relation to the specifics of the subsequent case, and it

substantially influences judgments and decisions.

Application to the Situation

In this case, the initial price of $20,000 set the standard, or anchor, in my mind or

memory. The benefit I gained from this negotiation was a lower price offer, yet the initial price

tag impacted the car's value. This anchoring effect made me perceive $18,000 as a reasonable

price even if the actual cost of this car is significantly lower.

Scenario 2: Availability Heuristic

Description of the Situation


PERSONAL EXPERIENCES 3

Several years ago, I had to choose whether to purchase travel insurance for a foreign tour.

I recently read several news stories about travellers’ medical emergencies in foreign countries,

which concerned me.

Definition of the Heuristic

The availability heuristic is a decision-making process in which a person believes

something true based on how easily examples can be recalled. Egger and Grano’s research

demonstrated that events that are more memorable or recent will be perceived as being more

likely or frequent than similar events despite objective likelihood.

Application to the Situation

The extant body of news stories about travel emergencies was easy to recall, and

therefore, the perceived probability of facing a similar situation was below the actual probability.

This availability bias ensured I invested in expensive travel insurance, being swayed by the

vividness and recency of similar stories I came across.

Scenario 3: Framing Effect

Description of the Situation

At one time, in a health program, the advantages of smoking were demonstrated in two

contrasting techniques. One of the pamphlets read, ‘90% of patients who cease smoking are

likely to survive, ‘ and another read ‘10% of patients who keep smoking are prone to die early.’

Definition of the Heuristic

The Framing effect is one method by which a person’s decision is influenced based on

how the choice is framed. Loss framing and gain framing can make a lot of difference in people's

decisions and perceptions.

Application to the Situation


PERSONAL EXPERIENCES 4

Even if essentially both of the statements contained the equivalent of information, the

positive message, “90% of them live longer”, influenced me to join the program more than the

negative one, “10% of them die prematurely.” The framing effect affected me regarding the

benefits, and the positive option appeared to be complete and attractive.

Conclusion

Such examples explain how biases present in us, like the Anchoring and Adjustment

heuristic, Availability heuristic, and Framing effect, affect decision-making. These biases can be

useful when people want to understand the possible impacts they may impose and do everything

possible to make more reasonable and less biased decisions.


PERSONAL EXPERIENCES 5

References

Goldstein, E. B. (2015). Cognitive psychology: Connecting mind, research and everyday

experience (p. 496). Stamford, CT: Cengage Learning.

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