Behavioural aspects of Decision Making Process- Heuristics ,Common

Biases, Emotions and Motivation and Group Decision Making.

 What are biases?

Biases are tendencies to act or think in particular ways, which frequently result in arbitrary
judgements or actions. They can be social (influences from cultural norms), emotional.

 17 odd biases out of which ten are discussed with the help of problems

Biases are categorised under Heuristics as follows:

Availability Heuristic: When assessing a problem or choosing a course of action, availability

heuristics are mental shortcuts that rely on the first instances that enter to mind.

 Vividness: Vivid experiences are more easily recalled because they are vivid or emotionally
intense

Example: You come across a dramatic news article, complete with detailed descriptions of the
symptoms, about someone who ate a popular snack and then became very ill. Even though these
kinds of incidents are uncommon, this startling story makes you hesitant to eat that snack. Even if
the meal is generally safe, you avoid it because of how clearly the story conveys the risk
involved.

 Recency: Because recent events are more likely to stick in your memory, they may distort how
often or likely something occurs.

Example: You might give a popular film you recently saw an A+ on social media and suggest it
to friends if it is all the talk of the town. Still, you may find that this wasn't as good as some of the
other movies you've seen recently if you compare it to your previous viewings. You favour it more
than you typically would due to the recent release and the excitement surrounding it, which
distorts your assessment of its overall quality.

 Retrievability: This refers to how easily you can bring information to mind, which can affect your
judgment.

Example: You might begin to believe that all interviews are equally difficult if you recently
learned about a friend's difficult job interview. Although most of your previous interviews were far
more laid back, this new narrative distorts your vision and makes you nervous for your own
forthcoming one. Your past good experiences are eclipsed by the retrievability of that one vivid
account.

Representative Heuristics: When estimating the probability of an event, people use the representational
heuristic, a mental shortcut that compares an event's similarities to an example or typical case. People
make choices based on how accurate or similar an example seems to their perceptions rather than taking
statistical data or base rates into account.
 Insensitivity to Base Rates: People often neglect statistical information (base rates) when forming
judgments about probabilities.
 Example: Employers may overlook the fact that most successful candidates for a post have
considerable experience and instead focus on a prestigious degree if an applicant has a solid
educational background but no relevant work experience.

 Insensitivity to Sample Size: People frequently overlook the sample size when analyzing the
reliability of information.

Example: You may believe a small local restaurant is a fantastic location to eat if you've heard
five positive evaluations from friends. With only ten reviews overall, you should take into account
the possibility that a tiny sample may not fairly represent the overall quality, which could be poor
if the other five reviews are unfavourable.

 Misconceptions of Chance: People often misunderstand how random events work and tend to
expect that future random events will reflect past patterns.

Example: If the previous three weekends have had rain, you might assume that it will rain this
weekend as well. Rainfall history has no impact on the likelihood of rain in the future;
meteorological patterns still regulate the possibility of rain.

 Regression to the Mean: Because of random variation, more moderate outcomes are likely to
follow extreme ones.

Example: A student is likely to perform better than keeping against their usual average on the
next exam if they performed especially poorly on the previous one due to an unsuccessful exam
day or lack of preparation. Rather than continually low scores, this regression to the mean
illustrates that extraordinary performances are often accompanied by regular ones.

 The Conjunction Fallacy: People get this when they believe that certain circumstances are more
likely than a single, general one.

Example: Let us suppose you hear of a passionate teacher. Many would assume that they are
more likely to be a teacher who encourages kids after school than a teacher who only teaches.
This is known as the conjunction fallacy since it is more likely to be a teacher alone than to be a
mentor as well.

Confirmation Bias Heuristic:

 Anchoring: When individuals rely their choices primarily upon just one piece of
information they are given (the "anchor"), this is known as anchoring.

Example: if a shirt costs $100 and is later on sale for $70, you might consider that to be
an amazing price. However, you may decide that $70 isn't really a deal if you had
previously seen an identical shirt for $40. Your vision is distorted by the anchor of the first
$100

 Conjunctive and disjunctive events bias: This bias involves misjudging the probability of
combined events (conjunctive) or at least one of several events happening (disjunctive).
Example: Suppose you decide to see a drama that got high praise from experts. Many
would choose the latter solution if asked which is more likely: the film receiving major
 praise alone or getting appreciation in along with winning many awards. Conjunctive
bias, however, can be seen in the fact that there is a greater chance of the film being just
praised by critics than of it being both praised and winning an award.

 Hindsight and curse of knowledge: Hindsight bias is the tendency to see events as having
been predicted after they have already occurred. The inability to imagine what it was like
to not know something you now know is known as the "curse of knowledge."

Example: An example of hindsight bias would be someone who, after attempting a new
recipe that didn't work out well, says, "I knew it wouldn't work," thinking that the failure
was predicted. The curse of knowledge, wherein the expert is blind to the gaps in the
beginner's understanding, is illustrated when a skilled chef teaches a novice the recipe;
the chef may omit basic procedures, presuming the novice is familiar with them.

Part :2

My name is Lakshmi Soumya, and I am currently in my second year of PG Diploma in

Human Resource Management. In my four years as an HR Specialist in India, I faced
various situations where I learned about how decisions can be influenced by our thoughts
and biases.

One important scenario was selecting an employee for the "Quarterly Performer" award
for the first quarter of the year. This award is meant to recognize an employee who has
made significant contributions and demonstrated the company’s values.

Heuristics Used:

Availability Heuristic: When choosing candidates, I preferred to remember the recent

succeeds of certain staff. One candidate, for instance, had recently handled a significant
project that gained a lot of attention. Regardless of the fact that other employees had
consistently performed outstanding work throughout the quarter but lacked the same
visibility, they were considered an easy option because of this.

Affect Heuristic: My judgment was influenced by my personal relationships with a few

employees. I had a better rapport with an employee who I loved, even though their
performance stats weren't as good as others.

Representative Heuristic: We frequently sought for applicants who showed similarities to

previous quarterly performer title winners. irrespective of whether other candidates had
different but significant contributions, candidates having a similar personality or style to
previous winners were more likely to be favored.

Biases involved:

 Ease of Recall (Vividness & Recency): The finalist conversations focused on the most
recent and notable performances. More attention was given to the candidates who had
recently achieved something than to those who had performed consistently during the
quarter.
  Retrievability: Because certain candidates' accomplishments were well-documented, it
was simpler to talk about them. As a result, candidates who were more well-known were
given preference over those who may have done well without receiving as much attention.
 Insensitivity to Base Rates: Occasionally, the group failed to recognize that a large
number of high achievers had a track record of steady contributions without many
noteworthy accomplishments. Rather than appreciating the significance of consistent
performance, we took a chance by making decisions based on first impressions.
 Insensitivity to Sample Size: The majority of the supervisors' feedback was what we relied
upon. Although their opinions are important, they didn't give a clear picture of the
candidates' abilities.
 Misconceptions of Chance: A certain candidates had an excellent quarter, but this was a
result of external factors. We were deceived about their entire talents if we assumed that
their achievement was only due to their talent.
 The Conjunction Fallacy: In our discussions, that candidates with a combination of
positive traits (such being likeable and results-driven) would succeed. This prompted us to
overlook other candidates who excelled in one area, even if they were not as well-rounded.

This experience made me realize how crucial it is to make decisions with a range of perspectives and
well-defined criteria. It reinforced the need to be aware of biases and mental shortcuts so we can make
fair and objective evaluations.

CITATIONS:

 Daniel Kahneman: The riddle of experience vs. memory. (2010). TED Talk. Retrieved
from TED
In this talk, Kahneman explores how our memories and experiences collide in decision-
making, shedding light on biases in judgment.

 Behavioral Economics with Dan Ariely. Freakonomics Radio. Retrieved from

Freakonomics
In this episode, behavioral economist Dan Ariely discusses various cognitive biases and
their implications in the business world.

 Roberts, R. R., & Uskokovic, M. (2017). Cognitive biases in performance appraisals:

The role of the supervisor's alignment with organizational goals. Human Resource
Management Review, 27(2), 186-194.
This article discusses cognitive biases in performance evaluations, including how
vividness and recency affect judgments.