SMG SM 131 Lecture Notes - Lecture 1: Foxconn, Bernard Madoff, Whistleblower
6 Apr 2016
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Quick intuitive decision vs. thinking through thoroughly: acting on gut reaction can lead to bias. What is in front of us is all we need to make decision: called system 1 thinking: based on intuition or emotion, quick, effortless, system 2 thinking: slower, more conscious, logical, and critical. What you see is not all there is. When we think about future, rarely take into account things that will affect decisions. Ford pinto rushed to produce b/c competing with other small car companies, gas prices going up, cheap and light . Motivated blindness: failure to notice others" unethical conduct when doing so would harm you: we see what we want to see . Conflict of interest: a bias that favors those that benefit you: may be unavoidable, but important how affect decisions. Moody"s, standard and poor"s, and fitch ratings all labeled lehman a safe investment the day they went bankrupt: paid by companies they rate (,500 - ,000,000)
