GMS200 Chap 3 - Info & Decision Making
Overview: - Biases when making decisions
- View decisions critically.
- Influence clients by a favorable alternative.
a. 36-inch TV: $800
b. 46in: $1340
c. 50in: $1480 >> IDEAL
THE DECOY EFFECT
- Observing and recording data is the central aspect of management
- Sometimes, the data at hand is not ideal.
THE SIMPSON’S PARADOX:
When look at number in figure collectively/ in total, it gives you a different
result when you break it up in categories. Leads to unnecessary
- One stock broker provides monthly predictions that correctly predicted
7 of 9 downturns in econ. Over past 3 yrs. Is he an expert? “What if he
said down 34 times” Not a reliable source.
- Experts predict no better than any other person. Be critical when
listening to experts.
Classic “Linda” Problem
- She becomes: 1/ Bank teller; or 2/ Bank teller and active feminist.
- The likelihood of one thing to be true is larger than two things to be true.