Management

Question 1

When manager do an important decision, they are easy to make decision-making bias. It influences by flaw in judgment which is caused by memory, social attribution, and statistical errors. Decision-making biases are common to all managers because they are followed to predictable and obvious patterns. Besides, they lead by their human tendency to make systematic decisions in certain circumstances based on cognitive factors rather than evidence. Then, the eight bias which are discussing in this essay are overconfidence bias, heuristic, immediate gratification bias, anchoring effect, framing bias, availability bias ,sunk cost error and hindsight bias.

Overconfidence bias means that the managers are holding unrealistically positive views of one’s self and one’s performance. The overconfidence effect is a well-established bias in which someone's subjective confidence in their judgments is reliably greater than their objective accuracy, especially when confidence is relatively high.  For example, in some quizzes, people rate their answers as "99% certain" but are wrong 40% of the time.

Heuristic refers to experience-based techniques for problem solving, learning, and discovery. Where an exhaustive search is impractical, heuristic methods are used to speed up the process of finding a satisfactory solution. For example, the most fundamental heuristic is trial and error, which can be used in everything from matching nuts and bolts to finding the values of variables in algebra problems.

Immediate Gratification Bias means that a manager should not only focus on current benefits and avoid current costs when he or she makes decision. This will not result in the best decision made. For these individuals, decision choices that provide quick payoffs are more appealing than those in the future. For example, a factory manager is considering building a factory. Factory A costs RM1 million but can produce RM200, 000 profit per year while factory B costs RM2 million...