what are the different types of errors in decision making give 1 real life scenario of each
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what are the different types of errors in decision making give 1 real life scenario of each
what are the different types of errors in decision making give 1 real life scenario of each
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There are different types of errors in decision making, including:
1. Confirmation bias - This is the tendency to look for information that confirms our pre-existing beliefs and ignore information that contradicts them.
✴ A real-life scenario of this is a hiring manager who has a bias towards candidates from Ivy League schools. They may ignore qualified candidates from other schools and only focus on those from Ivy League schools.
2. Overconfidence bias - This is the tendency to overestimate our abilities and the accuracy of our predictions.
✴ A real-life scenario of this is a trader who is overconfident in their ability to predict the stock market. They may make risky trades based on their predictions and end up losing a lot of money.
3. Anchoring bias - This is the tendency to rely too heavily on the first piece of information we receive when making a decision.
✴ A real-life scenario of this is a home buyer who sees a house listed at a high price. They may anchor on that price and be unwilling to offer a lower price, even if the house is not worth the asking price.
4. Hindsight bias - This is the tendency to believe, after an event has occurred, that one would have predicted or expected the outcome.
✴ A real-life scenario of this is a sports fan who claims they knew their team was going to win after the game is over, even if they did not predict the outcome before the game.
5. Availability bias - This is the tendency to rely on easily available information when making a decision, rather than seeking out more relevant but less easily available information.
✴ A real-life scenario of this is a doctor who is more likely to diagnose a patient with a disease that they have recently seen in another patient, rather than considering all possible diagnoses.
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