Pitfalls of Decision Making Essay

Pitfalls and Limitations of Decision Making

Heuristics and Biases:

‘People rely on a limited volume of heuristic concepts which reduce the complex tasks of examining probabilities and predicting principles to simpler judgmental procedures. ' (Kahneman et. 's, 1974) Heuristics are intellectual shortcuts or perhaps ‘rules of thumb' accustomed to simplify the choice making process. Heuristics result in great decisions and the main asset is that they save time. The majority of the heuristics are being used by people who have specific intellectual styles of find solutions to problems. However , heuristics can cause biases and methodical errors whenever they fail. Even though making decisions, people are commonly unaware of the heuristics and biases and when or in what instances they must be used. There are plenty of biases in the use of heuristics but some of the extremely common include; 1) Supply

2) Adjustment and Attaching

3) Representativeness

4) Motivational

1) Availability

‘There are situations through which people measure the frequency of your class and also the probability of the event by the ease which instances or perhaps occurrences may be brought to mind' (Kahneman ou. al, 1974) Availability can be described as the inability to accurately measure the probability of your particular event happening. The most typical factor is experience. Examination based on previous experience is probably not representative elizabeth. g. one may evaluate the possibility of a new local seafood shop in the Letterkenny area, failing, simply by imagining the different problems in may encounter. The structured review and analysis of target data can reduce supply bias. 2) Adjustment and Anchoring

‘In many scenarios, people make estimates simply by starting from a primary value that may be adjusted to yield the last answer' (Kahneman et. approach, 1974) Nearly all subjectively derived probability droit are too filter and are not able to estimate the actual variance with the event and possibly the best way to overcome this is to evaluate a set of beliefs, rather than just the mean. (I. e. anchoring) 3) Representativeness

This is the process by which an attempt to establish the probability which a person or perhaps object belongs to a particular group or class, based on the degree to which you will of that person/object fits into the stereotypical belief of associates of that group or category. In the addressing of these inquiries, people generally focus on the similarities with the respective person/object versus the unoriginal perception. The closer the similarity involving the two, then there is a large probability the fact that respective person/object belongs to a certain class. A good example from (Kahneman, 1974) reveals how representativeness may take place; Q: How can people measure the probability that Steve is usually engaged in a particular occupation by a list of opportunities (e. g. farmer, jeweler, airline initial, librarian or physician)? ‘Steve is a very timid and withdrawn, invariably useful, but with very little interest in people, or in the world of reality. A meek and tidy soul, he has a need for order and composition, and a passion for detail'. A: In the representativeness heuristic, the probability that Steve can be described as Librarian, for example , is assessed by the level to which he's representative of, or similar to, the stereotype of your librarian. Motivational

This is the circumstance when likelihood estimates tend to be influenced by incentives and so, the estimates do not accurately reflect someones true philosophy. These offers can be actual or identified.

Linked Decisions and presently there complexity

Associated decisions happen to be decisions manufactured today which in turn creates fresh decisions to be made in the future. There are virtually no time limits upon linked decisions and they can be minutes, weeks, years actually decades ahead. In terms of making linked decisions, to choose the right choice now, you must think and examine about decisions in the future. Consequently future planning is a large element, as well as understanding the marriage between the decisions...

Bibliography: Kahneman, D. And Tversky, A. (1974) Judgement under Concern: Heuristics and Biases. Science, Vol. 185, No . 4157, p1124-1131.

Hammond, J., Keeney, R., & Raiffa, H. (2002). Healthy choices – Part 9.

Hammond, J., Keeney, R., & Raiffa, They would. (2002). Smart Choices – Chapter 10

Actually after ending up in the group, I was assigned the part of concluding the ‘group decision making' area of the task in correlation with Shane. But , following researching and investigating that area we found that perhaps that part was more fitted to one individual and so when the group met once again, it was decided that I would look at the ‘pitfalls of decision making'. After a few research, I recently found it was a place with a large amount of information and decided I would personally try an incorporate what I felt was the most important issues, rather than centering on only one region. Firstly, I actually looked at the area of heuristics and biases. Using the class notes I touched within the various main types of biases associated with decision making. I tried to regress to something easier my details with estimates from the Kahneman's and Tversky's handout about ‘Judgement under Uncertainty, which was part of the compulsory reading surrounding topic 1 . I then touched on Linked Decisions and tried to tension the complexness of them. My spouse and i felt it had been important to be observant of the 6th steps in examining linked decisions; I got a lot of information to try back up my personal points again through the ‘Smart Choices' Handout. Finally I actually talked about emotional traps, how they happen and what are the simplest way00 in which to cope with them.

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