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Unit II E (1) BBA 3826 Heuristics and Biases in Decision-Making Columbia Southern University BBA 3826 Managerial Decision Making Heuristics and Biases in Decision-Making A heuristic is a problem-solving strategy that incorporates one's personal experience. In decision-making, heuristics pr...
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BBA 3826
Heuristics and Biases in Decision-Making
Columbia Southern University
BBA 3826 Managerial Decision Making
Heuristics and Biases in Decision-Making
A heuristic is a problem-solving strategy that incorporates one's personal experience. In
decision-making, heuristics provide ways for scrutinizing a restricted set of signals or
alternative options (Bazerman & Moore, 2013). Unfortunately, while heuristics can help us
solve problems and make decisions faster, they can also lead to errors and biased judgments.
This essay examines the origins of popular heuristics in human psychology. Understanding
how heuristics work can help us better understand our own biases and influences and
improve problem-solving and decision-making (Bazerman & Moore, 2013).
Understanding how heuristics function can help us better understand our own biases and
influences and help us solve problems and make better decisions (Bazerman & Moore,
2013). Each day, we make judgments about whether we can depend on someone, if we
should do something (or not), which path to take, how to reply to someone's question, and so
on. However, we would never get anything executed if we spent all of our time researching
and analyzing every possible consequence of these decisions and actions. Thankfully, our
minds make things easy for us by employing heuristics or efficient thinking processes (Ehrig
& Schmidt, 2021). A heuristic is a mental shortcut that allows us to make rapid decisions and
judgments without spending a lot of time investigating and analyzing data (Ehrig & Schmidt,
2021).
Both problem-solving and decision-making rely heavily on heuristics (Bazerman &
Moore, 2013). For example, when strolling down the street, you might notice a construction
, crew pulling a pallet of cinder blocks up on a pulley. You would probably choose to go
around that area of the street rather than straight below the cinder blocks without a break in
your stride. Because your intuition tells you that walking beneath the cinder blocks could be
dangerous, you quickly decide to walk around the construction zone. You are unlikely to
pause and examine the situation, let alone calculate the likelihood of cinder blocks falling on
you or your chances of surviving if that happened. Instead, you would utilize a heuristic to
make a quick decision that didn't require much thought. While heuristics can help us solve
problems and make decisions faster, they can also lead to errors and biased judgments
(Bazerman & Moore, 2013). It is important to remember that while something worked in the
past doesn't indicate it will work again. Depending on an established heuristic, it can make it
difficult to perceive alternate answers or generate new ideas (Ehrig & Schmidt, 2021).
As a result of their research and theories, cognitive psychologists have identified many
decision-making heuristics. Heuristics can be broad or narrow, and they can be used for
various purposes (Bazerman & Moore, 2013). For example, the "price heuristic," in which
people assess more expensive items to be of higher quality than lower-priced items, is
exclusive to consumer behavior; however, the "outrage heuristic," in which people consider
the severity of a crime while deciding on the punishment, is not (Bazerman & Moore, 2013).
According to Bazerman and Moore, the representative, availability, anchoring and
adjustment heuristics are three key heuristics (2013).
A mental shortcut that enhances decision-making by comparing evidence to mental
prototypes or beliefs is known as the representational heuristic (Bazerman & Moore, 2013).
It's the tendency to estimate the frequency or possibility of an event based on how similar it
is to a typical case (Bazerman & Moore, 2013). People who place high importance on this are
more likely to neglect other factors that substantially impact actual frequencies and
probabilities, such as chance rules, independence, and norms (Bazerman & Moore, 2013).
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