Q 16.Cognitive Biases and Effects

Front

Describe the primacy effect and give one example.

Back

The primacy effect refers to the tendency for individuals to better remember and give more importance to the first piece of information presented when making judgments. Example: In a job interview, if the first candidate presents themselves very confidently, the interviewer may give more weight to this first impression.

Front

Explain groupthink and provide one real-life scenario.

Back

Groupthink is a psychological phenomenon where the desire for group cohesion leads to poor decision-making. Example: The Bay of Pigs invasion, where advisors to President Kennedy failed to voice concerns about the plan due to a desire to maintain consensus.

Front

What is confirmation bias, and how does it impact decision-making?

Back

Confirmation bias occurs when individuals favor information that confirms their pre-existing beliefs while disregarding contradictory evidence. Example: A manager who believes an employee is highly productive may focus on evidence that supports this belief while ignoring evidence that suggests otherwise.

Front

Define the anchoring bias and provide an example of how it might occur in a negotiation.

Back

Anchoring bias is the cognitive bias where individuals rely heavily on the first piece of information they encounter when making decisions. Example: In salary negotiations, if the employer starts by offering a very low salary, it can anchor the entire negotiation process.

Front

What is the hindsight bias, and how can it affect business decisions?

Back

Hindsight bias is the tendency to believe, after an event has occurred, that one would have predicted the outcome. Example: After a project fails, a manager might claim they "knew it would happen," which could prevent them from learning from the failure.

Front

Explain the Dunning-Kruger effect and give an example of its occurrence in the workplace.

Back

The Dunning-Kruger effect is a cognitive bias in which individuals with low ability in a task overestimate their competence. Example: A new employee may overestimate their skills and volunteer to lead a complex project, unaware of their actual lack of experience.

Front

What is the framing effect, and how can it influence consumer behavior?

Back

The framing effect occurs when the way information is presented affects decision-making. Example: A product advertised as “90% fat-free” is likely to be perceived more favorably than one advertised as “contains 10% fat.”

Front

Describe the availability heuristic and give an example of how it affects decision-making.

Back

The availability heuristic is a mental shortcut where people make decisions based on how easily examples come to mind. Example: After hearing about high-profile data breaches, a company’s board may overestimate the likelihood of a similar breach happening to them.