Judging & Making Decisions

John is a passionate environmentalist who firmly believes in the urgency of addressing climate change. He regularly reads articles and follows social media accounts that align with his views. One day, he comes across a study that claims there is a consensus among scientists regarding the causes of climate change. Excited to have his beliefs reinforced, John quickly accepts the study's findings without critically evaluating its methodology or considering alternative perspectives. Despite the existence of dissenting opinions within the scientific community, John selectively focuses on information that confirms his pre-existing beliefs.

• Confirmation Bias

• Hindsight Bias

• Anchoring Bias

• Availability Bias

Answer explanation

John selectively focuses on information that confirms his pre-existing beliefs, illustrating confirmation bias.

Mary is an investor who closely follows the stock market. One day, she hears about a new technology company and decides to invest a significant amount of money in its stock. Over the next few months, the company's stock price experiences significant growth, and Mary feels a sense of satisfaction about her investment decision. Looking back, she becomes convinced that her choice was obvious and that she accurately predicted the company's success. However, she fails to acknowledge the uncertainty she faced when initially making the investment decision.

• Confirmation Bias

• Hindsight Bias

• Representative Bias

• Anchoring Bias

Answer explanation

This illustrates hindsight bias, as Mary's perspective is distorted by the knowledge of the outcome, making the past events seem more predictable than they actually were.

Mike is at an electronics store looking to purchase a new laptop. As he browses through the options, he notices a high-end laptop with a price tag of $2,500. This price becomes the anchor in his mind. Subsequently, when he sees a mid-range laptop priced at $1,500, he perceives it as a great deal, even though it might be more expensive than similar laptops at other stores.

• Confirmation Bias

• Hindsight Bias

• Anchoring Bias

• Availability Bias

Answer explanation

Mike's judgment is anchored to the initial high price he encountered, influencing his perception of value.

Lisa is a hiring manager tasked with selecting a new software engineer for her team. She interviews two candidates, Alex and Jordan. Alex is a recent graduate with excellent academic credentials, while Jordan has years of experience in the industry but with a less impressive academic background. Despite the fact that the job requires practical skills and experience, Lisa leans toward hiring Alex because he fits her mental prototype of a successful software engineer – someone with a strong academic background.

• Hindsight Bias

• Anchoring Bias

• Representative Bias

• Availability Bias

Answer explanation

In this scenario, Lisa demonstrates representative bias by favoring a candidate who matches her preconceived stereotype, even if it may not be the most relevant criteria for the job.

Sarah, a news editor, is assigned to cover a series of stories on car accidents in the city. After researching and reporting on several accidents involving a specific make and model of car, she begins to believe that this particular car is more prone to accidents. When discussing car safety with friends and family, she highlights incidents involving that specific car, overlooking the broader data on car accidents and safety ratings.

• Hindsight Bias

• Anchoring Bias

• Representative Bias

• Availability Bias

Answer explanation

Sarah's perception is influenced by the recent and readily available information she encountered in her reporting, illustrating availability bias.

Sarah is a manager at a software development company and is tasked with hiring a new team member. She interviews two candidates, Alex and Jordan. Sarah initially has a positive impression of Alex, as they share similar hobbies and have a friendly conversation during the interview. When reviewing their resumes, Sarah focuses on the aspects that confirm her initial impression of Alex, such as their educational background and work experience that align with her own. On the other hand, she tends to overlook or downplay Jordan's qualifications and achievements.

• Confirmation Bias

• Anchoring Bias

• Representative Bias

• Availability Bias

Answer explanation

Despite both candidates being equally qualified, Sarah's confirmation bias leads her to favor Alex and offer them the job.

Mark is an investor who recently sold his shares in a technology company just before its stock price plummeted due to a market downturn. Mark becomes overconfident in his decision and starts believing that he accurately predicted the market downturn. He begins to attribute his sale to his exceptional foresight rather than acknowledging that it was partly influenced by luck.

• Hindsight Bias

• Anchoring Bias

• Representative Bias

• Availability Bias

Answer explanation

As a result, Mark becomes more risk-averse in his future investment decisions, believing that he possesses an uncanny ability to predict market movements based on the hindsight bias that distorts his perception of the past events.

Emily is shopping for a new laptop and visits an electronics store. She sees a high-end laptop priced at $2,500, which she considers expensive. Later, she comes across a mid-range laptop priced at $1,200. Although this mid-range laptop might be considered expensive in a different context, Emily perceives it as a good deal compared to the initial high-end anchor price. Influenced by the anchor of $2,500,

• Anchoring Bias

• Representative Bias

• Availability Bias

• Confirmation Bias

Answer explanation

Emily decides to purchase the $1,200 laptop, even though she might have found a more suitable and reasonably priced option if she had not been anchored to the initial high price

Jessica is a hiring manager for a financial firm and is looking to fill a position for a data analyst. She receives two resumes – one from Sam, who has a degree in statistics and has worked in data analysis for the past five years, and another from Alex, who has a degree in literature but has taken online courses in data analysis and has two years of experience in a related field. Despite Alex's relevant experience and skills, Jessica leans towards hiring Sam because his background seems more representative of a typical data analyst.

• Representative

  Bias

• Availability Bias

• Confirmation Bias

• Hindsight Bias

Answer explanation

Jessica's decision is influenced by the representative bias, where she relies on stereotypes and preconceived notions about the educational and professional background of a data analyst.

Emily is planning a vacation with her friends and is considering different destinations. She recently watched a documentary about shark attacks, and the vivid and frightening images of shark encounters are still fresh in her mind. As Emily researches potential vacation spots, she unconsciously gives more weight to destinations that are coastal and near the ocean. She becomes overly concerned about the risk of shark attacks, even though the statistical likelihood of encountering a shark is extremely low.

• Availability Bias

• Representative Bias

• Anchoring Bias

• Hindsight Bias

Answer explanation

Due to the availability bias, Emily's decision is influenced by the recent and easily accessible information she encountered in the documentary. She fails to consider other factors such as climate, activities, and cultural experiences in her vacation planning because the vivid images of shark attacks dominate her thoughts, making her overly cautious about coastal destinations.