anchoring estimates are stated in the form of a confidence interval. Let’s take for an example a situation where the value of a stock market index on a particular day is predicted by people by defining an upper and lower bound so that they are 98% confident that the true value will be falling in that range. The most reliable finding is that people anchor their upper and lower bounds too close to their best estimates. This in turn leads to an overconfidence effect in decision-making. Preventing/ Mitigation: According to the effortful nature of adjustment, adjustment-based anchoring effects may be possibly diminished by incentives that can help to engage in effortful thoughts. Eliminating the “useless” options ourselves as we make decisions …show more content…
This bias effectively describes the human belief revision in which persons tend to over-weigh the prior information (base rate) and tend to under-weigh new information when compared to Bayesian belief-revision. According to Bayesian belief-revision theory, “change in opinion is very orderly and usually directly proportional to the numbers of Bayes Theorem, but it is insufficient in amount”. Conservatism is a mental process in which people rely on to their prior views at the expense of discarding new information. Conservatism bias tends to show under-reaction to completely new information. The mechanism that explains Conservatism bias is an information-theoretic generative mechanism that assumes a noisy conversion of objective evidence termed as observation into subjective estimates termed as …show more content…
The following three questions can be thrown in minimizing the impact of cognitive biases in decision-making. Are there any reasons of suspecting people while they make recommendations of biases purely based on self-interest, overconfidence, or attachment to their past experiences? Do most of the people fall in love with the recommendations they make? Were there any kind of disagreements within the decision-making team or was there group thinking? Whilst answering to these questions, one must be carefully examine as to how each question may be woven into the offered recommendation and then separate them from its value. An organization can follow these steps to help them reduce biases: (1) Actively focusing on the goals of the organization (2) Looking for information that disconfirms your belief (3) Avoiding creating meaning out of random events (4) Take a step ahead and do not restrict your options Fighting Back