bias

Examples of bias in the following topics:

• Diversity Bias

  • A cognitive bias is the human tendency to make systematic decisions in certain circumstances based on cognitive factors rather than evidence.
  • Bias arises from various processes that are sometimes difficult to distinguish.
  • Examples include the false-consensus bias, status quo bias, in-group favoritism, and stereotyping.
  • A cognitive bias in which the current baseline (or status quo) is taken as a reference point, and any change from that baseline is perceived as a loss.
  • A large body of evidence, however, shows that an irrational preference for the status quo—a status quo bias—frequently has a negative affect on decision-making.

• Personal Biases

  • Confirmation bias: This is probably the most common and the most subliminal, as many people naturally exhibit this bias without even knowing it.
  • Often times called selective search for evidence, confirmation bias occurs when decision makers seek out evidence that confirms their previously held beliefs, while discounting or diminishing the impact of evidence in support of differing conclusions.
  • Overconfidence bias: This is another potentially disruptive personal bias and occurs when a person subjectively overestimates the reliability of their judgments versus an objectively accurate outcome.
  • Groupthink: This is a bias within group decision making that leads the group toward harmony rather than a realistic evaluation of alternatives.
  • Other personal biases can take on a variety of forms and may extend to either the holder of the bias or to external parties.

• Cognitive Biases

  • Perceptual distortions, such as cognitive bias, can result in poor judgement and irrational courses of action.
  • Essentially, there must be an objective observer to identify cognitive bias in a subjective individual.
  • Bias arises from various processes that can be difficult to distinguish.
  • Self-serving bias - Another common bias is the tendency to take credit for success while passing the buck on failure.
  • Belief bias - Individuals often make a decision before they have all the facts.

• Cognitive Biases as a Barrier to Decision Making

  • Confirmation bias: This bias occurs when decision makers seek out evidence that confirms their previously held beliefs, while discounting or diminishing the impact of evidence in support of differing conclusions.
  • Overconfidence bias: This bias occurs when a person overestimates the reliability of their judgments.

• Determine a Course

  • One of the best-known theories about bias in decision making is Kahneman and Tversky's prospect theory.
  • Evaluate the importance of bias and prospect theory in effectively ensuring decision makers arrive at the ideal option

• Evaluate the Results

  • This type of bias can limit an honest assessment of what went right and what didn't, and thus reduce what can be learned by carefully evaluating outcomes.
  • How the decision maker dealt with uncertainty or bias can be examined in the face of the results that have transpired.

• Setting Transparency Norms

  • Where there is transparency, managers do not bias, embellish, or otherwise distort facts with the aim of misleading or misrepresenting reality.
  • Examples of decisions to increase corporate transparency include when a firm voluntarily shares information about their ecological impact with environmental activists; actively limiting the use of technical terminology, fine print, or complicated mathematical notations in the firm's correspondence with suppliers and customers; and avoiding bias, embellishment, or other distortions of known facts in the firm's communications with investors.

• Evaluate Alternatives

  • In order to eliminate bias in a decision, one can use tools such as influence diagrams and decision trees to evaluate alternatives.

• Managers Role in Ethical Conduct

  • These changes may be in response to an internal determination based on the experience of employees; for instance, additional clarification may be needed about what constitutes nepotism or unfair bias in hiring.

• Differences in Status

  • Status differences can create a bias against those with the perceived lower status.