IV.

• Cognitive Biases 

  • based on subjective standards or perspectives. 
  • lead managers to make wrong, illogical conclusions regarding situations and people.
•  Escalating commitment 

  • despite knowledge of a project’s failure, continues to acquire more resources to pursue the project instead of abandoning it. 
• Prior hypothesis bias

  • manager holds on to prior belief that a project will succeed even when evidence to the contrary has been provided. 
• Representativeness 

  • make generalizations based on a small sample or a single experience
  • happens every time a new product becomes popular and starts a trend.
• Reasoning by analogy 

  • conclude that the results of one situation can be repeated in a similar situation.
• Illusion of control

  • Many top-level managers commit when they become overconfident regarding their ability to solace problems. 
  • Using their years of experience and relying on their status in the industry, they tend to underestimate the problems they encounter.
  • This attitude clouds their judgment and eventually leads to poor decisions.
•  Framing bias

  • correlates the outcome with how a problem or decision is framed.
• Availability error 

  • immediately use available resources on a project that is expected to immediately provide profit, rather than holding off and waiting for a later opportunity that will generate even greater profit.