This document discusses various biases and errors that can negatively impact decision making. It outlines biases like overconfidence, where decision makers believe they know more than they actually do; anchoring effect, where too much weight is given to initial information; and confirmation bias, where decision makers only seek information confirming existing views. Other biases discussed include framing bias, availability bias, representation bias, sunk cost bias, and hindsight bias. The document emphasizes that while rules of thumb can make decisions quicker, they may not be reliable and can lead to errors and biases that impair good decision making.

1. DECISION MAKING
BIAS AND ERRORS
Dr Amit Kumar Lal
Founder, Skillics Learning Solution

2. Overview
•Most of the manager have a tendency to take
decisions based on rule of thumb.
•Rule of thumbs makes decision making
quick and easy.
•However, these rule of thumb may not be
reliable and may lead to error and biasness.

3. Types of Error or Biasness in Decision
Making
• Overconfidence Bias
• Immediate Gratification.
• Anchoring effect
• Selective Perception
• Confirmation
• Framing
• Availability
• Representation Bias
• Randomness
• Sunk costs
• Self Serving
• Hindsight

4. Overconfidence
•This error occurs when the decision maker
believe that they know more than what they
actually do.
•Another cause is holding too much positive views
of themselves.
•In simple words “ I can’t go wrong”

5. Immediate Gratification
•Decision makers who can’t wait and want
immediate results of their decision.
•They even don’t care of the cost.
•For them any choice that provide quick
payoff is more appealing to them.

6. Anchoring effect
•Some decision maker have a tendency give
more weightage to first piece of information.
•They tend to ignore the information received
in the later stages.
•First impression their priority

7. Selective Perception Bias
•When decision makers selectively organise
and interpret events based on their biased
perception.
• They create a perception (which may be
wrong) and take decision based on that.

8. Confirmation Bias
• There are decision makers who seek out
information that reaffirms their past
judgements and leave out information that
challenges their preconceived views.

9. Confirmation Bias
• There are decision makers who seek out
information that reaffirms their past
judgements and leave out information that
challenges their preconceived views.

10. Framing Bias
• When a decision maker highlight certain
aspect of a situation while excluding others.
• they have a tendency to omit certain parts
and end up on incorrent reference point.

11. Availability Bias
• When decision makers only remembers
events that are more recent.
• This distorts their judgements as they are
not able to recall past events.

12. Representation Bias
• When decision makers tries to compare
every new situation with the past event.
•They have a tendency to a create analogies
and see identical situations where they don’t
exist.

13. Randomness Bias
• when decision makers have a tendency to
create meaning from random events.
•There are so many events that happens by
chance and there is no way you can predict
them.

14. Sunk Cost Bias
• This error occurs when decision makers
forget that current choice can’t correct their
past.
• They keep on investing time on their past
expenditure rather than focussing on future
consequences.

15. Self Serving Bias
• This error occurs when decision makers are
quick to take credit of their success and
blame the outside factors for the failure.

16. Hindsight Biasness
• When decision makers say that they would
have predicted the results of any event after
the event outcome is already known.

17. THANKS