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Business Economics Assignment 01

Hannah provides examples of biases from her own experiences: [1] She used to continue supporting a girl group due to sunk costs of time and money invested, but now evaluates each release objectively. [2] She recognizes a tendency to resist career changes due to status quo bias, but is working to consider new perspectives. [3] At work, anchoring bias once led inefficient disaster recovery plans when a boss relied too heavily on initial data, but the utility now gathers diverse input and regularly reevaluates decisions.

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Hannah Mica Rodriguez
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65 views

Business Economics Assignment 01

Hannah provides examples of biases from her own experiences: [1] She used to continue supporting a girl group due to sunk costs of time and money invested, but now evaluates each release objectively. [2] She recognizes a tendency to resist career changes due to status quo bias, but is working to consider new perspectives. [3] At work, anchoring bias once led inefficient disaster recovery plans when a boss relied too heavily on initial data, but the utility now gathers diverse input and regularly reevaluates decisions.

Uploaded by

Hannah Mica Rodriguez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Name: Hannah Mica B Rodriguez Date: February 2, 2023

Group 1 MBA 6113

Kindly the following exercise from our text,

In your organization or personal experience, identify and explain any decisions that
have been systematically biased by the: a) sunk cost fallacy, b) status quo bias, or
c) anchoring. Explain how the organization or you could have achieved a better
outcome by controlling the bias.

a) The sunk cost fallacy happens when an individual continues to invest in something due to
the amount of resources (e.g., time, money, energy) already invested, even if the current
costs outweigh the benefits, rather than considering the future potential outcomes. As a
Korean Pop fan, I've been in a similar situation. I used to really like a girl group and would
continue to support them even though I no longer enjoy their music as much as I used to
because I had already invested a lot of time and money in the group (e.g., concert tickets,
merchandise). To counteract this bias, I evaluated each performance or release
objectively, taking into account factors such as the quality of the music, the effort put into
the production, and the overall impact on my enjoyment. As a result, rather than being
swayed by sunk costs, I was able to make decisions that align with my current preferences
and values. I still occasionally listen to their music up to this point, but I'm not as invested
as I once was.
b) Status quo bias refers to the tendency to maintain the current state of affairs, even if
change could lead to better outcomes. The tendency to stick with the current situation
because it is familiar and comfortable rather than considering other options. Despite the
possibility of greater fulfillment and success, I can personally be afraid of the unknown
and resist changing careers or taking on new tasks. I've realized that in the long term, this
might lead to a lack of innovation and progress, as well as lost chances for growth and
personal development. I believe that in order to overcome this tendency, I need actively
look for and examine fresh perspectives as well as objectively weigh the advantages and
disadvantages of change. I can also ask the opinions of reliable people and engage in
activities that are outside of my comfort zone. One of the first steps I'm taking to be able
to get over the status quo bias seems to be enrolling in an MBA program.
Name: Hannah Mica B Rodriguez Date: February 2, 2023
Group 1 MBA 6113

c) The anchoring bias refers to the tendency to rely too heavily on the first piece of
information encountered when making decisions, and to be insufficiently influenced by
subsequent information. In my line of work, this bias could occur when decision-makers
are making decisions about investments or contracts and strategies, and they have an
initial expectation or reference point that is difficult to change, even in the face of new or
conflicting information. This happened once a while ago during the disastrous Typhoon
restoration season when one of the new comer bosses relied heavily on first data he was
explained to. It was so difficult to change his mind on that certain thought that it almost
cost us an inefficient strategy on restoration plans . Rather than relying on a single point
of reference, we could establish a systematic and transparent process for evaluating and
weighing all relevant information to control this anchoring bias. Aside from that, we could
include individuals with diverse perspectives and expertise in the decision-making process
to help ensure that all relevant information is appropriately considered and weighed. We
could also gather data from a variety of sources, as well as conduct regular evaluations, to
ensure that decisions are based on the most current and accurate information. By
implementing these practices, the utility was able to improve its results by reducing the
impact of anchoring bias. Nonetheless, we’ve overcome that season pretty quickly so all
is good now.

PS. As much as I'd like to discuss much decisions made at work, I signed an NDA a long time ago, so I can't do so here.

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