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COGNITIVE BIASES IN PROJECT DECISION-MAKING
AimCognitive biases of project managers
can lead to perceptual distortion and inaccurate judgment affecting business and economic decisions and human behavior in general.
Subjecting these biases to scientific investigations and independently verifiable facts is the aim of the presentation
Ignoring Regression to Mean
The tendency to expect extreme events to be followed by similar extreme events.
In reality, extreme events are most likely to be followed by an average event.
Anecdote
Daniel Kahneman was awarded Nobel Prize in Economic Sciences in 2002.
The notable thing about this Nobel prize was that Daniel Kahneman was not an Economist but a Psychologist
Confirmation bias
The tendency to search for or interpret information in a way that confirms to one's preconceptions.
Gambler's fallacy
The tendency to think that future probabilities are altered by past events.
This bias results from an erroneous conceptualization of the Law of large numbers (Trial size for expectancy given by Bernoulli’s theorem) .
Experimenter's or Expectation bias
The tendency for experimenters to believe in data that agree with their expectations for the outcome, and to disbelieve or downgrade the data that appear to conflict with those expectations.
Framing Effect
Drawing different conclusions from the same information, depending on how or by whom that information is presented.
Knowledge Bias
The tendency of people to choose the option they know best rather than the best option.
Normalcy Bias
The failure to plan for a disaster which has never happened before.
Outcome Bias
The tendency to judge a decision by its eventual outcome instead of quality of the decision at the time it was made.
This bias manifests in the review of project decisions.
Well Travelled Road Effect
Underestimation of the duration taken to traverse oft-traveled routes and overestimation of the duration taken to traverse less familiar routes.
Half-Truths
In ancient Roman law, two half proofs constituted a complete proof .
False Positives
The probability that ‘A’ will occur if ‘B’ occurs will generally differ from the probability that ‘B’ will occur if ‘A’ occurs.
The probability that an event will occur if or given that other event occur is called Conditional Probability.
Hindsight Bias
The tendency to see past events as being predictable at the time those events happened.
In day-to-day life the past often seems obvious even when we could not have predicted.
This bias manifests in the review of project decisions.
Anecdote
Army Chief of Staff General George Marshal was faulted by U.S Congress Committee for having missed all the “signs” of a coming attack of Pearl harbor.
Conclusion
Thank You
“False Positive” - Tested positive but HIV Negative.
“True Positive” - Tested positive and HIV positive
"True Negative” -Tested negative and HIV negative
“False Negative” - Tested negative but HIV positive
As per the rule of compounding probabilities, no finite number of partial proofs will ever add up to a certainty.
Doctor’s Confusion
“He would test positive if he was not HIV infected”
with the chances that
“He would not be HIV infected if tested positive”
The study of randomness tells us that the crystal ball view of events is possible, unfortunately, only after they happen.
If you get 45 heads in the first 100 tosses, the coin would not develop a bias towards tail for the rest of the tosses to catch up!