Identify the heuristics that decision makers might use in making estimates in the situations listed below. Explain how biases might emanate from the use of these heuristics.
(a) Members of an interview panel making estimates of the probability that a candidate would be a successful appointment.
(b) A marketing manager of a company manufacturing computer peripherals making a forecast of the number of new orders that will be obtained next month.
(c) A sales executive estimating the correlation between the sales of a product and advertising expenditure.
(d) A manager of an international construction company making an estimate of the risk of civil unrest in a country which was formerly part of the Soviet Union and where the company is considering making investments.
(e) A company doctor estimating the degree of association between the exposure/non-exposure of workers to a chemical pollutant and the incidence of a particular respiratory illness among these workers.
(f) The manager of a manufacturing company estimating the relative probability of (i) a strike at the company’s Pittsburgh plant in the next year and (ii) the company experiencing a long-term loss of market share following a strike over pay at its Pittsburgh plant in the next year.