11-43 Decision-Making Biases Obtain from your library a copy of the following ar
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Question
11-43 Decision-Making Biases
Obtain from your library a copy of the following article: D. Kahenman, D. Lovallo, and O. Sibony, "Before You Make That Big Decision..." Harvard Business Review competent, and well-intentioned managers are fallible..." (p. 60). They discuss a variety of cognitive biases associated with the decision-making process. Such biases can diminish the quality of decision. The authors maintain that understanding these biases can diminish the quality of decisions. The authors maintain that understanding these biases may decrease their effect and offer a checklist designed to facilitate decision quality control.
REQUIRED:
1. What is meant by the term "cognitive bias"?
2/ What is the specific decision-making context addressed by the authors of this article?
3. What are the three major categories of the decision quality-control checklist recommended by the authors?
4. What are the specific cognitive biases discussed by the authors of this article?
Explanation / Answer
a)A cognitive bias refers to a systematic pattern of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion. Individuals create their own "subjective social reality" from their perception of the input.
b)When an adult does not have the capacity to make a decision and they do not have a guardian or personal directive, a health care provider (a physician, nurse practitioner, or dentist for dental care only), may choose a relative to act as a specific decision maker and make the necessary decision on behalf of the adult. Specific decision-making is used for time sensitive decisions. It is restricted to: health care; and temporary admission to or discharge from a residential facility. For example, an adult’s ability to make a decision may be impaired for a period of time after they have had a stroke. Under specific decision-making, their physician may ask a relative to provide consent to move the adult to a rehabilitation facility for treatment. The health care provider must first assess whether or not the adult is able to make decisions. The specific decision-making option is only used after the adult has been assessed as being incapable of providing informed consent for a specific decision and the health care provider has identified that a treatment or placement decision is needed.
c)our quality control program should take into account the individual characteristics of your organization and reflect: The size and structure of your organization The experience and expertise of the staff The geographic areas of operation The branch structure The volume and types of mortgages originated The origination sources used (for example, from mortgage brokers or correspondents or via the Internet) Any significant changes in the product lines, origination sources or production process Controls in place to ensure that internal policies and procedures are followed Your quality control program must: Be in writing Provide for standard operating procedures for all employees who will be involved with or affected by the quality control process Be capable of evaluating and monitoring the overall quality of your mortgage production on a regular and timely basis Include preclosing and postclosing quality control reviews Include procedures to ensure that sample selection mortgage file reviews and the reporting of findings to senior management are conducted in a timely manner
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