The paper "Contrasting Process and Outcomes of Groups and Individual Judgment" is an outstanding example of a management annotated bibliography. This article provides a comparison between the use of base-rate and individuating information by individuals and groups. Individuals have the ability to make category judgments through a determination of the degree to which an object is representative of a category. Judgment by representatives often leads to biases and less sensitivity to prior probabilities or base rates. This is what constitutes the base rate fallacy. Judgments by groups contain limited bias compare to those done by individuals.
This is because groups are in possession of more resources and they can cancel the error made by individuals this makes it a requirement for groups to be more sensitive to the base rate compared to individuals. Base rate fallacy is more likely to occur in organizational management. Organizations that are highly performing in their areas of expertise are often those that are managed by executives whose decision are made by a group. This means that the management through its corporate governance strategy engages in a consultative discourse to ensure that employees and other stakeholders are involved indirectly in the decision-making process.
The situation is however different in an organization where the manager makes all the decisions without consulting anyone. This limits the ability of the organization to grow as most of the stakeholders will feel rejected and this makes it relatively difficult to the said persons to embrace the decisions and own ideas in ways that will ensure progress for the organization and the stakeholders. Article (Arkes & Ayton, 1999): The Sunk Cost and Concorde Effects: Are Humans less rational Than Lower Animals? August 2, 2015 The sunken cost effect represents a maladaptive economic attribute often manifested in the greater tendency of continuing an endeavor once an investment of money, time ort effort has been made.
The main contributor to the sunken cost effect is the desire of people not to appear as wasteful. An individual would consider pursuing a course in which he or she has invested major resources compared to that which has attracted limited resources in term of the investment. Overgeneralization has been considered as the leading case of the sunk cost effect.
This is because it is often manifested in the failure by the participants to note cost-benefit considerations. The reason why humans more than the other lower animals are more likely to fall prey to the sunk cost effect is attributable to their ability to abide by abstract and rational laws. My brother is a football fan and he bets on matches. one way by which he operates according to the sunk cost effect is that he is always willing to let go of a bet attracting limited financial resources but actively pursues one in which he invested more money. The sunken cost effect can also occur among parents while assessing the performance of their children.
When a parent has two children studying in different schools, he or she tends to concentrate on the performance of the child whose school is relatively expensive. This does not mean that the parent cares less for the child whose school is cheaper but it means that the parent wants to be relatively less wasteful by ensuring that he or she receives value for the money invested.
Argote, L., Devadas, R & Melone, N. (1990). The Base-Rate Fallacy: Contrasting Processes and Outcomes
of Group and Individual Judgment. Organizational Behavior and Human Decision Processes 46, 296-310 (1990)
Arkes, H & Ayton, P. (1999). The Sunk Cost and Concorde Effects: Are Humans Less Rational Than Lower
Animals? Psychological Bulletin 1999, Vol. 125, No. 5, 591-600
Biyalogorsky, E., Boulding, W & Staelin, R. (2008). Stuck in the Past: Why managers Persist with New Product
Failure. Journal of Marketing Vol. 70, 108–121
Durand, R. (2003). Predicting a Firm’s Forecasting Ability: The Roles of Organizational Illusion of Control and
Organizational Attention. Strategic Management Journal Strat. Mgmt. J., 24: 821–838
Gilbey, A & Hill, S. (2012). Confirmation Bias in General Aviation Lost Procedures. Applied Cognitive
Psychology, Appl. Cognit. Psychol. 26: 785–795
Handgraaf, M & Dijik, E & Vermunt, R. (2008). Less Power or Powerless? Egocentric Empathy Gaps and the
Irony of Having Little Versus No Power in Social Decision Making. Journal of Personality and Social Psychology 2008, Vol. 95, No. 5, 1136–1149
Hwang, Y & Jeong, S. (2012). Public's Responses to Aviation Accidents: The Role of Exemplification and
Attributions. Journal of Applied Communication Research, 40:4, 350-367, DOI: 10.1080/00909882.2012.712709
Johnson, M. (1990). Age Differences in Decision Making: A Process Methodology for Examining Strategic
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