Cognitive Biases Impacting Decision-Making Processes PPT

This PPT slide, part of the 32-slide Product Management KPIs PowerPoint presentation, presents an overview of 3 cognitive biases that significantly impact decision-making processes. The first bias discussed is "Sample Size Neglect," which highlights a common fallacy where individuals draw conclusions from insufficient data. It emphasizes that meaningful statistical inferences require a sufficiently large sample size. This bias can lead to erroneous decisions, as people may overestimate the validity of their conclusions based on limited information.

Next, the slide addresses "Hindsight Bias." This bias describes the tendency for individuals to believe they could have predicted an outcome after it has occurred. The example provided references the Great Recession of 2008, where analysts retrospectively identified trivial events as indicators of impending financial trouble. This illustrates how hindsight bias can distort perceptions of past events and lead to overconfidence in forecasting abilities.

The final bias covered is "Anchoring & Adjustment." This bias occurs when an initial number or value serves as a reference point, influencing subsequent judgments and decisions. The example of a used car salesman illustrates this concept well, as the initial high price set by the salesman serves as an anchor, potentially skewing the buyer's perception of what constitutes a fair price.

Overall, the slide underscores the importance of recognizing these cognitive biases in order to enhance decision-making. Understanding how these biases operate can lead to more informed choices and improved outcomes in both personal and professional contexts.

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KPI Net Promoter Score Product Management Cognitive Bias Sales