Question

In the 1970s, one million college-bound students were surveyed and asked to compare themselves to their peers. Some of the key findings of the survey were as follows: a. 70% of the students rated themselves as above average in leadership ability, while only 2% rated themselves as below average in this regard. b. With respect to athletic skills, 60% of the students rated their skills as above the median and only 6% of students rated themselves as below the median. c. 60% of the students rated themselves in the top 10% in terms of their ability to get along with others, while 25% of the students felt that they were in the top 1% in terms of this interpersonal skill. Required: What type of cognitive bias reveals itself in the data mentioned above? How might this cognitive bias adversely influence a manager’s planning, controlling, and decision-making activities? What steps could managers take to reduce the possibility that this cognitive bias would adversely influence their actions?

          In the 1970s, one million college-bound students were surveyed and asked to compare themselves to their peers. Some of the key findings of the survey were as follows:
a. 70% of the students rated themselves as above average in leadership ability, while only 2% rated themselves as below average in this regard.
b. With respect to athletic skills, 60% of the students rated their skills as above the median and only 6% of students rated themselves as below the median.
c. 60% of the students rated themselves in the top 10% in terms of their ability to get along with others, while 25% of the students felt that they were in the top 1% in terms of this interpersonal skill.

Required:
What type of cognitive bias reveals itself in the data mentioned above? How might this cognitive bias adversely influence a manager’s planning, controlling, and decision-making activities? What steps could managers take to reduce the possibility that this cognitive bias would adversely influence their actions?

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Added by Danielle C.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

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Solved by Expert Madhur L

12/08/2023

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" This bias occurs when individuals overestimate their own abilities, skills, or positive qualities compared to others. In the survey, a majority of the students rated themselves as above average in leadership ability, athletic skills, and interpersonal skills, Show more…

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In the 1970s, one million college-bound students were surveyed and asked to compare themselves to their peers. Some of the key findings of the survey were as follows: a. 70% of the students rated themselves as above average in leadership ability, while only 2% rated themselves as below average in this regard. b. With respect to athletic skills, 60% of the students rated their skills as above the median and only 6% of students rated themselves as below the median. c. 60% of the students rated themselves in the top 10% in terms of their ability to get along with others, while 25% of the students felt that they were in the top 1% in terms of this interpersonal skill. Required: What type of cognitive bias reveals itself in the data mentioned above? How might this cognitive bias adversely influence a manager’s planning, controlling, and decision-making activities? What steps could managers take to reduce the possibility that this cognitive bias would adversely influence their actions?

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Transcript

00:01 Hello students, here is a question.

00:02 In 1970s, 1 million college -born students were surveyed and asked to compare themselves to their peers.

00:08 Some of the key findings of the survey were as given in the question.

00:12 So, based on that we have to tell what step, what is the controlling and decision -making activity and what step could manager can reduce to for possibility that cognitive bias would adversely influence their action.

00:28 So, this is our question.

00:29 Let us discuss the answer for this.

00:31 The first case, the cognizant biases revealed the data mentioned above is an illusory, supervisory or overconfidence bias.

00:40 So, the bias occurs when individual overestimate their own ability, skills or positive qualities compared to others.

00:48 So, in a survey, a majority of students rated themselves the above average leadership ability, athletic skills and interpersonal skills which are statistically unlikely.

00:58 So, the cognitive biases are adversely influence a manager's planning, controlling and decision -making activity in several ways.

01:06 So, those are the first is overestimating their own abilities, overestimating their own ability, their own abilities.

01:23 So, managers may take on more responsibility or make decisions without consulting others.

01:28 So, believing that they are the capable than they actually are.

01:32 So, this can lead to poor decision -making and increase stress for the managers.

01:37 And the second is underestimating, estimating the ability of others.

01:51 So, managers may not delegate tasks efficiently or provide enough support to their team members, believing that they are the more skilled and their colleagues...

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