You and your roommate are going shopping. As you walk down the street, you see movers lifting a large couch out of a truck and onto the sidewalk. You both quickly cross to the other side of the street. You don’t want to get in the way of the movers or risk being injured by a piece of furniture. This is an example of judgmental heuristics. Why is knowing about these important for managers? Identify and define at least six judgmental heuristics and give an example of each.
Judgemental Heuristics
Judgemental heuristics are the basic strategies or mental processes that are used to make decisions for complex problems.
Judgemental heuristics are important for the managers as you cannot always keep doing the research.
You have to take decisions on your gut feeling or instantly. In such situations heuristics come into play.
Types of Heuristics -
1. Consistency
In this a user responds to a particular situation in such a way that allows them to remain constant
Example - Ignoring the fact that sales will reduce during the spread of Corona Virus.
2. Rule of Thumb
In this approach an individual makes only approximation than doing proper research.
Example - Assuming that the tourism business will increase by 20% in summer season.
3. Educated Guess
In such a situation, rather than doing a proper research, an individual makes decision on the basis of facts based in past.
Example - Sales prediction done on the basis of last year's sale.
4. Contagion
The user avoids any information that is supposed to be bad or negative.
Example - Not eating chicken during the spread of Bird Flu so as to avoid the disease.
5. Availability
Decision is taken by the user on the basis of similar examples that are available in that situation.
Example - Shot selection by a batsman on the basis of what he has seen from non strike position.
6. Authority
Decision taken on the basis of belief on some person of authority.
Example - We promote this medicine in the organization because Doctor Paul suggested this.
You and your roommate are going shopping. As you walk down the street, you see movers...
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