1. Which is riskier:
driving a car on a 400-mile trip?
flying on a 400-mile commerical airline flight?

2. Are there more words in the English language:
that begin with "r"?
that have "r" as the third letter?

3. Mark is finishing his MBA at a prestigious university. He is very interested in the arts and at one time considered a career as a musician. Is Mark more likely to take a job:
in the management of the arts?
with a management consulting firm?

4. You are about to hire a new central-region sales director for the fifth time this year. You predict that the next director should work out reasonably well since the last four were "lemons" and the odds favor hiring at least one good sales director in five tries. Is this thinking:
correct?
incorrect?

5. A newly hired engineer for a computer firm in the Boston metropolitan area has 4 years' experience and good all-around qualifications. When asked to estimate the starting salary for this employee, a chemist with very little knowledge about the profession or industry guessed an annual salary of $55,000. What is your estimate? $80,000

EXPLANATION
1. Availability Heuristic - Many people respond that flying in a commercial airliner is far riskier than driving a car. The media's tendency to sensationalize airplane crashes contributes to this perception. In actuality, the safety record for flying is far better than that for driving. Thus, this example demonstrates that a particularly vivid event will systematically influence the probability assigned to that type of event by an individual in the future. This bias is an example of the availability heuristic; it occurs because vivid events are more easily remembered and consequently more available when making judgements.

2. Availability Heuristic - If you responded "start with an r," you have joined the majority. Unfortunately this is the incorrect answer. People typically solve this problem by first recalling words that begin with r and words that have an r as the third letter. The relative difficulty of generating words in each of these two categories is then assessed. If we think of our minds as being organized like a dictionary, it is easier to find lots of words that start with an r -- they are more readily available. The dictionary, and our minds, are less efficient at finding words that follow a rule that is inconsistent with the organizing structure - like words that have an r as the third letter.

3. Representativeness Heuristic - Most people will choose "a" because they approach the problem by analyzing the degree to which Mark is representative of their image of individuals who take jobs in each of the two areas. However, when you reconsider the problem in light of the fact that a much larger number of MBAs take jobs in management consulting -relevant information that should enter into any reasonable prediction of Mark's career path - then it is only reasonable to pick "b."

4. Representativeness Heuristic - Many people pick "a" despite the fact that the performance of the first four sales directors will not directly affect the performance of the fifth. Most individuals frequently rely upon their intuition and the representativeness heuristic and incorrectly conclude that a poor performance is unlikely because the probability of getting five "lemons" in a row is extremely low. Unfortunately, this logic ignores the fact that we have already witnessed four "lemons" (an unlikely occurrence) and the performance of the fifth sales director is independent of that of the first four.

5. Anchoring and Adjustment Heuristic - Was your answer affected by the chemist's response? Although most people will deny that it did, individuals are generally affected by the fairly irrelevant information given by the chemist. Reconsider how you would have would have responded if the chemist's estimate was $85,000. Studies have found that people develop estimates by starting from an initial anchor, based on whatever information is provided, and adjusting from there to yield a final answer.

INTERPRETATION
Each of the preceding questions examines your tendency to use a different judgment heuristic. Heuristics are "simplifying strategies, or rules of thumb" used by people to assist in making decisions.

Questions or comments? Send me an e-mail: msm4711@yahoo.com