Sometimes, business owners launch products on the basis of their research, which prove that the product will do well if it is launched. However, for whatever reason the market does not expand and the product cannot attract the number of customers the owner had expected. Since, the company cannot sell the products that can at least cover the cost of making it, the company incurs losses. In this case, the decision of the business owner was influenced by confirmation bias. In this article, we will discuss about different types of biases that affect decision making and find out solutions to make better decisions.
In the 1970s, Paul Slovic, Amos Tversky and Daniel Kahneman who were psychologists spoke about psychological bias for the first time. They published their observation in their book, "Judgment Under Uncertainty,” which was published in the year 1982.
According to the psychologists, these biases are also called cognitive biases. It is the tendency that makes people illogical. For instance, the business owner or the manager might feel pressurized by powerful peers.
In other words, psychological bias is in contrast with calculated measure and common sense. It results in poor decisions.