Which of the Following Cognitive Biases Occurs When Decision Makers

question 32

Multiple Choice

Which of the following cognitive biases occurs when decision makers commit even more resources to a project after they receive feedback that the project is failing?

• A) Prior hypothesis bias
• B) Reasoning by analogy
• C) Illusion of control
• D) Escalating commitment
• E) Representativeness

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Definitions:

Roundabout Production

A process of investing in capital goods to enhance productivity and efficiency, typically leading to greater output in the long run.

Specialization

The process by which individuals, firms, or countries focus on producing a narrow range of products or services to gain greater efficiencies and yield higher quality or productivity.

Competitive Industry

An industry characterized by a large number of firms competing against each other, leading to innovation, lower prices, and improved products and services.

Economic Profit

The difference between a company's total revenue and its total costs, including both explicit and implicit costs, serving as a measure of the company's overall financial performance beyond just covering its opportunity costs.