Why Is It Not a Contradiction to Say That a Firm

question 10

Essay

Why is it not a contradiction to say that a firm is simultaneously earning an accounting profit but suffering an economic loss?

Understand the concept of fundamental attribution error and its influencing factors.

Identify the impact of cognitive biases on perception and decision-making.

Distinguish between internal and external attributions.

Analyze factors that contribute to happiness and counterfactual thinking.

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Definitions:

Fundamental Attribution Error

The tendency to attribute others' actions to their character or personality, while attributing our own behaviors to external situational factors.

Internal Attributions

The process of inferring that personal factors, rather than external factors, are the cause of an event or behavior, suggesting that a person’s actions are due to their individual characteristics such as personality or effort.

Situational Causes

Factors in the environment that influence behavior, contrasted with dispositional factors which are traits or characteristics within the person.

Prejudice

Negative attitude held by a person about the members of a particular social group.