When an Entrepreneur Is Trying to Determine How Management Decisions

question 34

Essay

When an entrepreneur is trying to determine how management decisions have impacted the business for the past year, what four areas are critical?  What ratios would need to be calculated to find answers?

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Definitions:

Anchoring and Adjustment Bias

A cognitive bias where an individual relies too heavily on an initial piece of information (anchor) when making decisions, even if it is unrelated or irrelevant.

Availability Bias

A cognitive bias where people overestimate the importance of information that is readily available to them.

Confirmation Error

A cognitive bias where individuals favor information that confirms their existing beliefs or hypotheses.

Representativeness Bias

A cognitive bias where individuals incorrectly assess the likelihood of an event based on how closely it resembles their stereotypes of a category.