Instruction 14-11
the Manager of a Marketing Consulting Firm Has $\text { SUMMAROUTPUT }$

question 163

Short Answer

Instruction 14-11
The manager of a marketing consulting firm has been examining his company's yearly profits. He believes that these profits have been showing a quadratic trend since 1990. He uses Microsoft Excel to obtain the partial output below. The dependent variable is profit (in thousands of dollars), while the independent variables are coded years and squared of coded years, where 1990 is coded as 0, 1991 is coded as 1, etc.
$\text { SUMMAROUTPUT }$
$\text { Regression Statistics }$
$\begin{array}{ll}\text { MultipleR } & 0.998 \\\text { R Square } & 0.996 \\\text { Adjusted R Square } & 0.996 \\\text { StandardError } & 4.996 \\\text { Observations } & 17\end{array}$

$\begin{array}{ll} & \text { Coefficients } \\\text { Intercept } & 35.5 \\\text { Coded Year } & 0.45 \\\text { Year Squared } & 1.00\end{array}$

-Referring to Instruction 14-11,the forecast for profits in 2010 is _______.

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Definitions:

Representativeness Heuristic

A cognitive bias in decision-making where the likelihood of an event is estimated based on how much it resembles existing stereotypes or patterns.

Availability Heuristic

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

Anchoring and Adjustment Heuristic

A mental shortcut that influences the way people intuitively assess probabilities and make decisions based on initial information.

Escalation of Commitment

The phenomenon of investing increasingly more resources into a failing course of action due to cognitive biases and sunk costs.