cognitive biases in project management

COGNITIVE BIASES IN PROJECT DECISION-MAKING

AimCognitive biases of project managers

can lead to perceptual distortion and inaccurate judgment affecting business and economic decisions and human behavior in general.

Subjecting these biases to scientific investigations and independently verifiable facts is the aim of the presentation

Ignoring Regression to Mean

The tendency to expect extreme events to be followed by similar extreme events.

In reality, extreme events are most likely to be followed by an average event.

Anecdote

Daniel Kahneman was awarded  Nobel Prize in Economic Sciences in 2002.

The notable thing about this Nobel prize was that Daniel Kahneman was not an Economist but a Psychologist

Confirmation bias

 The tendency to search for or interpret information in a way that confirms to one's preconceptions.

Gambler's fallacy

The tendency to think that future probabilities are altered by past events.

This bias results from an erroneous conceptualization of the Law of large numbers (Trial size for expectancy given by Bernoulli’s theorem) .

Experimenter's or Expectation bias

 The tendency for experimenters to believe in data that agree with their expectations for the outcome, and to disbelieve or downgrade the data that appear to conflict with those expectations.

Framing Effect

 Drawing different conclusions from the same information, depending on how or by whom that information is presented.

Knowledge Bias

 The tendency of people to choose the option they know best rather than the best option.

Normalcy Bias

 The failure to plan for a disaster which has never happened before.

Outcome Bias

The tendency to judge a decision by its eventual outcome instead of quality of the decision at the time it was made.

This bias manifests in the review of project decisions.

Well Travelled Road Effect

 Underestimation of the duration taken to traverse oft-traveled routes and overestimation of the duration taken to traverse less familiar routes.

Half-Truths

In ancient Roman law, two half proofs constituted a complete proof .

False Positives

The probability that ‘A’ will occur if ‘B’ occurs will generally differ from the probability that ‘B’ will occur if ‘A’ occurs.

The probability that an event will occur if or given that other event occur is called Conditional Probability.

Hindsight Bias

The tendency to see past events as being predictable at the time those events happened.

In day-to-day life the past often seems obvious even when we could not have predicted.

This bias manifests in the review of project decisions.

Anecdote

Army Chief of Staff General George Marshal was faulted by U.S Congress Committee for having missed all the “signs” of a coming attack of Pearl harbor.

Conclusion

Thank You

“False Positive” - Tested positive but HIV Negative.

“True Positive” - Tested positive and HIV positive

"True Negative” -Tested negative and HIV negative

“False Negative” - Tested negative but HIV positive

As per the rule of compounding probabilities, no finite number of partial proofs will ever add up to a certainty.

Doctor’s Confusion

“He would test positive if he was not HIV infected”

with the chances that

“He would not be HIV infected if tested positive”

The study of randomness tells us that the crystal ball view of events is possible, unfortunately, only after they happen.

If you get 45 heads in the first 100 tosses, the coin would not develop a bias towards tail for the rest of the tosses to catch up!