Risky decision making involves making a tradeoff between the desirability and the likelihood of an outcome. However, managers often focus mainly on desirability in some situations, and focus mainly on likelihood in others.This results in inconsistent preferences.Which heuristic is responsible for this bias?
A)The representativeness heuristic
B)The availability heuristic
C)The simulation heuristic
D)The anchoring-and-adjustment heuristic
E)Correspondence bias

Question

Quizplus · Accepted Answer

The anchoring-and-adjustment heuristic is responsible for this bias because it leads managers to focus on the initial information they receive about a situation, which is often the desirability of an outcome. This can lead them to make decisions that are not in line with their overall goals.

Risky Decision Making Involves Making a Tradeoff Between the Desirability