The CFO for a medical supplies company observed that an advertising campaign touting its wide range of available products resulted in the doubling of profits for the company. On the
Other hand, he observed that increasing the firm's customer service representatives during this
Same time frame increased the profits by only 5%. He thus concluded that the best use of the
Firm's funds is in advertising. What behavioral bias is this?

Question

Quizplus · Accepted Answer

The CFO is exhibiting the compartmentalization bias, which is the tendency to focus on one aspect of a situation while ignoring other relevant factors. In this case, the CFO is focusing on the increase in profits from the advertising campaign while ignoring the smaller increase in profits from the increase in customer service representatives.

The CFO for a Medical Supplies Company Observed That an Advertising