Rajiv was asked to prepare a report on the estimated costs of introducing a new product into the market. He estimated the costs by slightly increasing the costs the company had incurred while introducing a product into the market the previous year. This might not be accurate, because a number of other factors should also have been considered while calculating the estimated costs for the current year. This type of decision-making error is known as _____.
A) availability bias
B) confirmation error
C) representativeness bias
D) anchoring and adjustment bias
E) lack-of-participation error

Question

Quizplus · Accepted Answer

The decision-making error described is anchoring and adjustment bias. This occurs when an initial (and potentially arbitrary) number or estimate "anchors" a person's subsequent judgments, leading them to adjust only slightly from that starting point rather than considering other relevant factors.

Rajiv Was Asked to Prepare a Report on the Estimated