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Chapter 10 Question 3
i)

It is likely that the manager will have anchored on the most likely duration of 30 days and
that the use of the anchoring and adjustment heuristic will have led to too tight a range of
possible project durations when the optimistic and pessimistic durations were estimated. He
is therefore likely to be over confident that his estimated range will include the actual
duration of the overhaul.

ii) The manager is anchoring on the probability of the elementary event (i.e., the 90%
probability that a given phase will be completed without a pollution problem). This is a
common problem when probabilities for conjunctive events need to be estimated. The correct
probability is (0.9)8 = 0.43.
iii) The manager is manifesting the gamblers fallacy, i.e., he expects chance to be self
correcting. Tversky and Kahneman argue that this results from the use of the
representativeness heuristic.
iv) The use of the availability heuristic is probably causing the manager to over estimate the
dangers of theft.
v) The managers estimate is an example of the conjunction fallacy where a specific event is
considered to be more probable than a general event (of which the specific event is a part). In
this case the event in the second statement is a subset of the event in the first statement and
hence cannot be more probable. Tversky and Kahneman argue that this results from the use
of the representativeness heuristic. It can also result from the availability heuristic where the
specific event is more easily imagined or recalled than the general event.

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