MGMT 3130 Judgment and Decision

Making in Organizations

UNIT 2.2
AVAILABILITY HEURISTIC

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 Where are we now?

Decision Heuristics Choice and Applications

Analysis and Biases Preference
Two systems of
Problem thinking Performance
Prospect theory
definition appraisal
Availability
heuristic
Decisions Motivating
Escalation of
involving multiple Representativeness employees by
commitment
objectives heuristic money? Or…?

Anchoring and Why people

Decision-making adjustment Time and
become bad
under uncertainty preferences
apples?
Embodied
cognition
Collecting more Is more choice
Bounded Going green
information always better?
awareness
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 UNIT 2.2
AVAILABILITY HEURISTIC

• What’s availability heuristic?

• Factors influencing availability
• The influence of availability heuristic in
organizational context

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 Let’s play a game…

Part 1: Write down, as many as you can, 7-letter words in the English
language that have the letter “n” as the 6th letter.

1. __ __ __ __ __ n __ 7. __ __ __ __ __ n __

2. __ __ __ __ __ n __ 8. __ __ __ __ __ n __

3. __ __ __ __ __ n __ 9. __ __ __ __ __ n __

4. __ __ __ __ __ n __ 10. __ __ __ __ __ n __

5. __ __ __ __ __ n __ 11. __ __ __ __ __ n __

6. __ __ __ __ __ n __ 12. __ __ __ __ __ n __

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Part 2: Write down, as many as you can, 7-letter words in the English
language that end with the letters “ing”.

1. __ __ __ __ i n g 7. __ __ __ __ i n g

2. __ __ __ __ i n g 8. __ __ __ __ i n g

3. __ __ __ __ i n g 9. __ __ __ __ i n g

4. __ __ __ __ i n g 10. __ __ __ __ i n g

5. __ __ __ __ i n g 11. __ __ __ __ i n g

6. __ __ __ __ i n g 12. __ __ __ __ i n g

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Debriefing of the game
• In a study, participants were asked two questions:

Estimate the percentage of Estimate the percentage of

7-letter words in the English 7-letter words in the English
language that have the letter language that end with the
“n” as the 6th letter letters “ing”
__ __ __ __ __ n __ __ __ __ __ i n g

• Results: Participants estimated “__ __ __ __ i n g” to be more

common than “__ __ __ __ __ n __”. What’s wrong?
• Why do we make this mistake? It is easier to come up with 7-letter
words that end with “ing” than those with “n” as the 6th letter. The
“ing” form (i.e. verb + “ing”) simply fits our memory structure better.
The perception of availability influences our judgment!
Tversky, A., & Kahneman, D. (1983). Extensional versus intuitive reasoning: The conjunction fallacy in
probability judgment. Psychological Review, 90(4), 293-315. 6
 AVAILABILITY HEURISTIC

Availability Heuristic
• People judge the likelihood of an event based on the
ease in which instances could be brought to mind.
• Events that are more “available” are judged to be
more probable.

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 FACTORS INFLUENCING AVAILABILITY

Some factors influencing availability:

Fit with memory structure
Vividness of event description
Frequency of mention in news /social media
Ease of retrieval imposed by task requirement
Personal experience (esp. recent and emotionally charged
experience)

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 Vividness of Description

Consider the following study:

• In April 1982, participants were requested to evaluate the probability of
occurrence of several events in 1983 using a 9-point scale:
.01%, .1%, .5%, 1%, 2%, 5%, 10%, 25%, 50% or more
Condition 1: Condition 2:
Less-detailed description More-detailed description
A massive flood somewhere An earthquake in California
in North America in 1983, in sometime in 1983, causing a
which more than 1000 massive flood in which more
people drown. than 1000 people drown.

• Results: Participants in the “more-detailed” condition estimated the

event to be more probable than those in the “less-detailed” condition.
What’s wrong with this result?
Tversky, A., & Kahneman, D. (1983). Extensional versus intuitive reasoning: The conjunction fallacy in
probability judgment. Psychological Review, 90(4), 293-315. 9
 Conjunction rule of probability theory says that:
A specific event cannot be more probable than
the general class of events to which it belongs.

P (Earthquake in California
sometime in 1983, caused a
massive flood in which more
than 1000 people drown)
P (Massive flood somewhere in
North America in 1983, in which
more than 1000 people drown)
perceived to be more probable.
This specific event is
objectively less probable than
the general class of event.
But the more-detailed
description makes the event
more vivid, easier to imagine
(i.e. more available in people’s
mind), thus the event is

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Consider the following study:

Paul is a meek man, 42 years old, married with two children. His neighbors
describe him as mild-mannered, but somewhat secretive. He owns an import-
export company based in New York City, and he travels frequently to Europe and
the Far East. Paul was convicted once for smuggling precious stones and metals
and received a suspended sentence of 6 months in jail and a large fine.
Paul is currently under police investigation. Please rank the following statements
by the probability that they will be among the conclusions of the investigation.
Use 1 for the most probable statement, 2 for the second, etc.

Half of participants were given: Another half of participants read:

 Paul is a child molester.  Paul is a child molester.
 Paul is involved in espionage and  Paul is involved in espionage and
the sale of secret documents. the sale of secret documents.
 Paul is a drug addict.  Paul is a drug addict.
 Paul killed one of his employees.  Paul killed one of his employees to
prevent him from talking to the police.
Results:
Mean ranking for the last item: 3.17 2.90
The mention of a plausible motive increases the perceived likelihood of a crime! 11
 Frequency of Mention in News / Social Media

Consider a study:
• Participants were asked: Which is a more common cause of death,
lung cancer or vehicle accidents?
• Results:
Causes People’s Annual Newspaper
of death choice US total reports per year
Lung Cancer 43% 140,000 3
Vehicle Accidents 57% 46,000 127

• The media has reported more on vehicle accidents than lung cancer,
people had more examples of death in vehicle accidents (that is,
incidents of vehicle accidents are more available).

Combs, B., & Slovic, P. (1979). Newspaper coverage of causes of death. Journalism & Mass Communication
Quarterly, 56(4), 837-849. 12
Consider another study:
• Survey results indicated that college students who spend more time
on Facebook agreed more that “others were happier and had better
lives.”
• Why? People tend to present themselves in a favorable way on their
Facebook profile. For heavy Facebook users, examples of others
having a good life can be easily recalled (i.e. more available).

Chou, H.T.G., & Edge, N. (2012). They are happier and having better lives than I am: The impact of using
Facebook on perceptions of others' lives. Cyberpsychology, Behavior, and Social Networking, 15(2), 117-121.

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 Ease of Retrieval (Imposed by Task Requirement)

Consider the following study:

• Participants were assigned to 4 experimental conditions.
They were asked to (1) list arguments about an issue, and then
(2) indicate their attitude towards the issue.

Number of Number of
arguments = 3 arguments = 7
Nature of argument
Condition 1 Condition 2
= Support
Nature of argument
Condition 3 Condition 4
= Against

• If people rely solely on the content of arguments to form their

judgment, they should find themselves more supportive of the
issue in Condition 2 (vs. 1) and in Condition 3 (vs. 4).
Wänke, M., Bless, H., & Biller, B. (1996). Subjective experience versus content of information in the
construction of attitude judgments. Personality and Social Psychology Bulletin, 22, 1105–1113. 14
• Results:
It’s so difficult to think of enough
It’s easy to think of enough arguments to support the issue, the
arguments to support the issue should NOT be worth supporting.
issue, the issue should be
worth supporting. Number of Number of
arguments = 3 arguments = 7
Nature of argument
= Support 9.2 7.6
Nature of argument
6.9 8.1
= Against
1 = not at all supportive , 11 = very supportive of the issue.

It’s easy to think of enough It’s so difficult to think of enough

arguments against the issue, the issue arguments against the issue, the
should NOT be worth supporting. issue should be worth supporting.

Instead of the content of arguments, people base their judgments

on the ease of retrieval (i.e. availability).
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Consider another study:
• Participants: Male undergraduates; some have a family history of
heart disease, some do not.
• They were asked to list either 3 or 8 factors (e.g. behaviors, personal
characteristics) that decrease their own risk for having heart disease.
Then, to estimate their chance of suffering from heart disease some
time in their life.
• Results:

# of risk-decreasing # of risk-decreasing
factor = 3 factor = 8
Family history = No 3.09 4.25
Family history = Yes 5.75 3.75
1 = no chance, 9 = high chance of getting heart disease.

Rothman, A. J., & Schwarz, N. (1998). Constructing perceptions of vulnerability: Personal relevance and the use of
experiential information in health judgments. Personality and Social Psychology Bulletin, 24(10), 1053-1064.
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• Why?
For participants who have no family history of heart disease,
estimating the risk of getting heart disease is personally irrelevant.
They use heuristic (System 1) thinking, and infer their risk of
getting heart disease from the ease of retrieval.
For participants who have family history of heart disease,
estimating the risk of getting heart disease is personally relevant.
They use System 2 thinking and base their risk judgments on the
content of retrieved information.

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 Personal Experience

• Personal experiences (esp. the recent and emotionally-charged

experiences) are more available than incidents that happened
to others.
• E.g. You remember more of your contribution to a team project
than the contribution of a teammate.

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 HOW AVAILABILITY HEURISTIC INFLUENCES
OUR JUDGMENT IN ORGANIZATIONS?

1. Optimistic Prediction in Planning

• “This project is going to be successful because of Reasons X, Y, Z.”
Managers/entrepreneurs are likely to overestimate the chance of
success, because the enriched description (Reasons X, Y, Z) makes the
success more vivid and imaginable.
• How to deal with this bias?
Conduct scenario analysis: Ask for instances of the opposite outcome.
For example, ask “If this project turned out to be unsuccessful, what
might be the reasons?”
The answer to this question would make the failure more available,
thus correct the original estimation.

Carroll, J. S. (1978). The effect of imagining an event on expectations for the event: An interpretation in
terms of the availability heuristic. Journal of Experimental Social Psychology, 14(1), 88-96. 19
 2. CEO Hubris & Media Praise

In an analysis of large acquisitions (US$100 million or more)…

• The acquisition premium increased with media praise of the CEO.
And, the post-acquisition performance was worse in situations
where CEOs paid bigger premiums.
• While CEOs could interpret media praise as evidences of their
success, it may not be perfect correlates of their success.
CEOs are likely to overestimate their ability when their “evidences
of success” are more available.

Hayward, M. L. A., & Hambrick, D. C. (1997). Explaining the premiums paid for large acquisitions: Evidence of
CEO hubris. Administrative Science Quarterly, 42, 103-127.

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 3. The Availability Cascade and Public Policy
The availability cascade
• Starts from media reports of a relatively minor event. The reports catch
the attention of a segment of the public, which becomes worried.
• This emotional reaction becomes a story in itself, prompting additional
coverage in the media, which in turn produces greater concern.
What’s bad about the
availability cascade?
A minor event can lead to
public panic; policy makers
and politicians place higher
priority in those issues, other
issues (may be with higher
real importance) have faded
into the background.
Kuran, T., & Sunstein, C.R. (1999). Availability cascades and risk regulation. Stanford Law Review, 683-768. 21
Time for REFLECTION

Write down an instance in which your judgment might be influenced

by availability heuristic. How would you correct (or make use of) the
error?

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 INTENDED LEARNING OUTCOMES FOR UNIT 2.2

By now, you should be able to:

• Describe the availability heuristic.
• Discuss factors that influence availability.
• Illustrate with examples how availability heuristic influences
judgment in organizational context and in your personal life.

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