The Chief Financial Officer (CFO) of a corporation

Full Answer Section

  The CFO is also exhibiting anchoring bias. Anchoring bias is the tendency to rely too heavily on the first piece of information that is presented to us, even when that information is irrelevant or unreliable. In this case, the CFO is anchoring on the data from several years ago that shows that sales did not go up during a period of high spending on marketing. She is ignoring more recent data that shows that marketing can be a effective way to increase sales. The steps that I would recommend to the CFO to reduce this kind of bias are:

• Be aware of your own biases. The first step to overcoming bias is to be aware of it. The CFO in this scenario is not aware of her confirmation bias. She is so convinced that marketing is not a good use of the company's money that she is unable to see any other possible explanation for the lack of sales growth.
• Gather more information. The CFO in this scenario should gather more information before making a decision about the marketing budget. She should look at data from more recent years, as well as data from other companies in the same industry. She should also talk to marketing experts to get their insights.
• Consider alternative explanations. The CFO should not automatically assume that the drop in sales is due to the cut in the marketing budget. There could be other explanations, such as changes in the market or competition. The CFO should consider all of the possible explanations before making a decision.
• Get feedback from others. The CFO should get feedback from others before making a decision about the marketing budget. She should talk to her colleagues, her boss, and her marketing team. She should also get feedback from customers and potential customers.

The CFO in this scenario is making a decision that could have a significant impact on the company. It is important for her to make an informed decision, based on all of the available information. By being aware of her biases and by gathering more information, she can make a better decision that is in the best interests of the company. The three background readings that I would recommend to the CFO are:

• "The Invisible Gorilla" by Christopher Chabris and Daniel Simons. This book discusses the importance of being aware of our own biases. It provides many examples of how our biases can lead us to make incorrect decisions.
• "Thinking, Fast and Slow" by Daniel Kahneman. This book discusses the two systems of thinking that our brains use: System 1 and System 2. System 1 is fast, intuitive, and effortless. System 2 is slow, deliberate, and effortful. We need to be aware of both systems of thinking in order to make good decisions.

"The Art of Thinking Clearly" by Rolf Dobelli. This book provides a concise and practical guide to avoiding common thinking errors. It is a great resource for anyone who wants to improve their decision-making skills.

Sample Answer

  The kind of decision-making bias that the CFO in this scenario is exhibiting is confirmation bias. Confirmation bias is the tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses. In this case, the CFO has a preexisting belief that marketing is not a good use of the company's money. When she sees data that shows that sales did not go up during a period of high spending on marketing, she interprets this data as confirmation of her belief. She ignores other possible explanations for the lack of sales growth, such as changes in the market or competition.