Human decision making: Distinctive traints and common errors

This note has been written for first year MBA students in order to make them conscious about their biases in decision making. The principal biases that are treated are: 1. The framing and anchoring of choices, the importance of the presentation of a problem; 2. Segregation of decisions, the isolation of a problem from its context; 3. The conjunction effect of false causalities, incorporation of impertinent information; 4. The neglect of base rates, this means, the impossibility of integrating different sources of information; and 5. Overconfidence. Several experiments that have been published in the last decades are used as examples for these most common errors.