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An Open Letter to Simon and Schuester CEO Carolyn Reidy

Hi Carolyn,

Sit down before you read this.

We've got to talk.

Look. This is going to piss you off. This is going to look like I'm causing problems.

I'm not causing problems. I'm just pointing out where problems already exist.

Some examples of "Irrational" thinking (Part 1)

On Decisions

Following my last post, I will try to provide the readers with some examples of how people tend to make decisions which are to some extent irrational. Hopefully each example will show one or a few of common biases that result in making wrong decisions. During next couple of posts I will provide more examples and discuss the biases. Some of the examples of this post are borrowed (although might slightly been changed) from a great book, "Judgment in Managerial Decision Making" by Max Bazerman. I recommend this book to anyone who likes this subject and want to start from somewhere that is not too technical. Try to read through the examples and answer each question before going to next section for explanations.

Example 1: a) In a four pages of a novel (about 2000 words), how many words would you expect to find that have the form ----ing (seven letter words ending with "ing"). Indicate your best estimate by choosing one of the following: 0 1-2 3-4 5-7 8-10 11-15 16+

b) In a four pages of a novel (about 2000 words), how many words would you expect to find that have the form -----n- (seven letter words that have "n" in the sixth position). Indicate your best estimate by choosing one of the following: 0 1-2 3-4 5-7 8-10 11-15 16+

Example 2: Which of the following lottery outcomes seems more probable (in choosing five numbers from 1 to 100): a) 3, 4, 5, 6, 7 b) 12, 29, 44, 81, 93

Example 3: You are playing Roulette in a casino, and during last seven rounds you have selected the Red but have lost each time as the Black has won in each round. As the last seven times have been Black, you choose to select Red again as odds favor Red winning at least one time in eight rounds and it is due to win this round. Is this thinking correct or not?

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