An executive makes salary increase recommendations for key personnel by simply adjusting their current base salaries by a percentage amount. This is an example of which heuristic?

A. Anchoring and adjustment heuristic: The decision for the increase was likely based upon a previously established researched market value and simply used for increases moving forward.

B. Representativeness heuristic: The decision for the increase was likely based upon the executive's familiarity with other organizations' salary increase practices.

C. Availability heuristic: The decision for the increase was likely based on repeating the same percentage increase from prior years.

D. Incremental change heuristic: The decision for the increase was likely based on slightly increasing the percentage.

Question

28-06-2024
Business

Answered

An executive makes salary increase recommendations for key personnel by simply adjusting their current base salaries by a percentage amount. This is an example of which heuristic?

A. Anchoring and adjustment heuristic: The decision for the increase was likely based upon a previously established researched market value and simply used for increases moving forward.

B. Representativeness heuristic: The decision for the increase was likely based upon the executive's familiarity with other organizations' salary increase practices.

C. Availability heuristic: The decision for the increase was likely based on repeating the same percentage increase from prior years.

D. Incremental change heuristic: The decision for the increase was likely based on slightly increasing the percentage.

Answer :

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GinnyAnswer GinnyAnswer · Answer 1 · 2024-06-28T23:29:15-04:00

Final answer:

The executive's decision-making process aligns with anchoring and representativeness heuristics, leading to salary adjustments based on percentages and familiarity rather than a comprehensive evaluation.

Explanation:

Anchoring and adjustment heuristic: The executive adjusting base salaries by a percentage amount without considering other factors illustrates this heuristic. By anchoring on current salaries, the decision is made without full adjustment to all relevant variables (e.g., market conditions).

Representativeness heuristic: This heuristic involves making decisions based on familiarity rather than a full analysis of the situation. If the executive's decision is influenced by what other organizations typically do without considering individual employee performance, it aligns with the representativeness heuristic.

Incremental change heuristic: Slightly increasing the percentage based on past practices without substantial changes or analysis reflects this heuristic. It involves making gradual adjustments without fully evaluating the impact or necessity of such changes.

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