Prior Hypothesis Bias

Prior Hypothesis bias refers to the fact that decision makers who have strong prior beliefs about the relationship between two variables tend to make decisions on the basis of those beliefs, even when presented with the evidence that their beliefs are wrong. Moreover, they tend to use and seek information that is consistent with their prior beliefs, while ignoring information that contradicts these beliefs.

From a strategic perspective, a CEO who has a strong prior belief that a certain strategy makes sense might continue to pursue that strategy, despite evidence that it is inappropriate or failing.


Ref : Strategic Management : An Integrated Approach, 6e, Charles W L Hill, Gareth R Jones

Comments

Mark J. Perry said…
This is related to the concept of "Irrational escalation of commitment," the phenomenon where people (managers) increase their investment in a decision despite new evidence suggesting that the decision was probably wrong. From Wikipedia.
Ray Titus said…
Dr. Perry,

Absolutely....'Escalating Commitment' is a cognitive bias that is closely related to 'Prior Hypothesis bias'. The other cognitive biases listed are -

1. Reasoning by Analogy
2. Representativeness
3. Illusion of Control

(Ref : Strategic Management : An Integrated Approach, 6e, Charles W L Hill, Gareth R Jones)

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