In the 1970s, one million college-bound students were surveyed and asked to compare themselves to their peers. Some of the key findings of the survey were as follows:

a. Seventy percent of the students rated themselves as above average in leadership ability, while only 2% rated themselves as below average in this regard.

b. With respect to athletic skills, 60% of the students rated their skills as above the median and only 6% of students rated themselves as below the median.

c. Sixty percent of the students rated themselves in the top 10% in terms of their ability to get along with others, while 25% of the students felt that they were in the top 1% in terms of this interpersonal skill.

Required:

1. What type of cognitive bias reveals itself in the data mentioned above?

2. How might this cognitive bias adversely influence a manager’s planning, controlling, and decision-making activities?

3. What steps could managers take to reduce the possibility that this cognitive bias would adversely influence their actions?

Source: Dan Lovallo and Daniel Kahneman, “Delusions of Success: How Optimism Undermines Executives’ Decisions,” Harvard Business Review, July 2003, pp. 56–63.

Assume that you are the chairman of the Department of Accountancy at Mountain State University. One of the accounting professors in your department, Dr. Candler, has been consistently and uniformly regarded by students as an awful teacher for more than 10 years.
Other accounting professors within your department have observed Dr. Candler’s classroom teaching and they concur that his teaching skills are very poor. However, Dr. Candler was granted tenure 12 years ago, thereby ensuring him life-long job security at Mountain State University.
Much to your surprise, today you received a phone call from an accounting professor at Oregon Coastal University. During this phone call, you are informed that Oregon Coastal University is on the verge of making a job offer to Dr. Candler. However, before extending the job offer, the faculty at Oregon Coastal wants your input regarding Dr. Candler’s teaching effectiveness while at Mountain State University.
Required:
How would you respond to the professor from Oregon Coastal University?
What would you say about Dr. Candler’s teaching ability? Would you describe your answer to this inquiry as being ethical? Why?