Final answer:
Cognitive biases encompass various types of biases and human frailties that can lead to poor managerial decisions. Examples include the Dunning-Kruger effect, heuristics, and the Gambler's fallacy, which contribute to a subjective perception of reality. Recognizing and mitigating these biases is crucial for better decision-making.
Step-by-step explanation:
Biases, blind spots, and human frailties that lead to poor managerial decisions fall under the concept of cognitive biases. These are systematic patterns of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion. Individuals create their own "subjective reality" from their perception of the input, which may not necessarily correspond with the objective reality.
Several types of cognitive biases can affect decision-making, such as the Dunning-Kruger effect, which is where people with limited knowledge overestimate their own abilities, and the Gambler's fallacy, which leads individuals to expect a reversal of a random chance event. Another example is heuristics, which are mental shortcuts that can both aid and impair decision-making.
Epistemic humility is an important quality in decision-making, which involves recognizing one's own cognitive limitations. Additionally, tribal thinking and the bandwagon fallacy can affect managerial decisions by aligning beliefs with a particular group. Acknowledging these biases and actively seeking ways to mitigate them can enhance the quality of decisions and reduce the likelihood of errors, as highlighted in studies such as the one conducted by Bruno & Abrahão (2012) on operators in an information security center.