When asked to estimate next quarter's sales your manager reports a pessimistic low figure "Just to be sure" they hit the target. What bias is at play here?

Question

When asked to estimate next quarter's sales your manager reports a pessimistic low figure "Just to be sure" they hit the target.  What bias is at play here?

BlackTom AI · Accepted Answer

The question describes a situation where a manager asks for an estimate of next quarter's sales and then reports a pessimistic low figure “Just to be sure” so that they hit the target. This prompts us to identify the cognitive bias at play.

Since no alternative answer choices are provided in the prompt, I cannot evaluate each option individually. Instead, I will focus on why the stated answer, 'Prudence trap,' makes sense and what it implies in this context.

- Prudence trap as a concept: The prudence trap refers to a bias where a person intentionally or subconsciously adopts a conservative or risk-averse estimate in order to avoid being criticized for overestimating or underperforming. By stating a pessimistic forecast, the manager creates a buffer or cushion that increases the likelihood of meeting or exceeding the target, reducing downside risk and potential blame if sales fall short. This aligns with behaviors aimed at safeguarding against risk and maintaining a favorable performance narrative.

- Why this fits the scenario: The manager’s action of deliberately reporting a lower figure 
- to be safe and to ensure the target is met - embodies cautious forecasting with the aim of avoiding disappointment or accountability for over-optimistic projections. This is characteristic of a prudence-driven adjustment rather than a neutral or data-driven forecast.

- What this is not (and how to distinguish it): It is not simply general pessimism, since the term prudence trap specifically describes a strategic bias in estimation to hedge against risk and protect reputation. It is also not necessarily a standard bias like anchoring, availability heuristic, or confirmation bias, unless the context shows the pessimistic figure is being used to anchor subsequent decisions or confirm a preferred outcome. The key feature is the deliberate conservative bias to shield against potential blame.

- If there were other options to compare, we would evaluate each for whether it describes a forecasting bias that causes deliberate underestimation to improve the chance of meeting targets, rather than stemming from pure data uncertainty, genuine pessimism, or misinterpretation of probabilities. A correct choice would capture the defensive, reputational motive behind the low estimate.

- Practical takeaway: Recognizing a prudence trap helps in designing forecasting processes that encourage accuracy and accountability, such as requiring multiple scenarios, running sensitivity analyses, or using probabilistic estimates rather than single-point forecasts.

Note: Because the original prompt did not list other answer options, this analysis centers on why 'Prudence trap' is an appropriate label for the described behavior and how it contrasts with other potential biases in forecasting contexts.

MKT395 C MKT395 Assessment #1

When asked to estimate next quarter's sales your manager reports a pessimistic low figure "Just to be sure" they hit the target. What bias is at play here?

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