Bias 10: Regression to the Average
Your company has 3 shops of the same size with the same products. The predictions are that the total sales of your company will increase by 10% in 2013. Complete the following tab:
|Shop 1||10 000||?|
|Shop 2||20 000||?|
|Shop 3||100 000||?|
|TOTAL||130 000||143 000|
Most people tend to increase the sales of each shop by 10% while it is more plausible that extreme values (Shop 3 and 1) will regress to the average. This bias is called the regression to the average effect.
Thinking fast and slow, D.Kahneman