ERROR MANAGEMENT THEORY Predicts Human Judgments and Decisions

Management Studies

Error management theory predicts Human Judgments & Decisions and often views cognitive biases as adaptations of the human mind to deal with problems that were faced by human ancestors. Human development has involved trial and error, made mistakes and then tried to improve. Type I error is essentially the rejection of the true null hypothesis. It is not possible to completely eliminate the probability of a type I error in hypothesis testing. Type II error is a situation where in a hypothesis test fails to reject the null hypothesis that is false. Type III error is correctly rejecting the null hypothesis for the wrong reason and Type IV error is gives incorrect interpretation of a correctly rejected Null hypothesis. Modern human behavior can be understood using the above discussed errors. Error is an important part of the process, whereas mistakes or errors made in childhood are viewed as part of growing up and learning, in a business context errors are often seen as something to be feared, a shameful sign of incompetence, something entirely negative.

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