Question

Game magazines in the past few weeks reported that the CEO of Sony Entertainment was recently “demoted” probably due to the failure of PS3. Some editorials questioned the vision of that CEO, criticizing that

(1) he did not notice the obvious saturated demand on video graphic improvement (i.e., the major component PS3 is superior than its competitors), and

(2) he escalated his commitment to the previous winning formula of PS2. Please comment on the editorials.

discussion points explaining point (1) and (2) :-

here are some of the points to discuss

Game magazines
a) Hindsight biases which underestimate the difficult in market prediction
b) Fundamental attribution errors

Answer 1

Editorial 1 : This comment is the indication of a fundamental attribution error made by the editorials.

A fundamental attribution error is a type of error where the situational factors are ignored while the internal factors are highlighted while reaching a conclusion.

In this case,the editor blames or put the emphasis on the negligence of CEO for the failure of PS3.

Editorial 2: This comment is the indication of the hindsight bias made by the editorial.

Hindsight bias is a type of error where individuals tend to believe that they know the outcome of a specific event well before the event occurs i.e they tend to predict the outcome of an event.

In this case,the editor predicts that the winning formula of PS2 will not work with the PS3 i.e the editor believes that the same formula will result in the success of  PS3.