Business Case Study of Earth Baby Inc

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Earth Baby, Inc Case Study There is always the lure of easy profits when working with partnership deals to help reduce operating and manufacturing costs. This is exactly what Earth Baby, Inc. is facing in its potential deal with GDI. Working with GDI could impact quality and customer reputation, but as seen in Agans & Shaffer's 1994 article, this may be a risk that is overestimated only after it is manifested, making the proposal one Earth Baby, Inc. should not accept. The hindsight bias is a tricky issue when working within the realm of business. Essentially, Agans & Shaffer state that judgments are relatively accurate and unbiased forecasts before hand. However, the hindsight judgments show a much higher rate of bias when dealing with judgments. Hindsight bias is defined as "an unjustified increase in the perceived probability of an event due to outcome knowledge" (Agans & Shaffer, 1994, p 439). Therefore, people believe that it was easier to predict possible outcomes than it actually was after they already know the outcome of particular actions and events. As such, Agans and Shaffer suggest "that hindsight information activates the use of the availability heuristic on peoples' probability estimates of certain misfortune" (Agans & Shaffer, 1994, p 440). In reality, it is much more difficult to accurately make predictions without knowing the overall outcome of certain events; having the hindsight bias simply fools us into believing that things were much clearer than

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