Harvard Business Essentials, Decision Making

Selecting the reference class is important and should be done

with care. Let’s say that the company had published six books in HR

management over the past few years. Their first-year unit sales, ar-

rayed by size, were as follows:

A. 3,800

B. 4,650

C. 6,100

D. 6,950

E. 8,200

F. 8,800

The range here is 3,800 on the low end and 8,800 on the high

end. The average first-year unit sales for this reference class is 6,417,

and the distribution around the average is fairly normal—that is, we

don’t have a bunch of very low sales and another bunch of extremely

high ones.

Finally, the editor would try to place the HR book she hoped to

publish at an appropriate point within ...