MBA Error Log Template

MBA Error Log: [Your programme, term or course]

A mistake journal for the MBA core: one log table for every error you make in problem sets, cold calls, case write-ups, practice exams and recruiting cases; a seven-type MBA error taxonomy to classify each one; a catalogue of 25 classic business misconceptions (confusing profit and cash, ranking projects by IRR, mishandling sunk costs, averaging percentages and more) each with the fix and the card that teaches it; fix-it drills; and a weekly review routine. It is for MBA students in the core year, admitted students working through the pre-MBA primers, and recruiting candidates who want each mistake to happen only once. Source basis: retrieval and spacing research (Roediger and Karpicke 2006; Cepeda et al. 2006; Dunlosky et al. 2013) and the reflective-practice tradition (Kolb 1984; Schön 1983), written in our own words. All companies and numbers are fictional. Replace every [bracketed] value and every row marked Example.

Document control

Why an MBA error log works

The MBA core moves fast: a new case or problem set almost every day, across six or more courses at once. In that pace, a mistake that is corrected in class and then forgotten usually returns, because the wrong idea is still the first one your memory offers under time pressure. Writing the mistake down, naming its type and its root cause, and turning the fix into a short rule that you later test yourself on replaces the wrong idea through retrieval practice and spacing, the two techniques Dunlosky et al. (2013) rate as having the highest utility.

The log also shows patterns that grades hide. If most of your errors are "set-up" errors in finance (wrong cash flows, wrong discount rate), more practice problems help less than re-reading the cash-flow rules on the cards. If most are "communication" errors in case write-ups, the analysis is fine and the fix is a recommendation-first structure. Kolb (1984) describes learning as a cycle of experience, reflection, abstraction and new experiment; the log makes each step explicit: the error is the experience, the root cause is the reflection, the fix rule is the abstraction and the re-test is the experiment.

MBA error taxonomy

Classify in this order, stopping at the first "no":

Error log

Re-test record:

Error profile

Counting errors by type tells you where your next study hour pays most. In the fictional term below (28 errors), concept, set-up and judgement errors dominate. The learner should spend the next week on the concept cards and on writing the decision rule before every calculation, not on more arithmetic practice.

Catalogue of 25 classic MBA misconceptions

Fix-it drills

Each drill takes one wrong statement, names its error type, explains why it is wrong and rewrites it.

Drill A (fully worked). A teammate's pricing slide for Northfield Outdoor Co. (fictional): "Unit cost is USD 60; we target a 40% margin, so price at USD 84."

1. Error type: concept (markup confused with margin, misconception 16).
2. Why it is wrong: USD 84 is cost plus 40% of cost, a 40% markup. Its margin on price is 24 / 84 = 28.6%, not 40%.
3. Correct price for a 40% margin on price: $p = c / (1 - m) = 60 / 0.60 = 100$. Excel: =60/(1-40%) returns 100.
4. Rewrite: "Unit cost is USD 60; a 40% margin on price requires a price of USD 100 (a 66.7% markup on cost)."
5. Fix rule: "Margin divides by price, markup divides by cost: say which one."

Drill B (half worked). Survey summary from Tallow Creek Medical Center (fictional): "Satisfaction was 90% in the inpatient survey (400 responses) and 50% in the emergency survey (100 responses), so overall satisfaction is 70%."

1. Error type: [ ].
2. Why it is wrong: the two percentages have different [ ], so a simple average gives each survey equal weight.
3. Correct overall rate: $(0.90 \times 400 + 0.50 \times 100) / 500 =$ [ ]. Excel: =SUMPRODUCT(B2:B3,C2:C3)/SUM(C2:C3).
4. Fix rule: [ ].

Drill C (unsolved). From a finance team memo on Corvane Robotics (fictional): "We have already spent USD 2m on the prototype line, so abandoning it now would waste that money; we should spend the remaining USD 1.5m to finish it." Name the error type(s), explain what is wrong, say which information you would need to decide, and rewrite the argument.

Mixed set (interleaved). Mark each statement right or wrong; for wrong ones, give the misconception number.

1. "Our receivables doubled while profit rose, so operating cash flow may have fallen."
2. "Project A has the higher IRR, so it creates more value than mutually exclusive project B."
3. "Sales grew 10% last year and 30% this year, so compound growth was 20% a year."
4. "Running the clinic at 98% utilisation minimises waiting time."
5. "The allocated head-office charge is irrelevant when we decide whether to close a store, unless closing removes it."
6. "Debt is cheaper than equity, so moving from 20% to 60% debt must lower our WACC."

Weekly review routine

Where to find new problems for re-tests: Exercise C in each mba/*-card, the mini-cases in each mba/*-guide, your course's past exams, and the drills in mba/pre-mba-quant-refresher. Use a different company and different numbers from the original error, so that you test the rule rather than your memory of one answer. Bring your top two errors to the learning team: explaining them to others is itself retrieval practice.

Self-test questions

1. Name the seven error types in the order you should check them.
2. You entered =NPV(8%, B2:B6) with the year 0 outlay in B2. Which type is this, and what is the fix rule?
3. Your recommendation picked the cheaper supplier but ignored a delivery risk raised in the case. Which type?
4. When is an error closed in this log?
5. State the correct idea for misconception 6 in one sentence.

My notes and next steps

Most frequent error type this term: [ ]. Course with most errors: [ ]. Focus card for next week: [mba/...]. Errors still open: [ ]. Question for the teaching assistant or learning team: [ ].

Sources and further reading

• Roediger, H. L., and Karpicke, J. D. (2006). Test-enhanced learning: taking memory tests improves long-term retention. Psychological Science, 17(3), 249–255.
• Cepeda, N. J., Pashler, H., Vul, E., Wixted, J. T., and Rohrer, D. (2006). Distributed practice in verbal recall tasks: a review and quantitative synthesis. Psychological Bulletin, 132(3), 354–380.
• Dunlosky, J., Rawson, K. A., Marsh, E. J., Nathan, M. J., and Willingham, D. T. (2013). Improving students' learning with effective learning techniques. Psychological Science in the Public Interest, 14(1), 4–58.
• Kolb, D. A. (1984). Experiential Learning: Experience as the Source of Learning and Development. Prentice Hall.
• Schön, D. A. (1983). The Reflective Practitioner: How Professionals Think in Action. Basic Books.
• Arkes, H. R., and Blumer, C. (1985). The psychology of sunk cost. Organizational Behavior and Human Decision Processes, 35(1), 124–140.
• Modigliani, F., and Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48(3), 261–297.
• Herzberg, F., Mausner, B., and Snyderman, B. B. (1959). The Motivation to Work. Wiley.
• Hackman, J. R., and Oldham, G. R. (1976). Motivation through the design of work: test of a theory. Organizational Behavior and Human Performance, 16(2), 250–279.
• Fisher, I. (1930). The Theory of Interest. Macmillan.
• Further reading (by name only): Berk and DeMarzo, Corporate Finance; Brealey, Myers and Allen, Principles of Corporate Finance; OpenStax Principles of Accounting (CC BY-NC-SA 4.0).

Answer key

Drill B. 1: concept (misconception 13, averaging percentages without weights). 2: bases (numbers of responses). 3: $(360 + 50) / 500 = 0.82$, so 82.0%, not 70.0%. 4: "Average percentages by weighting with their bases."

Drill C. Judgement error driven by the sunk-cost fallacy (misconception 5). The USD 2m is spent whatever the decision. The decision needs the future cash flows of finishing (the remaining USD 1.5m plus expected inflows from the line), the value of the best alternative (for example resale or reuse of the prototype equipment, misconception 6), and the risk of the project. Rewrite: "The USD 2m spent is sunk. Finishing the line is worthwhile only if the present value of its future inflows exceeds the remaining USD 1.5m plus the value we give up from the best alternative use of the prototype assets."

Mixed set. 1 right (misconception 1). 2 wrong (8). 3 wrong (15: the compound rate is $\sqrt{1.10 \times 1.30} - 1 = 19.58\%$, close to but not 20%; the gap grows with volatility). 4 wrong (20). 5 right (4 and 6). 6 wrong (12).

Self-test.

1. Reading the question or case, concept, set-up, calculation, Excel, judgement, communication (calculation and Excel are checked at the same step: by hand or in the spreadsheet).
2. Excel. Fix rule: "Excel NPV starts at year 1: write =NPV(8%, B3:B6)+B2."
3. Judgement: the numbers were right but an assumption the case raised was not tested.
4. When you solve a new problem of the same kind correctly on two re-tests at least a week apart.
5. A past outlay is sunk only to the extent no current choice can recover it; any resale value, cancellable commitment or tax effect that still depends on the decision is a relevant cash flow.

Revision history

Standard and licence note

Structure aligned with the retrieval, spacing and reflective-practice research cited above (Roediger and Karpicke 2006; Cepeda et al. 2006; Dunlosky et al. 2013; Kolb 1984; Schön 1983). The taxonomy, catalogue, drills and examples are original text written for this library; the fictional companies and numbers are invented. This template is not affiliated with or endorsed by any business school, publisher or accreditation body; check your own course's rules on practice materials and collaboration. Template licence: MIT.