Thinking and Deciding

BAD REASONS FOR STICKING TO PLANS: BIASES 477
they had $10 million to invest and were asked to decide which of two divisions of the
business they would invest it in for research and development. Half of these students
were told that the division they had chosen did well after the investment; half were
told it did badly. They were then asked to divide an additional $20 million between
the two divisions. When the chosen division had performed badly, the allocation to
that division the second time around averaged about $13 million (out of $20 million),
but when the division had done well the allocation averaged only about $9 million.
Other subjects were not asked to make the original decision on the investment
of the $10 million; they were told that it had been made by someone else. These
subjects allocated about $8 million to the division that had received the $10 million
when they were told that the division had done well, and they allocated about the
same amount of money when they were told it had done badly. In short, subjects
allocated extra money to the division that had previously received $10 million only
when they had decided to allocate the original $10 million and when the division
in question did badly. Presumably this was caused by a desire to believe that their
original decision had been a good one, leading to a belief that the original decision
had been a good one, leading to additional investment in a cause that seemed likely
to succeed (see Chapter 12). 1
In sum, the status quo bias, omission bias, the sunk-cost effect, and the commitment
effect can cause us to stick to our plans, even when the rational reasons listed in
the preceding section are not sufficient to keep us from switching, given the greater
expected future benefits of a new course. We may stick to our old course because
we feel that we have sunk too much into it to give it up — even though putting more
into it will only increase the waste. Likewise, by analogy with the endowment effect,
we may feel that the loss of the advantages of our current course outweighs the gain
from switching to a new course, although we would choose the new course if we
looked at the whole situation afresh.
Sometimes we stick to plans irrationally because of our basic aversion to risks,
resulting from the certainty effect (Chapter 11). Our present course seems to us to
have consequences known with certainty. However (as argued in Chapter 11), this
may be an illusion resulting from our failure to consider the true variability of the
consequences that might result from our present course.
Finally, a major change of plans, especially when it involves a change of goals,
may seem to a person to involve a loss of self, a partial death in which some of the self
is replaced with a different person. A change of this sort creates a sense of personal
loss that may not be easily compensated for by the creation of a new person inside
one’s skin. The fear of such a loss may be irrational if the new person is otherwise
to be preferred (see Parfit, 1984).
1 The same results are found when the decision involves hiring people who perform either well or
badly (Bazerman, Beekun, and Schoorman, 1982) and when the decisions are made by groups instead of
individuals (Bazerman, Giuliano, and Appleman, 1984).