224 IndexBhaskar, R., 123Biasesfrom availability heuristic, 18–21from bounded ethicality, 124chapter problems on, 15t–17tcommon, 14from confirmation heuristic,28–40conjunctive- and disjunctive-events,34–35debiasing judgment and, 189–191in employment interviews, 185hindsight, 9, 38–40increased through disclosure,130–131investments and, 138–145judgmental, 109–110linear model decisions and, 182omission, 77, 123overconfidence and, 35–37perceptual, 109rationality and, 5from representativeness heuristic,21–28retrievability, 30self-serving, 94–96, 174–176serial decision making and, 101status quo, 143–144summary of, 41tunderstanding in others, 195–197value of studying, 179vulnerability to, 95–96Bidding. See AuctionsBiddle, G. C., 33Big Positive Gamble problem, 62–63Bjork, R. A., 39Björklund, F., 134Black, W. C., 91Blanton, H., 128Blindness to informationchange blindness, 47–48inattentional, 46–47Block, R. A., 37Blount, S., 80, 120Blumberg, S. J., 83Bodenhausen, G. V., 96, 127Boer, E., 47Bogle, J. C., 142Bonds, B., 26Bonus framing, 78–79Boras, S., 173Borgida, E., 129Boston Scientific, 108Bounded awareness, 6, 42–61in auctions, 59–61in groups, 50–51problems about, 43t–45tin strategic settings, 51–61Bounded ethicality, 6, 122–134conflict of interest and, 129–132discounting the future as,126–127implicit attitudes and, 127–129indirectly unethical behavior and,132–133in-group favoritism as, 125–126overclaiming credit as, 124–125use of term, 123–124values held as sacred and, 133–134Bounded rationality, 4–6, 42, 82Braininattentional blindness and, 47multiple selves in, 85Brawley, L. R., 124Brickman, P., 83Brief, A. P., 129Brodt, S. E., 93Brosnan, S. F., 119Brown, J. D., 90, 93Budescu, D. V., 91Budiansky, S., 94Burrows, L., 127Burrus, J., 92Burson, K. A., 91Bush, G. W., 30, 110Buyers, endowment effect and, 73Bystander laws, 78Cain, D., 48, 57, 92, 130, 133Caldwell, D. F., 109Callender, J. C., 33, 185Camerer, C. F., 39, 57, 82, 94, 174Cameron, L., 118Campbell, D. T., 83Campbell, J. D., 93Camp David Accords (1978), valuecreation in, 156–158, 157fCantelon, D. A., 123Cantril, H., 94Capuchin monkeys, fairness behaviorby, 119Carhart, M. M., 139, 142Carlson, B. W., 28Carroll, J. S., 56, 57, 186Caruso, E., 124, 125Carvallo, M., 90Casino betting, 58Cassidy, J., 137Certainty, 67–70Chabris, C. F., 47Challenger space shuttle disaster,focalism and, 50Chamberlain, W., 26Chambers, J. R., 92Chance, misconceptions of, 23–25Changealternative behaviors and, 190–191decision making and, 10perception of, 47–48Change blindness, 47–48Chatman, J. A., 93Chen, M., 127Cheney, D., 124Choi, J., 144Choice. See also Framingexpected-value decision rule and,62–63risk-averse, 63Chugh, D., 3, 42, 45, 61, 123, 128, 129,192Clinton, B., 30Coates, D., 83Codes of ethics, 130Cognitionemotion and, 84–89negotiator, 168–178Cognitive consistency, positiveillusions and, 93Cognitive functioning, System 1 andSystem 2, 3–4Cognitive neuroscience, multipleselves theory and, 85–86Cohen, J. D., 85Cohen, R. R., 129Coin-toss gamble, 67Cold War, self-serving reasoningabout, 94–95Colleges, admission decisions in, 184Commitment, escalation of, 101–113Comparative optimism, 91Competition, escalatory behavior by,106Competitive escalation paradigm,105–108Competitive irrationality, 111–112Confidence, financial trading and,138–140Confirmation heuristic, 9, 14, 95, 109anchoring and, 31–34biases from, 28–40conjunctive- and disjunctive-eventsbias and, 34–35in employment interviews, 185hindsight, knowledge, and, 38–40overconfidence and, 35–37Confirmation trap, 28–31Conflictsescalation of, 171–172between ‘‘wants’’ and ‘‘shoulds,’’ 85Conflicts of interest, psychology of,129–132Conjunction fallacy, 27–28Conjunctive-events bias, 34–35‘‘Consider the opposite,’’ as debiasingstrategy, 191Context, of decision, 58Contingent contracts, negotiationsand, 160Contractscontingent, 160negotiating, 154Cooper, A. C., 194Corporate scandals, ethics and,122–123, 134–135Corporate takeovers, 61Cost and benefits, evaluation of, 103Cowherd. D. M., 119Crandall, R., 107Creativity problems, 45–46Credit, overclaiming of, 124–125Crocker, J., 90Cross-species generality, in fairnessjudgments, 119Cryder, C. E., 96Culture, ultimatum game and,118–119Curhan, J. R., 153, 169‘‘Curse of knowledge,’’ 39–40Dahl, R. E., 96Dalai Lama, 133–134
Daly, H., 126Damasio, A. R., 85, 86Damasio, H., 85, 86Dana, J., 132–133Darley, J. M., 32, 135Dasgupta, N., 126Davis, M. S., 199Dawes, R. M., 127, 133, 182–183, 184,188Dawson, E., 95Daytrading, 145–147Dealcrafting, 159Death penalty, evidence for andagainst, 30Debiasing, 196–197analogical reasoning for, 191–193of judgment, 189–191DeBondt, W. F. M., 142Decision analysislinear models in, 181–182tools for, 181Decision-analytic approach, tonegotiations, 152–154Decision makingaffect heuristic and, 85anchoring bias and, 34availability heuristic and, 18–21confirmation bias and, 30descriptive models in, 5emotional influences on, 96–99expected-value decision rule and,62–63expertise for, 186–188neglect of context and, 58prescriptive models in, 5regret avoidance and, 98–99risk and, 67separating initial from related futuredecisions, 104–105strategic conceptualization of, 188strategies for improving, 179–199taking outsider’s view and, 193–195Decision-making biases, 96Decision-making processchange and, 10rational, 2–3Decision rules, for mental accounts,74Decision theory, resolving want/should conflict with, 88–89Declining marginal utility of gains,63DeDreu, C. K. W., 81Den Ouden, E., 39Depken, C. A., 119DePodesta, P., 180De Quervain, D. J.-F., 122Descriptive decision-making models, 5Devaluation, fixed-pie assumptionand, 169De Waal, F. B. M., 119Dhar, R., 86Dictator game, 118, 133Diekmann, K. A., 94, 172Dietz, J., 129Dijksterhuis, A., 90Diltz, J. D., 146Disclosure, conflicts of interest and,130Discountingfairness and, 115–116of future, 126–127temporal differences and, 87–88Disease vaccination, pseudocertaintyeffect and, 68–69Disgust, 96Disjunctive-events bias, 34–35Distribution, of price offers, 56fDitto, P. H., 95Dividing a Pie problem, 192Dollar auctions, 106, 111Dougherty, T. W., 33, 185Dow 36,000 (Glassman and Hassett),138Duncan, B. L., 33Dunkelberg, W. C., 194Dunning, D., 37, 90, 93, 95Economic decision making, fairnessand, 114–116Economics, resolving want/shouldconflict with, 88Egalitarianism, stereotypes and, 127Egeth, H., 47Egypt, Camp David Accords and,156–158, 157fEinhorn, H. J., 182, 185, 186Electronic trading, 145–146Elson, S. B., 134Elyashiv, T., 123Emotioncognition and, 84–89controls on, 99–100decision making and, 96–99fairness decided by, 116mood-congruent recall and, 97–98moral judgments and, 134neutralizing effect on decisions,99–100regret avoidance and, 98–99in ultimatum game, 118Employment interviews, 184–186Endowment effect, 73, 159emotional state and, 97Englich, B., 31, 33Enron, 122–123, 131Entrapment, 102Entrepreneursbase-rate insensitivity and, 22positive illusions of, 93Environmentdecisions about, 10, 126–127joint vs. separate preferencereversals and, 80Epelbaum, M., 169Epley, N., 31, 34, 37, 40, 78–79, 124,125Equality, in decision making,116–117Equality norms, perverseconsequences of, 121Erev, I., 91Escalationof commitment, 101–113Index 225competitive escalation paradigm,105–108unilateral escalation paradigm,103–105, 108Ethicsbounded, 6, 122–134codes of, 130in decision making, 113–135linear model uses and, 182–183profits and, 135training in, 135Evaluability hypothesis, 81Evaluationjoint vs. separate preferences in,79–81mental accounting for, 74Evidencebiased perception of, 95biased search for and interpretationof, 30Exchanges, endowment effect in, 73Executive ethics, profits and, 135Expectations, self-serving bias and, 94Expected-utility theory, 71. See alsoUtilityExpected value, 67decision analysis and, 181Expected-value decision rule, 62–63Experience, in negotiations, 188Expertise, for decision making, 186–188Exploitation, camouflagingintentionality behind, 132–133Exponential discounting, 87Fairnessin decision making, 113–135perceptions of, 113–122punishment of unfair treatment,121–122standards of, 121‘‘unfair’’ ultimatums and, 116–119Fallacies, conjunction, 27–28Favoritism, in-group, 125–126Favors, bounded ethicality and, 125–126Fear, 96Feder, B., 107, 108Feedback, 189Fehr, E., 119, 122, 126Fidelity’s Magellan Fund, 8Fiedler, K., 39Fields, W. C., 101Finance, behavioral, 137–138Financial decisionsemotions and, 97psychology of poor investments and,138–145Finucane, M., 9, 80, 85Fischbacher, U., 122, 126Fischer, D., 94Fischhoff, B., 37, 38, 39, 68, 69, 91,189Fisher, R., 153Fiske, S. T., 123Fixed pie assumption, of negotiation,168–169
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JUDGMENT INMANAGERIALDECISION MAKIN
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Dedicated toMHB: To Howard Raiffa,
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PREFACEBetween 1981 and 1983, one o
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ContentsChapter 1Introduction to Ma
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Contents ixOverestimating Your Val
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CHAPTERONEIntroduction to Manageria
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System 1 and System 2 Thinking 3di
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The Bounds of Human Rationality 5T
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Introduction to Judgmental Heuristi
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2. Are couples who marry under the
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An Outline of Things to Come 11who
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CHAPTERTWOCommon BiasesPlease read
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TABLE 2-1Chapter ProblemsCommon Bia
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Common Biases 17a. Drawing a red m
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Biases Emanating from the Availabil
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Biases Emanating from the Represent
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three flips of a coin or getting mo
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samples, scientists often grossly o
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Biases Emanating from the Represent
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Biases Emanating from the Confirmat
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Biases Emanating from the Confirmat
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Biases Emanating from the Confirmat
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Consider the following real-life sc
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Biases Emanating from the Confirmat
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Biases Emanating from the Confirmat
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TABLE 2-2 Summary of the Twelve Bia
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TABLE 3-1Chapter ProblemsRespond to
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Bounded Awareness 45Problem 6. Wit
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After showing the video the first t
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Focalism and the Focusing Illusion
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Bounded Awareness in Strategic Sett
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Bounded Awareness in Strategic Sett
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Bounded Awareness in Strategic Sett
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Bounded Awareness in Strategic Sett
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Bounded Awareness in Auctions 59th
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to have overbid, or at least not by
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Lawsuit: You are being sued for $50
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Framing and the Irrationality of th
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We Like Certainty, Even Pseudocerta
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participants who were given Version
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What’s It Worth to You? 71straig
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The Value We Place on What We Own
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Mental Accounting 75systematically
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Do No Harm, the Omission Bias, and
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Joint Versus Separate Preference Re
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Joint Versus Separate Preference Re
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Conclusion and Integration 83Given
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When Emotion and Cognition Collide
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The Impact of Temporal DifferencesW
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When Emotion and Cognition Collide
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Positive Illusions 91players or wi
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Positive Illusions 93individual’
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Self-Serving Reasoning 95attribute
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Emotional Influences on Decision Ma
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feedback on the decision not chosen
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CHAPTERSIXThe Escalation of Commitm
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The Unilateral Escalation Paradigm
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The Competitive Escalation Paradigm
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The Competitive Escalation Paradigm
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reasons. The first three classes of
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Why Does Escalation Occur? 111In h
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CHAPTERSEVENFairness and Ethics inD
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Perceptions of Fairness 115underpe
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Perceptions of Fairness 117include
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Perceptions of Fairness 119in thes
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These findings are consistent with
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Bounded Ethicality 123within firms
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Bounded Ethicality 125(Epley, Caru
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Bounded Ethicality 127implicit des
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Bounded Ethicality 129people. Inst
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Bounded Ethicality 131The results
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Bounded Ethicality 133played a pec
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Conclusion 135the classic experime
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Common Investment Mistakes 137to h
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The Psychology of Poor Investment D
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The Psychology of Poor Investment D
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The Psychology of Poor Investment D
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to taxes. From a tax perspective, w
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Action Steps 147island have been l
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choose them carefully. Some annuiti
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CHAPTERNINEMaking Rational Decision
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Together, these three sets of facts
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CLAIMING VALUE IN NEGOTIATIONConsid
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Creating Value in Negotiation 157I
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Creating Value in Negotiation 159c
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divided between negotiators. Yet, f
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The Tools of Value Creation 163The
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The Tools of Value Creation 165Typ
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Summary and Critique 167approach,
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academic programs, corporate battle
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view the negotiation with a positiv
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