226 IndexFocalism, 48–50Focusing illusion, 49Fooled by Randomness (Taleb), 142Football, self-serving reasoning about,94–95Forgas, J. P., 96Forsyth, D. R., 124401(k) employee savings plans, 144, 148Fox, C. R., 49, 140Framingirrationality of sum of choices and,65–67joint vs. separate preferencereversals and, 79–81of negotiator judgment, 169–171and overselling of insurance, 70–71rebate/bonus, 78–79reversal of preferences and, 62–83uses of term, 64Franconeri, S. L., 48Franken, A., 30Franklin, B., 156, 188Frederick, S., 10Friedman, A., 104Friedman, D., 55Fuller, R., 197Fuller-Thaler mutual funds, 197Future, discounting of, 126–127Gabriel, S., 96Gächter, S., 122Gaertner, L., 90Galinsky, A. D., 177Gambler’s fallacy, misconceptions ofchance and, 24Gambling, 67Games. See also Gambling; Riskprisoner dilemma, 58–59Russian Roulette, 67–68ultimatum, 117–119Game theory, 54–55, 57. See alsospecific gamesGender, and investmentoverconfidence, 139–140Gentner, D., 191–192Gerberding, J. L., 18Gest, T., 94Gigerenzer, G., 193–194Gilbert, D. T., 9, 48, 49, 83, 90, 184Gillespie, J. J., 160Gilovich, T., 24, 31, 34, 37, 77, 95, 98,143Gino, F., 48, 58, 184Giuliano, T., 104Gladwell, M., 182Glassman, J. K., 138Glick, P., 129Goethals, G. R., 90Goetzmann, W. N., 141Goldberg, J. H., 99Goldstein, D. G., 77Gonzalez, R. M., 91Gonzalez-Vallejo, C., 37Goodwin, P., 181Gorbachev, M., 95Gore, A., 94, 126Grabiner, D., 171Gramzow, R. H., 90Green, M. C., 134Greene, J. D., 132Greenwald, A. G., 90, 93, 128Griffin, D. W., 37Gross, J. J., 96Gross, P. H., 32Grosskopf, B., 187, 192Grossman, S. J., 138Groupsbounded awareness in, 50–51escalation of commitment and, 104Gruenfeld, D. H., 50Guidant, bidding war over, 107–108Güth, W., 117Ha, Y.-W., 9Haidt, J., 96, 134Hall, M., 53Hammond, J. S., 3, 181Happiness, subjectivity utility scaleand, 82–83Hardin, G., 175Harper, D. R., 37Harrington, M., 172–173Harris, G., 108Hart, P., 130Hassett, K. A., 138Hastie, R., 93Hastorf, A. H., 94Healy, P. J., 36n, 91Heath, C., 93Hedge funds, 137Heider, F., 190Henrich, J., 118Hershey, J. C., 9, 70Heuristics, 40affect, 9–10, 14availability, 7–8, 14, 18–21confirmation, 9, 14, 28–40, 95in employment interviews, 185judgmental, 6–10, 82–83positive hypothesis testing, 8–9representativeness, 8, 14, 21–28selective application of, 40types of, 7, 14Hindsight bias, 9, 38–40Hiring, decision-analysis tools for,184–185Ho, T.-H., 57Hoang, H., 104Hoch, S. J., 39Hoffman, E., 118Hoffrage, U., 193–194Hogan, D., 185Hogarth, R. M., 185, 186Holt, J., 88Holt, L. L., 179Homer, 84Hsee, C. K., 79, 80, 86, 97Huberman, G., 42Hunter, J. E., 185Hyperbolic discounting, 87Hypothesis testing, positive, 7, 8–9Idson, L. C., 78, 192Illusions, positive, 90–94Implicit Associations Test (IAT), 128Implicit attitudes, 127–129Impression management, 110–111Inattentional blindness, 46–47Incentives, for retirement investment,147–148Index funds, 136–137Indirectly unethical behavior,132–133Inferences, availability heuristic and,18–19Informationconfirmation trap and, 29–30in groups, 50–51overlooked, 46sharing, 161strategic disclosure of, 162–163Information overload, informationfiltering and, 42Ingerman, C., 90In-group favoritism, boundedethicality and, 125–126In-group members, favors for, 126Insider view, 194–195Insuranceframing and overselling of, 70–71purchases based on availabilityheuristic, 19–20Integration, escalation of commitmentand, 112Interests, of negotiators, 153–154Internal conflicts, reconciling, 88–89Intuitionavailability heuristic and, 21in baseball, 179–180Investmentaction steps for, 147–150active trading and, 145–147goals for, 147–149loads on funds, 149mistakes with, 136–150money held for, 144optimism about, 140–141overconfidence in trading and,138–140prospect theory and, 144–145returns on, 139types of assets for, 143Irrationality, competitive, 111–112Israel, Camp David Accords and,156–158, 157fIssacharoff, S., 94, 174Iyengar, S. S., 42Jaccard, J., 128Jacobson, L., 33James, W., 42Janoff-Bulman, R., 83Jegadeesh, N., 142Jiang, W., 42Job interviews, 184–186Johnson, E. J., 77, 99Joint ventures, overclaiming of creditand, 124–125Joint vs. separate preference reversals,79–81Jones, J. T., 90
Jordan, D. J., 146Joyce, E. J., 33Judgment. See also Biasescertainty and uncertainty effectsand, 70debiasing, 189–191emotions and, 96–97framing and, 82–83Judgmental biases, 109–110. See alsoBiasesJudgmental heuristics, 6–10. See alsoHeuristicsKagel, J. H., 186Kahneman, D., 3, 5–6, 7, 9, 10, 15, 18,20, 21, 22, 23, 24, 26, 27, 28, 31,34, 35, 49, 61, 62, 63, 64, 65, 66,67, 68, 69, 70, 72, 73, 77, 78, 80,82, 83, 97, 98, 114, 115, 120, 170,186, 187, 194, 195, 196–197Kanwisher, N., 179Karlsson, N., 19Kassam, K., 132Kat, H. M., 137Keeney, R. L., 3, 181Keltner, D., 96, 97, 169Kennedy, J. F., 111Kerry, J., 110Keynes, J. M., 149Keysar, B., 39Khan, U., 86Kim, H. S., 90Kim, T. G., 91Kirchsteiger, G., 119Klayman, J., 9, 37, 91Klein, W. M. P., 93Kleinbölting, H., 194Knetsch, J. L., 73, 97, 114Knowledge, from experience, 188Koehler, D. J., 49–50Koole, S. L., 90Koriat, A., 37, 39Krabbenoft, M. A., 185Kramer, G. P., 96Kramer, R. M., 93, 94, 95Kristel, O. V., 134Krueger, A. B., 83Krueger, J. I., 93Kruger, J., 40, 91, 92Kuang, J. X., 132–133Kunda, Z., 30, 90Kunreuther, H., 19, 70Kurtzberg, T. R., 140Laibson, D., 85, 87, 144, 147Lakin, J. L., 93Larrick, R. P., 91, 98, 188, 189Laschever, S., 32Latane, B., 134–135Law of small numbers, misconceptionsof chance and, 24–25Lax, D. A., 153, 154, 159Learning, 42debiasing and, 192from mistakes, 187Lee, G. P., 85Leeson, N., 109–110Lehman, B. J., 97Leibold, J. M., 129Leith, K. P., 97Lepper, M. R., 30, 42, 191Lerner, J. S., 91, 96, 97, 99, 134Let’s Make a Deal (televisionprogram), 53–54Levin, D., 47, 48, 186Levine, D. I., 119Levine, M., 147Levy, J., 47Lewin, K., 10Lewinsky, M., 30Lewis, M., 179, 180Li, M., 91Lichtenstein, S., 37, 68, 69, 189Lieberman, M. D., 99Lies, decision-making biases and, 96Life decisions, information availablefor, 18–19Limbaugh, R., 30Lind, E. A., 113Lindell, M. K., 20Linear models, 181–182in college admissions decisions, 184resistance to, 182–184superior decisions from, 182Lineberger, M., 96Linton, S., 97Lituchy, T. R., 81Loads (commissions), 149Loewenstein, G., 19, 39, 48, 79, 80, 82,85, 86, 89, 90, 94, 97, 120, 127,130, 131, 174, 191–192, 193Logicbase-rate sensitivity and, 21–22of heuristics, 40Lopez, D. F., 95Lord, C. G., 30, 191Lotto, A. J., 179Lovallo, D., 57, 67, 194Lowenthal, D. J., 80Lynch, P., 8MacGregor, D. G., 9, 80, 85Mack, A., 47Macrae, C. N., 127Madey, S. F., 98Madrian, B. C., 144Magellan Fund, 8Major League Baseball. See BaseballMak, D., 78Malhotra, D., 159, 161, 165Malkiel, B. G., 137, 150Malmendier, U., 37Malone, P. S., 184Managementavailability heuristic and, 21regression principle and, 27Managers, 10–11Mannix, E. A., 50March, J. G., 5Marginal utility of gains, declining, 63Market, investment decisionscompared with, 141Marks, J. S., 18Markwith, M., 4Index 227Marx, G., 55Massey, C., 58Maury, R., 56Maxcy, C., 171nMcCabe, K., 118McCauley, C. R., 96McClure, S. M., 85, 88McConnell, A. R., 129McGhee, D. E., 128McGraw, A. P., 93McGraw, K. M., 90Mean, regression to, 25–27Mediation, framing in, 170–171Medvec, V. H., 77, 98Meier, B., 107Mellers, B. A., 93Mental accounting, 74–76Merck, ethics of, 132Mergers, classroom auction strategyand, 105–106Messick, D. M., 48, 52, 55, 90, 94, 113,121, 126, 135, 176Metrick, A., 144Meyers, J. M., 48Milgram, S., 134Milkman, K. L., 75, 87Miller, D. T., 98Minorities, exclusion of, 126Mirenberg, M. C., 90Mistakes, learning from, 187Mitroff, S. R., 48Moag, J., 57Mokdad, A. H., 18Moneyball (Lewis), 179–180Money managers, 136Monkeys, fairness behavior by, 119Monty Hall games, 51, 53–54, 55–56,192Mood-congruent recall, 97–98Moore, C. M., 47Moore, D. A., 22, 36n, 48, 52, 55, 57,58, 80, 91, 92, 96, 130, 131, 140,141, 142, 153, 184Moore, P. C., 94Moral judgments, emotions and, 134Moran, S., 192, 193Morewedge, C. K., 90Morgan, K. P., 131Morris, M. W., 94Motivation, subjectivity utility scaleand, 82–83Mroz, L., 171nMuecke, D., 129Multiparty ultimatum games, 51, 52–53Multiple-selves theory, 85–86Murnighan, J. K., 118Murnighan, K. K., 123Murphy, S., 134Mussweiler, T., 31, 32, 33, 34, 39, 177,189Mutual funds, 136investment decisions and, 138performance of, 142for retirement investment, 149Nalebuff, B., 46, 53NASA, Challenger disaster and, 50
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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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Overestimating Your Value in Negoti
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