BazermanMoore

56 Chapter 3: Bounded Awareness
That is, most people keep the door originally chosen, giving them a one-in-three chance
of winning, rather than trading for a two-in-three chance. Tor and Bazerman (2003)
replicated this result, finding specifically that 41 percent of participants traded doors
and 59 percent kept the inferior door. In the Mean Monty version (Problem 5), 79
percent made the right decision to keep the existing door, which is consistent with modal
intuition in the other version. Finally, most people made the same decision in both
versions of the game; only 24 percent answered both versions correctly.
The most extensive evidence on bounded awareness in negotiation comes from
‘‘Acquiring a Company,’’ the problem that has been researched for the longest period
of time. Substantial research on this problem suggests that bounded awareness leads
decision makers to ignore or simplify the cognitions of opposing parties as well as the
rules of the game (Carroll, Bazerman, & Maury, 1988). The first group to respond to
this problem was comprised of 123 MBA students from Boston University (Samuelson
& Bazerman, 1985). Their results are charted in Figure 3.1, which shows that the dominant
response fell between $50 and $75. How did students reach this $50–to–$75 decision?
One common, but wrong, explanation is that ‘‘On average, the firm will be worth
$50 to the target and $75 to the acquirer; consequently, a transaction in this range will,
on average, be profitable to both parties.’’
In fact, the correct answer to the Acquiring a Company problem is so counterintuitive
that only 9 of 123 participants correctly offered $0 per share. Replications with
accounting firm partners, CEOs, investment bankers, and many other skilled groups
have produced similar results. Finally, even participants who were paid according to
their performance and given many opportunities to learn through experience exhibited
Total
number of
responses: 123
45
27
18
9
7
5
4 4
1
0
$0 $20–25 $40–45 $60–65 $80–85
$10–15 $30–35 $50–55 $70–75 $90–95
Figure 3.1
The Distribution of Price Offers