Management Science · 1993 · 2K citations · 39 references
ManagementDecision SciencesOrganizational BehaviorDecision MakingDecision TheoryStrategic Decision-makingBehavioral Decision-makingDecision Making Under RiskManagerial Decision MakingProspect TheoryRisk AttitudesRisk PreferencesAggregationBehavioral ForecastingBiasesCognitive Perspective TakingPreference Under UncertaintyRisk Perception BiasesRisky Decision MakingStatistical Aggregation
Decision makers have a strong tendency to consider problems as unique. They isolate the current choice from future opportunities and neglect the statistics of the past in evaluating current plans. Overly cautious attitudes to risk result from a failure to appreciate the effects of statistical aggregation in mitigating relative risk. Overly optimistic forecasts result from the adoption of an inside view of the problem, which anchors predictions on plans and scenarios. The conflicting biases are documented in psychological research. Possible implications for decision making in organizations are examined.
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Judgment under Uncertainty: Heuristics and Biases
Amos Tversky, Daniel Kahneman · 1975 · 23.1K citations
On the psychology of prediction.
Daniel Kahneman, Amos Tversky · Psychological Review · 1973 · 6.3K citations