Judgment in Managerial Decision Making

Chapter 1 Introduction to Managerial Decision Making 1
The Anatomy of Decisions 1
System 1 and System 2 Thinking 3
The Bounds of Human Attention and Rationality 5
Introduction to Judgmental Heuristics 7
An Outline of Things to Come 10

Chapter 2 Overconfidence 14
The Mother of All Biases 14
Overprecision 16
Overestimation 22
Overplacement 26
Let's Hear it for Well-Calibrated Decision Making 28

Chapter 3 Common Biases 31
Biases Emanating from the Availability Heuristic 34
Biases Emanating from the Representativeness Heuristic 38
Biases Emanating from the Confirmation Heuristic 46
Integration and Commentary 57

Chapter 4 Bounded Awareness 60
Inattentional Blindness 65
Change Blindness 66
Focalism and the Focusing Illusion 67
Bounded Awareness in Groups 69
Bounded Awareness in Strategic Settings 71
Discussion 81

Chapter 5 Framing and the Reversal of Preferences 82
Framing and the Irrationality of the Sum of Our Choices 85
We Like Certainty, Even Pseudocertainty 87
Framing and The Overselling of Insurance 90
What's It Worth to You? 91
The Value We Place on What We Own 93
Mental Accounting 94
Rebate/Bonus Framing 96
Joint-versus-Separate Preference Reversals 98
Conclusion and Integration 100

Chapter 6 Motivational and Emotional Influences on Decision Making 103
When Emotion and Cognition Collide 105
Self-Serving Reasoning 112
Emotional Influences on Decision Making 114
Summary 117

Chapter 7 The Escalation of Commitment 119
The Unilateral Escalation Paradigm 121
The Competitive Escalation Paradigm 123
Why Does Escalation Occur? 127
Integration 131

Chapter 8 Fairness and Ethics in Decision Making 132
Perceptions of Fairness 133
When We Resist "Unfair" Ultimatums 135
When We are Concerned about the Outcomes of Others 139
Why do Fairness Judgments Matter? 142
Bounded Ethicality 143
Overclaiming Credit 145
In-Group Favoritism 146
Implicit Attitudes 147