Suchergebnisse

"Society venerates experience. Our personal experience is a key component of who we are. We judge others by theirs and are judged by ours. From doctors to teachers to presidents to chefs, in our society, the more experience the better. But while we value and trust experience above all else, we overlook its inherent downfalls. In The Myth of Experience, Hogarth and Soyer explore why a reliance on experience can ultimately hinder individual and societal decision-making. Drawing on concepts of behavioral science and economics, they highlight how experience can misrepresent the past, limit creativity, restrict freedom and reduce happiness. In doing so, they transform the conventional wisdom behind experience and provide a guide on how to improve our use of it. When organizations and decision-makers develop a healthy criticism towards experience, effective strategies develop and growth can occur. Told in an engaging narrative with cases from history and everyday life, alongside their own cutting-edge discoveries in behavioral science, Hogarth and Soyer illustrate the flaws of experience as a decision-making tool and the instances where our most trusted ally could really be our enemy, in the workplace and beyond"--

Excess entry—or the high failure rate of market entry decisions—is often attributed to overconfidence exhibited by entrepreneurs. Assuming that these decisions depend on assessments of business opportunities, we model boundedly rational entrepreneurs and show analytically that, whereas excess entry is an inevitable consequence of imperfect judgment, it does not necessarily imply overconfidence. Indeed, judgmental fallibility can lead to excess entry even when all potential entrepreneurs are underconfident. We further demonstrate that, as a group, individuals who decide to start a new business exhibit more confidence than those who do not and that successful entrants are less confident than failures. Our results therefore question general claims that overconfidence leads to excess entry. We conclude by emphasizing the need to understand the role of judgmental fallibility in producing economic outcomes and implications for both venture capitalists and the training of entrepreneurs.

An important problem in descriptive and prescriptive research in decision making is to identify "regions of rationality," i.e., the areas for which heuristics are and are not effective. To map the contours of such regions, we derive probabilities that heuristics identify the best of m alternatives (m ≥ 2) characterized by k attributes or cues (k ≥ 1). The heuristics include a single variable (lexicographic), variations of elimination-by-aspects, equal weighting, hybrids of the preceding, and models exploiting dominance. We use 20 simulated and 4 empirical data sets for illustration. We further provide an overview by regressing heuristic performance on factors characterizing environments. Overall, "sensible" heuristics generally yield similar choices in many environments. However, selection of the appropriate heuristic can be important in some regions (e.g., if there is low intercorrelation among attributes or cues). Because our work assumes a hit-or-miss decision criterion, we conclude by outlining extensions for exploring the effects of different loss functions.