...Organizational Behavior: 1/10/13 * Real life decision making is not rational * “Sunk cost bias” – violates economic assumption of reality * ex: $20 auction * Escalation * Influences of Escalation * Project features encourage it * Psychological factors encourage it * Social factors encourage it * Structural factors encourage it * ex: Vietnam war – committed large number of troops to combat * Reduce escalation of commitment * Separate initial decision-makers from decision evaluators * banks making problem loans * get a fresh set of eyes to evaluate * Shift focus of attention * think about others, pro-social view * hopes and aspirations, growth * Hold people accountable for decision processes, not only outcomes * Maximizers vs. Satisficers * Maximizers – 20% higher salary * Maximizers less successful * less satisfied with outcomes * more negative emotions during search * Maximizers tend to do better but feel worse than satisficers * ex: Silver medal in Olympics * Maximizers at greater risk of escalating commitment * Irrationality * Often can not articulate why we make decisions * ex: Predicting double faults * when asked to justify, they do not really know but may give an answer * Irrationality is unconscious * people’s decisions are also shaped...
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