Designing for Deliberative Goal-Based Decision Making in Environments with Rare Adverse Events—An Experimental Study

Published Online:https://doi.org/10.1287/orsc.2016.1095

References

  • Argote L, Greve HR (2007) A behavioral theory of the firm—40 years and counting: Introduction and impact. Organ. Sci. 18(3):337–349.LinkGoogle Scholar
  • Axelrod R, Cohen MD (2000) Harnessing Complexity: Organizational Implications of a Scientific Frontier (Free Press, New York).Google Scholar
  • Barron G, Erev I (2003) Small feedback-based decisions and their limited correspondence to description-based decisions. J. Behav. Decision Making 16(3):215–233.CrossrefGoogle Scholar
  • Basel Committee on Banking Supervision (2004) International convergence of capital measurement and capital standards: A revised framework (Bank for International Settlements, Basel, Switzerland).Google Scholar
  • Basel Committee on Banking Supervision (2011) Basel III: A global regulatory framework for more resilient banks and banking systems, revised version (Bank for International Settlements, Basel, Switzerland).Google Scholar
  • Bellman R (1952) On the theory of dynamic programming. Proc. Natl. Acad. Sci. USA 38(8):716–719.CrossrefGoogle Scholar
  • Board of Governors of the Federal Reserve System (2016) Dodd-Frank Act Stress Test 2016: Supervisory stress test methodology and results (Federal Reserve, Washington, DC).Google Scholar
  • Buljan A, Shapira Z (2005) Attention to production schedule and safety as determinants of risk-taking in NASA’s decision to launch the Columbia shuttle. Starbuck WH, Farjoun M, eds. Organization at the Limit: Lessons from the Columbia Disaster (Blackwell Publishing, Oxford, UK), 140–156.Google Scholar
  • Calabrese R (2014) Downturn loss given default: Mixture distribution estimation. Eur. J. Oper. Res. 237(1):271–277.CrossrefGoogle Scholar
  • Campbell DJ (1988) Task complexity: A review and analysis. Acad. Management Rev. 13(1):40–52.CrossrefGoogle Scholar
  • Cyert RM, March JG (1963) A Behavioral Theory of the Firm (Prentice Hall, Englewood Cliffs, NJ).Google Scholar
  • Dantzig GB (1963) Linear Programming and Extensions (Princeton University Press, Princeton, NJ).CrossrefGoogle Scholar
  • Davison AC, Hinkley DV (1997) Bootstrap Methods and Their Application (Cambridge University Press, New York).CrossrefGoogle Scholar
  • Dobbs R, Manyika J, Woetzel J (2015) No Ordinary Disruption: The Four Global Forces Breaking All the Trends (Public Affairs Press, New York).Google Scholar
  • Efron B, Tibshirani RJ (1993) An Introduction to the Bootstrap (CRC Press, Boca Raton, FL).CrossrefGoogle Scholar
  • Erev I, Roth AE (1998) Predicting how people play games: Reinforcement learning in experimental games with unique, mixed strategy equilibria. Amer. Econom. Rev. 88(4):848–881.Google Scholar
  • European Banking Authority (2016) 2016 EU-Wide Stress Test—Methodological Note (European Banking Authority, London).Google Scholar
  • Evans JSBT (2007) Hypothetical Thinking: Dual Processes in Reasoning and Judgement (Psychology Press, New York).CrossrefGoogle Scholar
  • Evans JSBT (2014) The presumption of consciousness. Behav. Brain Sci. 37(1):26–27.CrossrefGoogle Scholar
  • Evans JSBT, Stanovich KE (2013) Dual-process theories of higher cognition advancing the debate. Perspect. Psych. Sci. 8(3): 223–241.CrossrefGoogle Scholar
  • Fishbach A, Hofmann W (2015) Nudging self-control: A smartphone intervention of temptation anticipation and goal resolution improves everyday goal progress. Motivation Sci. 1(3):137–150.CrossrefGoogle Scholar
  • Förster J, Liberman N, Higgins ET (2005) Accessibility from active and fulfilled goals. J. Experiment. Soc. Psych. 41(3):220–239.CrossrefGoogle Scholar
  • Fredrickson JW, Mitchell TR (1984) Strategic decision processes: Comprehensiveness and performance in an industry with an unstable environment. Acad. Management J. 27(2):399–423.CrossrefGoogle Scholar
  • Gavetti G, Levinthal DA (2000) Looking forward and looking backward: Cognitive and experiential search. Admin. Sci. Quart. 45(1):113–137.CrossrefGoogle Scholar
  • Gavetti G, Levinthal DA, Rivkin JW (2005) Strategy making in novel and complex worlds: The power of analogy. Strategic Management J. 26(8):691–712.CrossrefGoogle Scholar
  • Gavetti G, Greve HR, Levinthal DA, Ocasio W (2012) The behavioral theory of the firm: Assessment and prospects. Acad. Management Ann. 6(1):1–40.CrossrefGoogle Scholar
  • Gick ML, Holyoak KJ (1983) Schema induction and analogical transfer. Cognitive Psych. 15(1):1–38.CrossrefGoogle Scholar
  • Gilboa I, Schmeidler D (1995) Case-based decision theory. Quart. J. Econom. 110(3):605–639.CrossrefGoogle Scholar
  • Greiner B (2004) An online recruitment system for economic experiments. Kremer K, Macho V, eds. Forschung und wissenschaftliches Rechnen 2003, Vol. 63 (Gesellschaft für Wissenschaftliche Datenverarbeitung, Göttingen, Germany), 79–93.Google Scholar
  • Greve HR (2008) A behavioral theory of firm growth: Sequential attention to size and performance goals. Acad. Management J. 51(3):476–494.CrossrefGoogle Scholar
  • Haldane AG (2009) Why banks failed the stress test. Speech by Andrew G. Haldane, executive director for financial stability, Marcus-Evans Conference on Stress-Testing, February 13, Bank of England, London.Google Scholar
  • Hertwig R, Barron G, Weber E, Erev I (2004) Decisions from experience and the weighting of rare events. Psych. Sci. 15(8):534–539.CrossrefGoogle Scholar
  • Higgins ET (1998) Promotion and prevention: Regulatory focus as a motivational principle. Zanna MP, ed. Advances in Experimental Social Psychology, Vol. 30 (Academic Press, New York), 1–46.CrossrefGoogle Scholar
  • Hohnisch M, Pittnauer S, Pfingsten A, Selten R (2016) Deliberative versus less-reasoned decision making in environments with rare adverse events—The role of task complexity. Working paper, Technion, Haifa, Israel.Google Scholar
  • Hohnisch M, Pittnauer S, Selten R, Pfingsten A, Erassmy J (2014) Gender differences in decisions under profound uncertainty are non-robust to the availability of information on equally informed others’ decisions. J. Econom. Behav. Organ. 108(December): 40–58.CrossrefGoogle Scholar
  • Holland JH, Holyoak KJ, Nisbett RE, Thagard P (1986) Induction. Processes of Inference, Learning, and Discovery (MIT Press, Cambridge, MA).Google Scholar
  • Kahneman D (2011) Thinking, Fast and Slow (Farrar, Straus, and Giroux, New York).Google Scholar
  • Kareev Y, Avrahami J, Fiedler K (2014) Strategic interactions, affective reactions, and fast adaptations. J. Experiment. Psych.: General 143(3):1112–1126.CrossrefGoogle Scholar
  • Keeney RL, Raiffa H (1976) Decisions with Multiple Objectives: Preferences and Value Trade-Offs (John Wiley, New York).Google Scholar
  • Krantz DH (2010) Constructed preference and the quest for rationality. Michel-Kerjan E, Slovic P, eds. The Irrational Economist: Making Decisions in a Dangerous World (Public Affairs Press, New York), 66–71.Google Scholar
  • Krantz DH, Kunreuther HC (2007) Goals and plans in decision making. Judgment Decision Making 2(3):137–168.Google Scholar
  • Kroszner RS, Shiller RJ (2011) Reforming U.S. Financial Markets (MIT Press, Cambridge, MA).Google Scholar
  • Kruglanski AW (2013) Only one? The default interventionist perspective as a unimodel? Commentary on Evans and Stanovich (2013). Perspect. Psych. Sci. 8(3):242–247.CrossrefGoogle Scholar
  • Kruglanski AW, Bélanger JJ, Chen X, Köpetz C, Pierro A, Mannetti L (2012) The energetics of motivated cognition: A force-field analysis. Psych. Rev. 119(1):1–20.CrossrefGoogle Scholar
  • Kruglanski AW, Shah JY, Fishbach A, Friedman R, Chun WY, Sleeth-Keppler D (2002) A theory of goal systems. Zanna MP, ed. Advances in Experimental Social Psychology, Vol. 34 (Academic Press, New York), 331–378.CrossrefGoogle Scholar
  • Kunreuther HC (1978) Disaster Insurance Protection: Public Policy Lessons (John Wiley, New York).Google Scholar
  • Kunreuther HC, Meszaros J (1997) Organizational choice under ambiguity: Decision making in the chemical industry following Bhopal. Shapira Z, ed. Organizational Decision Making (Cambridge University Press, Cambridge, UK), 61–80.Google Scholar
  • Kunreuther HC, Pauly MV, McMorrow S (2013) Insurance and Behavioral Economics: Improving Decisions in the Most Misunderstood Industry (Cambridge University Press, Cambridge, UK).Google Scholar
  • Lewin K, Dembo T, Festinger L, Sears PS (1944) Level of aspiration. Hunt JM, ed. Personality and the Behavior Disorders, Vol. 1 (Ronald Press, Oxford, UK), 333–378.Google Scholar
  • Loewenstein G, Weber EU, Hsee CK, Welch N (2001) Risk as feelings. Psych. Bull. 127(2):267–286.CrossrefGoogle Scholar
  • Lopes LL (1987) Between hope and fear: The psychology of risk. Adv. Experiment. Soc. Psych. 20(3):255–295.CrossrefGoogle Scholar
  • March JG (1978) Bounded rationality, ambiguity, and the engineering of choice. Bell J. Econom. 9(2):587–608.CrossrefGoogle Scholar
  • March JG (1994) A Primer on Decision Making (Free Press, New York).Google Scholar
  • March JG (2010) The Ambiguities of Experience (Cornell University Press, Ithaca, NY).CrossrefGoogle Scholar
  • March JG, Olsen JP (1976) Ambiguity and Choice in Organisations (Universitetsforlaget, Bergen, Norway).Google Scholar
  • March JG, Shapira Z (1992) Variable risk preferences and the focus of attention. Psych. Rev. 99(1):172–183.CrossrefGoogle Scholar
  • March JG, Simon HA (1958) Organizations (Wiley, New York).Google Scholar
  • Meyer RJ (2012) Failing to learn from experience about catastrophes: The case of hurricane preparedness. J. Risk Uncertainty 45(1):25–50.CrossrefGoogle Scholar
  • Michel-Kerjan E, Slovic P (2010) The Irrational Economist: Making Decisions in a Dangerous World (Public Affairs Press, New York).Google Scholar
  • Milgrom P, Roberts J (1992) Economics, Organization and Management (Prentice Hall, Englewood Cliffs, NJ).Google Scholar
  • Newell A, Simon HA (1972) Human Problem Solving (Prentice Hall, Englewood Cliffs, NJ).Google Scholar
  • Nickerson JA, Zenger TR (2004) A knowledge-based theory of the firm—The problem-solving perspective. Organ. Sci. 15(6): 617–632.LinkGoogle Scholar
  • Ocasio W (1997) Towards an attention-based view of the firm. Strategic Management J. 18(Summer):187–206.CrossrefGoogle Scholar
  • Ordóñez LD, Schweitzer ME, Galinsky AD, Bazerman MH (2009) Goals gone wild: The systematic side effects of overprescribing goal setting. Acad. Management Perspect. 23(1):6–16.CrossrefGoogle Scholar
  • Public Law 111-203 (2010) Dodd-Frank Wall Street Reform and Consumer Protection Act. July 21, 124 Stat. 1375–2223, Washington, DC.Google Scholar
  • R Development Core Team (2011) R: A Language and Environment for Statistical Computing (R Foundation for Statistical Computing, Vienna, Austria), http://www.R-project.org.Google Scholar
  • Rottenstreich Y, Hsee CK (2001) Money, kisses, and electric shocks: On the affective psychology of risk. Psych. Sci. 12(3):185–190.CrossrefGoogle Scholar
  • Sauermann H, Selten R (1962) Anspruchsanpassungstheorie der unternehmung. Zeitschrift für die gesamte Staatswissenschaft/J. Institutional Theoretical Econom. 118(4):577–597.Google Scholar
  • Savage LJ (1954) Foundations of Statistics (Wiley, New York).Google Scholar
  • Selten R (1998) Aspiration adaptation theory. J. Math. Psych. 42(23): 191–214.CrossrefGoogle Scholar
  • Selten R (2001) What is bounded rationality? Gigerenzer G, Selten R, eds. Bounded Rationality—The Adaptive Toolbox (MIT Press, Cambridge, MA), 13–35.Google Scholar
  • Selten R, Abbink K, Cox R (2005) Learning direction theory and the winner’s curse. Experiment. Econom. 8(1):5–20.CrossrefGoogle Scholar
  • Selten R, Pittnauer S, Hohnisch M (2012) Dealing with dynamic decision problems when knowledge of the environment is limited: An approach based on goal systems. J. Behav. Decision Making 25(5):443–457.CrossrefGoogle Scholar
  • Shackle GLS (1972) Epistemics and Economics: A Critique of Economic Doctrines (Cambridge University Press, Cambridge, UK).Google Scholar
  • Shapira Z (1995) Risk Taking: A Managerial Perspective (Russell Sage Foundation, New York).Google Scholar
  • Shleifer A (2004) Does competition destroy ethical behavior? Amer. Econom. Rev. 94(2):414–418.CrossrefGoogle Scholar
  • Simon HA (1947) Administrative Behavior: A Study of Decision-Making Processes in Administrative Organization (Macmillan, New York).Google Scholar
  • Simon HA (1955) A behavioral model of rational choice. Quart. J. Econom. 69(1):99–118.CrossrefGoogle Scholar
  • Simon HA (1962) The architecture of complexity. Proc. Amer. Philos. Soc. 106(6):467–482.Google Scholar
  • Simon HA (1978) Rationality as process and as product of thought. Amer. Econom. Rev. 68(2):1–16.Google Scholar
  • Simon HA (1979) Rational decision making in business organizations. Amer. Econom. Rev. 69(4):493–513.Google Scholar
  • Slovic P (1995) The construction of preference. Amer. Psychologist 50(5):364–371.CrossrefGoogle Scholar
  • Stanovich KE (2009) Decision Making and Rationality in the Modern World (Oxford University Press, New York).Google Scholar
  • Stanovich KE (2011) Rationality and the Reflective Mind (Oxford University Press, New York).Google Scholar
  • Starbuck W, Farjoun M, eds. (2005) Organization at the Limit: Lessons from the Columbia Disaster (Blackwell Publishing, Oxford, UK).Google Scholar
  • Sterman JD (2012) Sustaining sustainability: Creating a systems science in a fragmented academy and polarized world. Sustainability Science (Springer, New York), 21–58.CrossrefGoogle Scholar
  • Sunstein CR, Hastie R (2015) Wiser: Getting Beyond Groupthink to Make Groups Smarter (Harvard Business Review Press, Boston).Google Scholar
  • Thompson VA (2013) Why it matters: The implications of autonomous processes for dual process theories—Commentary on Evans and Stanovich (2013). Perspect. Psych. Sci. 8(3):253–256.CrossrefGoogle Scholar
  • Tversky A (1972) Elimination by aspects: A theory of choice. Psych. Rev. 79(4):281–299.CrossrefGoogle Scholar
  • Wood RE (1986) Task complexity: Definition of the construct. Organ. Behav. Human Decision Processes 37(1):60–82.CrossrefGoogle Scholar
  • Yechiam E, Barron G, Erev I (2005) The role of personal experience in contributing to different patterns of response to rare terrorist attacks. J. Conflict Resolution 49(3):430–439.CrossrefGoogle Scholar
  • Yechiam E, Erev I, Barron G (2006) The effect of experience on using a safety device. Safety Sci. 44(6):515–522.CrossrefGoogle Scholar
  • Zeigarnik B (1927) Das Behalten erledigter und unerledigter Handlungen [The memory of completed and uncompleted actions]. Psychologische Forschung 9(1):1–85.Google Scholar
  • Zhou YM (2013) Designing for complexity: Using divisions and hierarchy to manage complex tasks. Organ. Sci. 24(2):339–355.LinkGoogle Scholar
INFORMS site uses cookies to store information on your computer. Some are essential to make our site work; Others help us improve the user experience. By using this site, you consent to the placement of these cookies. Please read our Privacy Statement to learn more.