Timid choices and bold forecasts: a cognitive perspective on risk taking.
Abstract
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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Individuals tend to underestimate the necessary time it takes to complete tasks (the planning fallacy).
“Other research, focusing on planning, has demonstrated that individuals tend to underestimate the necessary time it takes to complete tasks (the planning fallacy; Kahneman and Tversky, 1979; Kahneman and Lovallo, 1993) and to prefer longer deadlines when allowed to choose (Solomon and Rothblum, 1984).”
From How Study Environments Foster Academic Procrastination: Overview and Recommendations (2020) · cites this paper as Kahneman and Lovallo, 1993
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- Authors
- Kahneman, D., & Lovallo, D.
- Affiliations
- University of California, Berkeley (US)
- ORCID
- Lovallo, Dan
- Venue
- Management Science
- Published
- 1993-01
- Volume
- 39
- Issue
- 1
- Pages
- 17-31
- ISSN
- 0025-1909 (ISSN-L)
- 1526-5501
- OpenAlex
- W2017563734
- Cited by
- 2,043
- References
- 4
- Citations by year
- 2026: 39 · 2025: 45 · 2024: 56 · 2023: 78 · 2022: 90 · 2021: 96 · 2020: 76 · 2019: 95 · 2018: 91 · 2017: 117 · 2016: 116 · 2015: 93 · 2014: 101 · 2013: 70 · 2012: 86
- FWCI
- 15.98
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Management Science (publishedVersion)
- Topics
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Social Sciences › Decision Sciences › Management Science and Operations Research › Leadership, Behavior, and Decision-Making Studies
- Health Sciences › Medicine › Family Practice › Clinical Reasoning and Diagnostic Skills
- Keywords
- risk-taking, risk aversion, cognitive biases, anchoring, statistical aggregation, relative risk, decision-making, organizational decision-making, optimism bias
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