A Review of Optimism Bias, Planning Fallacy, Sunk Cost Bias and Groupthink in Project Delivery and Organisational Decision Making
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A Task-Based Taxonomy of Cognitive Biases for Information Visualization
A Task-based Taxonomy of Cognitive Biases for Information Visualization Evanthia Dimara, Steven Franconeri, Catherine Plaisant, Anastasia Bezerianos, and Pierre Dragicevic Three kinds of limitations The Computer The Display 2 Three kinds of limitations The Computer The Display The Human 3 Three kinds of limitations: humans • Human vision ️ has limitations • Human reasoning 易 has limitations The Human 4 ️Perceptual bias Magnitude estimation 5 ️Perceptual bias Magnitude estimation Color perception 6 易 Cognitive bias Behaviors when humans consistently behave irrationally Pohl’s criteria distilled: • Are predictable and consistent • People are unaware they’re doing them • Are not misunderstandings 7 Ambiguity effect, Anchoring or focalism, Anthropocentric thinking, Anthropomorphism or personification, Attentional bias, Attribute substitution, Automation bias, Availability heuristic, Availability cascade, Backfire effect, Bandwagon effect, Base rate fallacy or Base rate neglect, Belief bias, Ben Franklin effect, Berkson's paradox, Bias blind spot, Choice-supportive bias, Clustering illusion, Compassion fade, Confirmation bias, Congruence bias, Conjunction fallacy, Conservatism (belief revision), Continued influence effect, Contrast effect, Courtesy bias, Curse of knowledge, Declinism, Decoy effect, Default effect, Denomination effect, Disposition effect, Distinction bias, Dread aversion, Dunning–Kruger effect, Duration neglect, Empathy gap, End-of-history illusion, Endowment effect, Exaggerated expectation, Experimenter's or expectation bias, -
An Assessment of the Causes of Schedule and Cost Overruns in South African Megaprojects: a Case of the Critical Gov.Za> Energy Sector Projects of Medupi and Kusile
Review articles • Oorsigartikels Fhumulani Tshidavhu Ms Fhumulani Tshidavhu, Old Mutual Building, 78 Hans Van Rensburg Street, Polokwane, 0699, Limpopo, Published by the UFS RSA National Department of Public http://journals.ufs.ac.za/index.php/as Works, Polokwane, South Africa. Phone: 071 679 8604, © Creative Commons With Attribution (CC-BY) e-mail: <Fhumulani.Tshidavhu@dpw. How to cite: Tshidavhu, F. & Khatleli, N. 2020. An assessment of the causes of schedule and cost overruns in South African megaprojects: A case of the critical gov.za> energy sector projects of Medupi and Kusile. Acta Structilia, 26(2), pp. 119-143. Nthatisi Khatleli AN ASSESSMENT OF THE CAUSES Dr Nthatisi Khatleli, senior lecturer, School of Construction Economics OF SCHEDULE AND COST and Management, University of OVERRUNS IN SOUTH AFRICAN the Witwatersrand, Johannesburg, South Africa. MEGAPROJECTS: A CASE Phone: 011 7177651, e-mail: <[email protected]> OF THE CRITICAL ENERGY DOI: http://dx.doi. SECTOR PROJECTS OF org/10.18820/24150487/as27i1.5 MEDUPI AND KUSILE ISSN: 1023-0564 e-ISSN: 2415-0487 Peer reviewed and revised March 2020 Acta Structilia 2020 27(1): 119-143 Published June 2020 *The authors declared no conflict of interest for the article or title ABSTRACT Cost and schedule overruns are the most common challenges in mega construction projects around the globe, and South Africa is no different. Although comparatively small in number, megaprojects have an inordinate number of projects failing, due to budget overflow and schedule slippage. This article assessed the causes of cost and schedule overruns as well as the challenges with the implementation of critical construction megaprojects, using Kusile and Medupi energy-sector megaprojects in South Africa. -
Optimism Bias and Illusion of Control in Finance Professionals
November, 28th – P13 Look ma(rket), No Hands! Optimism Bias and Illusion of Control in Finance Professionals Francesco Marcatto, Giovanni Colangelo, Donatella Ferrante University of Trieste, Department of Life Sciences, Psychology Unit Gaetano Kanizsa, Trieste, Italy Abstract behavior, whereas extreme optimists display financial habits The optimism bias is the tendency to judge one’s own risk as and behavior that are generally not considered prudent (Puri less than the risk of others. In the present study we found that & Robinson, 2007). Moreover, analysts have been shown to also finance professionals (N = 60) displayed an optimism be systematically overoptimistic in their forecasts about the bias when forecasting the return of an investment made by earnings potential of firms at the time of their initial public themselves or by a colleague of the same expertise. Using a offerings, and this optimism increases as the length of the multidimensional approach to the assessment of risk forecast period increases (McNichols & O’Brien, 1997; perception, we found that participants’ forecasts were biased Rajan & Servaes, 1997). To the best of our knowledge, not because they judged negative consequences as less likely for themselves, but because they were overconfident in their however, the presence of the optimism bias/unrealistic ability to avoid and control them. comparative optimism in financial risk (i.e., judging personal risk of losing money as lower than other investors’ Keywords: Optimism bias; unrealistic comparative risk) has never been subject of empirical testing. optimism; financial risk; investment risk; perceived control; illusion of control. The main aim of this study is to investigate whether the optimism bias can be observed also in experts in the field of Introduction financial risk. -
78 Risk Assessment of Time and Cost Overrun Factors Throughout
Risk Assessment of Time and Cost Overrun Factors throughout Construction Project Lifecycle Prof. Mostafa Hasan Kotb1, Prof. Amin Saleh Aly2 and Eng. Khaled Muhammad Ali Muhammad3 1Professor, Structural Engineering Department, Faculty of Engineering, Al-Azhar University, Cairo, Egypt 2Professor, Structural Engineering Department, Faculty of Engineering, Ain Shams University, Cairo, Egypt 3PhD Student,, Structural Engineering Department, Faculty of Engineering, Al-Azhar University, Cairo, Egypt [email protected] Abstract: The construction industry has a reputation for delivering projects over budget. This research identifies actual project examples illustrating the problem of cost overruns. Results of a questionnaire survey present perceptions of the main reasons why building construction projects sometimes exceed the initial budget estimate. The paper reviews how the construction industry is responding to the challenge of accurate budgeting. In the domain of facility capital cost budgets and risk management, two key conclusions are made. Firstly, that complete design information leads to more accurate budget estimates. Secondly, that client driven design change is the greatest risk. Clients are the key drivers of change and they must therefore take a look at themselves before blaming the industry for being inefficient. [Mostafa Hasan Kotb, Amin Saleh Aly, and Khaled Muhammad Ali Muhammad. Risk Assessment of Time and Cost Overrun Factors throughout Construction Project Lifecycle. Life Sci J 2019;16(9):78-91]. ISSN: 1097- 8135 (Print) -
Simulation Modeling of Cost Overrun in Construction Project in Ethiopia Geletaw Taye
International Journal of Recent Technology and Engineering (IJRTE) ISSN: 2277-3878, Volume-8 Issue-4, November 2019 Simulation Modeling of Cost Overrun in Construction Project in Ethiopia Geletaw Taye Abstract: Cost is an essential part of any construction worldwide and it is more severe in developing countries. project. It was observed that cost overrun is one of the most Like many other developing countries, the construction frequently occurring issues in construction projects of Ethiopia and it is more severe in different parts of the country. The aim of industry in Ethiopia also affected by the cost overrun. Most this research has identified the factors that influence cost of the construction projects in Ethiopia are exposed to cost overruns of construction projects, quantified the percentage of overrun this leading to loss of projects profit, budget identified factors, established probability distribution of identified shortfall of project owners, falling the project to deliver on factors and develop simulation modeling of cost overrun. The study was conducted based on the desk study and questionnaire time, the company or firms exposed to bad debt or survey. Questionnaire surveys were analyzed by using Relative bankruptcy, and it also considered another a big problem, Important Index (RII) ranking and significance of data checked which hinders project's progress since it decreases the by using a t-test at a 95% confidence level. Based on the desk study of 19 projects, a simulation model of cost overrun was contractor profit leading to huge losses leaving the project in developed by using the Monte Carlo simulation method. a big trouble. -
Attribution of Intentions and Context Processing in Psychometric Schizotypy
Cognitive Neuropsychiatry ISSN: 1354-6805 (Print) 1464-0619 (Online) Journal homepage: http://www.tandfonline.com/loi/pcnp20 Attribution of intentions and context processing in psychometric schizotypy Romina Rinaldi, Laurent Lefebvre, Wivine Blekic, Frank Laroi & Julien Laloyaux To cite this article: Romina Rinaldi, Laurent Lefebvre, Wivine Blekic, Frank Laroi & Julien Laloyaux (2018) Attribution of intentions and context processing in psychometric schizotypy, Cognitive Neuropsychiatry, 23:6, 364-376, DOI: 10.1080/13546805.2018.1528972 To link to this article: https://doi.org/10.1080/13546805.2018.1528972 Published online: 06 Oct 2018. Submit your article to this journal Article views: 33 View Crossmark data Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=pcnp20 COGNITIVE NEUROPSYCHIATRY 2018, VOL. 23, NO. 6, 364–376 https://doi.org/10.1080/13546805.2018.1528972 Attribution of intentions and context processing in psychometric schizotypy Romina Rinaldia,b, Laurent Lefebvreb, Wivine Blekicb, Frank Laroic,d,e and Julien Laloyauxc,d,e aGrand Hôpital de Charleroi, Hôpital Notre-Dame, Charleroi, Belgium; bCognitive psychology and Neuropsychology Department, University of Mons, Mons, Belgium; cDepartment of Biological and Medical Psychology, University of Bergen, Bergen, Norway; dNORMENT – Norwegian Center of Excellence for Mental Disorders Research, University of Oslo, Oslo, Norway; ePsychology and Neuroscience of Cognition Research Unit, University of Liège, Liège, Belgium ABSTRACT ARTICLE HISTORY Introduction: Impairment in Theory of mind (TOM) has frequently Received 26 January 2018 been associated with schizophrenia and with schizotypy. Studies Accepted 15 September 2018 have found that a tendency to over-attribute intentions and KEYWORDS special meaning to events and to people is related to positive Psychotic symptoms; theory psychotic symptoms. -
Behavioral Biases on Investment Decision: a Case Study in Indonesia
Kartini KARTINI, Katiya NAHDA / Journal of Asian Finance, Economics and Business Vol 8 No 3 (2021) 1231–1240 1231 Print ISSN: 2288-4637 / Online ISSN 2288-4645 doi:10.13106/jafeb.2021.vol8.no3.1231 Behavioral Biases on Investment Decision: A Case Study in Indonesia Kartini KARTINI1, Katiya NAHDA2 Received: November 30, 2020 Revised: February 07, 2021 Accepted: February 16, 2021 Abstract A shift in perspective from standard finance to behavioral finance has taken place in the past two decades that explains how cognition and emotions are associated with financial decision making. This study aims to investigate the influence of various psychological factors on investment decision-making. The psychological factors that are investigated are differentiated into two aspects, cognitive and emotional aspects. From the cognitive aspect, we examine the influence of anchoring, representativeness, loss aversion, overconfidence, and optimism biases on investor decisions. Meanwhile, from the emotional aspect, the influence of herding behavior on investment decisions is analyzed. A quantitative approach is used based on a survey method and a snowball sampling that result in 165 questionnaires from individual investors in Yogyakarta. Further, we use the One-Sample t-test in testing all hypotheses. The research findings show that all of the variables, anchoring bias, representativeness bias, loss aversion bias, overconfidence bias, optimism bias, and herding behavior have a significant effect on investment decisions. This result emphasizes the influence of behavioral factors on investor’s decisions. It contributes to the existing literature in understanding the dynamics of investor’s behaviors and enhance the ability of investors in making more informed decision by reducing all potential biases. -
MITIGATING COGNITIVE BIASES in RISK IDENTIFICATION: Practitioner Checklist for the AEROSPACE SECTOR
MITIGATING COGNITIVE BIASES IN RISK IDENTIFICATION: Practitioner Checklist for the AEROSPACE SECTOR Debra L. Emmons, Thomas A. Mazzuchi, Shahram Sarkani, and Curtis E. Larsen This research contributes an operational checklist for mitigating cogni- tive biases in the aerospace sector risk management process. The Risk Identification and Evaluation Bias Reduction Checklist includes steps for grounding the risk identification and evaluation activities in past project experiences through historical data, and emphasizes the importance of incorporating multiple methods and perspectives to guard against optimism and a singular project instantiation-focused view. The authors developed a survey to elicit subject matter expert judgment on the value of the check- list to support its use in government and industry as a risk management tool. The survey also provided insights on bias mitigation strategies and lessons learned. This checklist addresses the deficiency in the literature in providing operational steps for the practitioner to recognize and implement strategies for bias reduction in risk management in the aerospace sector. DOI: https://doi.org/10.22594/dau.16-770.25.01 Keywords: Risk Management, Optimism Bias, Planning Fallacy, Cognitive Bias Reduction Mitigating Cognitive Biases in Risk Identification http://www.dau.mil January 2018 This article and its accompanying research contribute an operational FIGURE 1. RESEARCH APPROACH Risk Identification and Evaluation Bias Reduction Checklist for cognitive bias mitigation in risk management for the aerospace sector. The checklist Cognitive Biases & Bias described herein offers a practical and implementable project management Enabling framework to help reduce biases in the aerospace sector and redress the Conditions cognitive limitations in the risk identification and analysis process. -
Cognitive Biases in Economic Decisions – Three Essays on the Impact of Debiasing
TECHNISCHE UNIVERSITÄT MÜNCHEN Lehrstuhl für Betriebswirtschaftslehre – Strategie und Organisation Univ.-Prof. Dr. Isabell M. Welpe Cognitive biases in economic decisions – three essays on the impact of debiasing Christoph Martin Gerald Döbrich Abdruck der von der Fakultät für Wirtschaftswissenschaften der Technischen Universität München zur Erlangung des akademischen Grades eines Doktors der Wirtschaftswissenschaften (Dr. rer. pol.) genehmigten Dissertation. Vorsitzender: Univ.-Prof. Dr. Gunther Friedl Prüfer der Dissertation: 1. Univ.-Prof. Dr. Isabell M. Welpe 2. Univ.-Prof. Dr. Dr. Holger Patzelt Die Dissertation wurde am 28.11.2012 bei der Technischen Universität München eingereicht und durch die Fakultät für Wirtschaftswissenschaften am 15.12.2012 angenommen. Acknowledgments II Acknowledgments Numerous people have contributed to the development and successful completion of this dissertation. First of all, I would like to thank my supervisor Prof. Dr. Isabell M. Welpe for her continuous support, all the constructive discussions, and her enthusiasm concerning my dissertation project. Her challenging questions and new ideas always helped me to improve my work. My sincere thanks also go to Prof. Dr. Matthias Spörrle for his continuous support of my work and his valuable feedback for the articles building this dissertation. Moreover, I am grateful to Prof. Dr. Dr. Holger Patzelt for acting as the second advisor for this thesis and Professor Dr. Gunther Friedl for leading the examination board. This dissertation would not have been possible without the financial support of the Elite Network of Bavaria. I am very thankful for the financial support over two years which allowed me to pursue my studies in a focused and efficient manner. Many colleagues at the Chair for Strategy and Organization of Technische Universität München have supported me during the completion of this thesis. -
Memory, Attention, and Choice
Memory, Attention, and Choice Pedro Bordalo, Nicola Gennaioli, Andrei Shleifer1 Revised May 7, 2019 (original version 2015) Abstract. Building on the textbook description of associative memory (Kahana 2012), we present a model of choice in which options cue recall of similar past experiences. Recall shapes valuation and choice in two ways. First, recalled experiences form a norm, which serves as an initial anchor for valuation. Second, salient quality and price surprises relative to the norm lead to large adjustments in valuation. The model provides a unified account of many well documented choice puzzles including experience effects, projection and attribution biases, background contrast effects, and context- dependent willingness to pay. The results suggest that well-established psychological processes – memory-based norms and attention to surprising features – are key to understanding decision-making. 1 The authors are from University of Oxford, Universita Bocconi, and Harvard University, respectively. We are grateful to Dan Benjamin, Paulo Costa, Ben Enke, Matt Gentzkow, Sam Gershman, Thomas Graeber, Michael Kahana, Spencer Kwon, George Loewenstein, Sendhil Mullainathan, Josh Schwartzstein, Jesse Shapiro, Jann Spiess, Linh To, and Pierre- Luc Vautrey for valuable comments. Shleifer thanks the Sloan Foundation and the Pershing Square Venture Fund for Research on the Foundations of Human Behavior for financial support. 1 1. Introduction Memory appears to play a central role in even the simplest choices. Consider a thirsty traveler thinking of whether to look for a shop to buy a bottle of water at the airport. He automatically retrieves from memory similar past experiences, including the pleasure of quenching his thirst and the prices he paid before, and decides based on these recollections. -
Can Self-Persuasion Reduce Hostile Attribution Bias in Young Children?
Journal of Abnormal Child Psychology https://doi.org/10.1007/s10802-018-0499-2 Can Self-Persuasion Reduce Hostile Attribution Bias in Young Children? Anouk van Dijk1 & Sander Thomaes1 & Astrid M. G. Poorthuis1 & Bram Orobio de Castro1 # The Author(s) 2018 Abstract Two experiments tested an intervention approach to reduce young children’s hostile attribution bias and aggression: self-persua- sion. Children with high levels of hostile attribution bias recorded a video-message advocating to peers why story characters who caused a negative outcome may have had nonhostile intentions (self-persuasion condition), or they simply described the stories (control condition). Before and after the manipulation, hostile attribution bias was assessed using vignettes of ambiguous provocations. Study 1 (n =83,age4–8) showed that self-persuasion reduced children’s hostile attribution bias. Study 2 (n = 121, age 6–9) replicated this finding, and further showed that self-persuasion was equally effective at reducing hostile attribution bias as was persuasion by others (i.e., listening to an experimenter advocating for nonhostile intentions). Effects on aggressive behavior, however, were small and only significant for one out of four effects tested. This research provides the first evidence that self-persuasion may be an effective approach to reduce hostile attribution bias in young children. Keywords Hostile attribution bias . Self-persuasion . Aggression . Intervention . Experiments Children’s daily social interactions abound with provocations by Dodge 1994). The present research tests an intervention approach peers, such as when they are physically hurt, laughed at, or ex- to reduce hostile attribution bias in young children. cluded from play. The exact reasons behind these provocations, Most interventions that effectively reduce children’s hostile and especially the issue of whether hostile intent was involved, attribution bias rely on attribution retraining techniques (e.g., are often unclear. -
Dunning–Kruger Effect - Wikipedia, the Free Encyclopedia
Dunning–Kruger effect - Wikipedia, the free encyclopedia http://en.wikipedia.org/wiki/Dunning–Kruger_effect Dunning–Kruger effect From Wikipedia, the free encyclopedia The Dunning–Kruger effect is a cognitive bias in which unskilled individuals suffer from illusory superiority, mistakenly rating their ability much higher than average. This bias is attributed to a metacognitive inability of the unskilled to recognize their mistakes.[1] Actual competence may weaken self-confidence, as competent individuals may falsely assume that others have an equivalent understanding. David Dunning and Justin Kruger of Cornell University conclude, "the miscalibration of the incompetent stems from an error about the self, whereas the miscalibration of the highly competent stems from an error about others".[2] Contents 1 Proposal 2 Supporting studies 3 Awards 4 Historical references 5 See also 6 References Proposal The phenomenon was first tested in a series of experiments published in 1999 by David Dunning and Justin Kruger of the Department of Psychology, Cornell University.[2][3] They noted earlier studies suggesting that ignorance of standards of performance is behind a great deal of incompetence. This pattern was seen in studies of skills as diverse as reading comprehension, operating a motor vehicle, and playing chess or tennis. Dunning and Kruger proposed that, for a given skill, incompetent people will: 1. tend to overestimate their own level of skill; 2. fail to recognize genuine skill in others; 3. fail to recognize the extremity of their inadequacy; 4. recognize and acknowledge their own previous lack of skill, if they are exposed to training for that skill. Dunning has since drawn an analogy ("the anosognosia of everyday life")[1][4] with a condition in which a person who suffers a physical disability because of brain injury seems unaware of or denies the existence of the disability, even for dramatic impairments such as blindness or paralysis.