Decision Science News

ESCALATION

One time DSN host and all around smart person Dan Gilbert has a typically well-written and insightful piece in the New York Times op-ed section:He who cast the first stone probably didn’t. It’s a topic that doesn’t get much play in the Judgment and Decision Making literature, which is strange because retaliation is a decision.

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DECISION SCIENCE NEWS MEME HITS WSJ, SLASHDOT, AND DIGG

DSN reported just two weeks ago that the habit of Netflix procrastination–recently put forth by two DSN writers in Harvard Business Review–found its way into a Newsweek blog.

This week, we report that the same idea has now made the Wall Street Journal Online and picked up by news ranking sites Slashdot and Digg.

DSN is happy to be making the news that is making the news, but next time a little credit, please.

JUDGMENT AND DECISION MAKING

History is made as an entirely online (and for the time being free) journal titled Judgment and Decision Making launches its Volume 1, Number 1. Things seem to be off to a good start, with a solid editorial board and a first issue featuring some heavy hitters.

Decision Science News, which ran an exclusive interview with Editor Jon Baron before the project was launched, wishes the journal the best.

CATCHY NAME GIVEN TO NETFLIX GUILT

In July 2006, DSN writers Dan Goldstein and Dominique Goldstein described in a Harvard Business Review article titled “Profiting from the Long Tail” a behavioral phenomenon in which Netflix customers let highbrow movies sit around unwatched while lowbrow films get watched and returned right away. They use as examples “The Seventh Seal” vs. “Meet the Fockers” and draw an analogy to neglected gym memberships.

Skip ahead 6 weeks and Newsweek blogger Brad Stone has called this “Netflix Guilt” in a recent blog post. Chez Stone it’s “City of God” vs. “The 40 Year Old Virgin” and the gym membership analogy … remains a gym membership analogy.

Jet back to 1999, before Netflix even existed, and the highbrow / lowbrow film choice problem is examined in an article by decision researchers Read, Loewenstein, and Kalyanaraman.

ADDENDUM: This just discovered a few hours after the original post. In 1994 academic blogger Henry Farrell called this “The Netflix Fallacy“. Discoveries, discoveries in the long tail of cites.

REFERENCES:

Goldstein, D. G., & Goldstein, D. C. (2006). Profiting from the long tail. Harvard Business Review, 84(6), 24-28.

Read, D., Loewenstein, G., & Kalyanaraman, S. (1999). Mixing virtue and vice: Combining the immediacy effect and the diversification heuristic. Journal of Behavioral Decision Making, 12, 257-273.

Thanks to Prof. Suzanne Shu for the find.

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CENTER FOR THE DECISION SCIENCE REBRANDS

Former Decision Science News home The Center for The Decision Sciences at Columbia University launches its new clean look and feel and a tidier URL: decisionsciences.columbia.edu.

Stop by and have a click. While there, listen to these nice audio interviews with Elke Weber and other decision researchers on the BBC.

JOB MARKET TIME FOR THE MARKETING MARKET

Every year hundreds of marketing grad students go to AMA summer educator’s conference seeking the chance at, well, employment. Good news: employment will be offered again this year. Be sure to get those packets in by July 4th and read this if you like advice (I don’t, but to each his own).

This year’s conference will take place August 4-7, 2006 at:

Sheraton Chicago Hotel & Towers
301 East North Water Street
Chicago, IL 60611

Call 1-877-242-2558 for reservations. If you can’t get in to the hotel, try to get one nearby as you’ll need a place to decompress between interviews. (Oops, sorry for the unsolicited advice.)

ADVICE AND TRUST IN DECISION MAKING / CONSUMER BEHAVIOUR AND BOUNDED RATIONALITY

June 29th and 30th 2006, just down the street from DSN headquaters, ELSE will hold two-day conference on advice and trust in decision making packed with good speakers from around the world. The program is online and if you decide to attend registration seems straightforward.

June 23rd and 24th, also in London, DSN will be at another ELSE conference, this one on Consumer Behavio(u)r and Bounded Rationality.

2006 Behavioral Decision Research in Management Conference

DSN recommends that scholars and journalists interested in decision making make their way to the Behavioral Decision Research in Management conference this Friday and Saturday in Santa Monica. It’s a small conference, but of the highest quality.

The setting can’t be beat and organizer Craig Fox promises some surprise entertainment. Here are some ways to enjoy the area.

Of particular interest is the Friday morning session “Amos Tversky’s Contribution to Behavioral Decision Research”

Conference Web site.

THE PSYCHOLOGY OF SUNK COSTS

The sunk cost effect is sometimes called the Concorde fallacy

Hal Arkes and Catherine Blumer asked a group of 48 people the following scenario involving sunk costs:

As the president of an airline company, you have invested 10 million dollars of the company’s money into a research project. The purpose was to build a plane that would not be detected by conventional radar, in other words, a radar-blank plane. When the project is 90% completed, another firm begins marketing a plane that cannot be detected by radar. Also, it is apparent that their plane is much faster and far more economical than the plane your company is building. The question is: should you invest the last 10% of the research funds to finish your radar-blank plane, yes or no?

Then asked another group of 60 people this very similar scenario, which one will notice has no sunk costs:

As president of an airline company, you have received a suggestion from one of your employees. The suggestion is to use the last 1 million dollars of your research funds to develop a plane that would not be detected by conventional radar, in other words, a radar-blank plane. However, another firm has just begun marketing a plane that cannot be detected by radar. Also, it is apparent that their plane is much faster and far more economical than the plane your company could build. The question is: should you invest the last million dollars of your research funds to build the radar-blank plane proposed by your employee?

Which did people choose?

Researchers refer to this phenomenon as the “sunk cost effect … manifested in a greater tendency to continue an endeavor once an investment in money, effort, or time has been made.” One could argue that the decision to complete the project shouldn’t be influenced by the information which differs between the sunk cost and non-sunk cost scenarios, and yet the data show that the framing matters very much to people.

To see 9 (!) other studies on the sunk cost effect, some involving real-world decisions such as to use pre-paid season tickets, see Arkes and Blumer, below.

Reference:
Arkes, H. R. & Blumer C. (1985). The Psychology of Sunk Cost. Organizational Behavior and Human Decision Processes, 35, 124-140.

HARVARD CENTER FOR RISK ANALYSIS QUIZ ON CAUSES OF DEATH

The folks at Risk World let me know about this mini-quiz on odds of various causes of death at Harvard’s Center for Risk Analysis.

It’s a lot more fun if you take the time before going to that page to complete the following quiz.

The annual risk of dying from the following causes is 1 in ___:
heart disease ___
cancer ___
stroke ___
accidents of all kinds ___
motor vehicle accident ___
Alzheimer’s disease ___
alcohol ___
suicide ___
homicide ___
food poisoning ___
drowning ___
fire ___
bicycle accident ___
lightning ___
bioterrorism ___

Now go take the quiz.

Risks of death are a popular topic among judgment and decision making crowd, the most common reference being to:

Slovic, P., B. Fischhoff, and S. Lichtenstein (1982), Facts Versus Fears: Understanding Perceived Risk, in D. Kahneman, P. Slovic, and A. Tversky (eds.), Judgment Under Uncertainty: Heuristics and Biases. Cambridge: Cambridge University Press.