Confounding changes in averages with marginal effects: : How anchoring can destroy economic value in strategic investment assessments

• Autores: Zur Shapira, J. Myles Shaver
• Localización: Strategic management journal, ISSN 0143-2095, Vol. 35, Nº 10, 2014, págs. 1414-1426
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • Profit maximization requires that decision makers assess marginal profits. We demonstrate that decision makers often confound marginal profits with changes in average profits (e.g., changes in return-on-investment). This results in systematic deviations from profit maximization where decision makers forgo profit-enhancing investments that reduce average profits or engage in loss-enhancing investments that decrease average losses. In other words, average profit becomes an anchor by which new investments are assessed. We conduct two decision-making experiments that show this bias and demonstrate it is pronounced when average profit data are accessible or task-relevant. Moreover, we find within-subject effects across experiments, which helps demonstrate the mechanism that invokes the bias.