Projects per year
Many empirical studies suggest that the realized values of highest-ranked decision alternatives tend to be systematically lower than estimated, causing the decision-maker to experience post-decision disappointment. This systematic overestimation of value has been explained by a systematic bias in the alternatives’ estimated values resulting from, e.g., a behavioural disposition towards overoptimism or even strategic misrepresentation. Nevertheless, even if these estimates are unbiased, the value of the selected alternative is likely to be overestimated due to selection bias. In this paper, we build models for measuring the shares of systematic and selection biases in generating post-decision disappointment, and develop approaches for estimating these models from data which contains the estimated values of all alternatives but the realized values of selected alternatives only. Results obtained from applying these models to real data on 5,610 transportation infrastructure projects suggest that out of the total cost overrun of $2.77 billion, only ca. 24% can be attributed to systematic bias.
- Behavioural OR
- Post-decision disappointment
- Systematic bias
- Selection bias
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- 1 Active
Right tools for the right problems – Improving environmental planning with portfolio decision analysis
01/09/2019 → 31/08/2023
Project: Academy of Finland: Other research funding