Related papers: Planning Fallacy or Hiding Hand: Which Is the Bett…
If managers assume a normal or near-normal distribution of Information Technology (IT) project cost overruns, as is common, and cost overruns can be shown to follow a power-law distribution, managers may be unwittingly exposing their…
When deploying artificial skills, decision-makers often assume that layering human oversight is a safe harbor that mitigates the risks of full automation in high-complexity tasks. This paper formally challenges the economic validity of this…
This note investigates the causes of the quality anomaly, which is one of the strongest and most scalable anomalies in equity markets. We explore two potential explanations. The "risk view", whereby investing in high quality firms is…
To make good decisions in the real world people need efficient planning strategies because their computational resources are limited. Knowing which planning strategies would work best for people in different situations would be very useful…
Models of economic decision makers often include idealized assumptions, such as rationality, perfect foresight, and access to all relevant pieces of information. These assumptions often assure the models' internal validity, but, at the same…
Algorithmic predictions are increasingly informing societal resource allocations by identifying individuals for targeting. Policymakers often build these systems with the assumption that by gathering more observations on individuals, they…
Planning is useful. It lets people take actions that have desirable long-term consequences. But, planning is hard. It requires thinking about consequences, which consumes limited computational and cognitive resources. Thus, people should…
This article presents results from the first statistically significant study of traffic forecasts in transportation infrastructure projects. The sample used is the largest of its kind, covering 210 projects in 14 nations worth US$59…
We consider a hidden-action principal-agent model, in which actions require different amounts of effort, and the agent privately knows his ability that determines his cost of effort. We show that linear contracts admit approximation…
Working becomes harder as we grow tired or bored. I model individuals who underestimate these changes in marginal disutility -- as implied by "projection bias" -- when deciding whether or not to continue working. This bias causes people's…
The paper analyses the increasing popularity of large funds in the secondary private equity market, which are pegged on the perceived larger scale advantages of operational efficiency and fewer manager relationships (Reuter & Zitzewitz,…
Explainable planning is widely accepted as a prerequisite for autonomous agents to successfully work with humans. While there has been a lot of research on generating explanations of solutions to planning problems, explaining the absence of…
A principal hires an agent to work on a long-term project that culminates in a breakthrough or a breakdown. At each time, the agent privately chooses to work or shirk. Working increases the arrival rate of breakthroughs and decreases the…
This paper explores the behavior of present-biased agents, that is, agents who erroneously anticipate the costs of future actions compared to their real costs. Specifically, the paper extends the original framework proposed by Akerlof…
The paper explores "uniqueness bias," a behavioral bias defined as the tendency of planners and managers to see their decisions as singular. For the first time, uniqueness bias is correlated with forecasting accuracy and performance in…
We deal with the problem of outsourcing the debt for a big investment, according two situations: either the firm outsources both the investment (and the associated debt) and the exploitation to a private consortium, or the firm supports the…
Lock-in, the escalating commitment of decision-makers to an ineffective course of action, has the potential to explain the large cost overruns in large scale transportation infrastructure projects. Lock-in can occur both at the…
The existence of "Hot Hands" and "Streaks" in sports and gambling is hotly debated, but there is no uncertainty about the recent batting-average of the New York Times: it is now two-for-two in mangling and misunderstanding elementary…
Street-level bureaucrats, such as caseworkers and border guards routinely face the dilemma of whether to follow rigid policy or exercise discretion based on professional judgement. However, frequent overrides threaten consistency and…
This mathematical recreation extends the analysis of a recent paper, asking when a traveller at a bus stop and not knowing the time of the next bus is best advised to wait or to start walking toward the destination. A detailed analysis and…