Research in psychology and decision sciences has challenged the assumption that people apply rational principles in making decisions that work to optimize expected results. This descriptive, empirical research has catalogued many of the biases that enter into decision making. Managers often seek to mitigate uncertainty by any means before committing to a decision.
One of the most famous examples of this line of research is the study of "anchoring" conducted by Daniel Kahneman and Amos Tversky in the 1970s. Through many experiments, they were able to show that managers make judgments by making adjustments from some initial value, even if that initial value is based on totally random information. (Professor Kahneman was awarded the 2002 Nobel Prize for Economics for his pioneering research.)
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