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Biased decisions concerning productivity increase options

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  • Svenson, Ola

Abstract

When people judge the time that can be saved by increasing speed they make systematic errors. This was called the time-saving bias by Svenson (2008) which describes that time savings following speed increases of high speeds are overestimated relative to time savings following increases of low speeds. The present contribution tested the hypothesis that the time-saving bias would predict unaided decisions about productivity. The results showed that the predicted bias distorted decisions both when productivity increase of a factory was measured in units produced per hour and when it was measured in number of units produced per man-year. When productivity was increased from an initial low production speed, the relative gain (e.g., in number of less workers needed for the same production) was underestimated in comparison with gains obtained when productivity was increased from an initial high productivity.

Suggested Citation

  • Svenson, Ola, 2011. "Biased decisions concerning productivity increase options," Journal of Economic Psychology, Elsevier, vol. 32(3), pages 440-445, June.
  • Handle: RePEc:eee:joepsy:v:32:y:2011:i:3:p:440-445
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    References listed on IDEAS

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    1. J. Edward Russo & Margaret G. Meloy & T. Jeffrey Wilks, 2000. "Predecisional Distortion of Information by Auditors and Salespersons," Management Science, INFORMS, vol. 46(1), pages 13-27, January.
    2. Svenson, Ola, 1985. "Cognitive strategies in a complex judgment task: Analyses of concurrent verbal reports and judgments of cumulated risk over different exposure times," Organizational Behavior and Human Decision Processes, Elsevier, vol. 36(1), pages 1-15, August.
    3. Russo, J. Edward & Medvec, Victoria Husted & Meloy, Margaret G., 1996. "The Distortion of Information during Decisions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 66(1), pages 102-110, April.
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    Cited by:

    1. Ola Svenson & Nichel Gonzalez & Gabriella Eriksson, 2014. "Modeling and debiasing resource saving judgments," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 9(5), pages 465-478, September.
    2. Tscharaktschiew, Stefan, 2016. "The private (unnoticed) welfare cost of highway speeding behavior from time saving misperceptions," Economics of Transportation, Elsevier, vol. 7, pages 24-37.
    3. Eyal Peer & Eyal Gamliel, 2013. "Pace yourself: Improving time-saving judgments when increasing activity speed," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(2), pages 106-115, March.

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