Organizational decision-maker bias supports market wave formation: Evidence with logical formalization
Imitation of first-mover firms in opting for a merger or acquisition (M&A) facilitates merger-wave formation. Empirical evidence suggests that, under uncertainty of outcomes, firms regret more not following their rivals’ strategy than possibly failing jointly by copying it. We explore the outcomes and look for underlying behavioral assumptions in that decision-making framework by modal logic. Biased expectations, represented by the B (belief) modal operator, filter out relevant scenarios from managerial consideration. The theorems highlight the drive to imitate first-mover M&As. Our approach goes against the view that human behavior, being non-logical in many respects, defies logic-based rendering. Logic is a flexible representation tool that can model even faulty behavior in a transparent way, also exploring the consequences of the cognitive mistakes made. Our findings suggest that threats to wealth creation may not necessarily find their origins in morally dubious organizational behavior, but rather in modalities of decision making under uncertainty.
|Date of creation:||May 2011|
|Contact details of provider:|| Postal: Prinsstraat 13, B-2000 Antwerpen|
Web page: https://www.uantwerp.be/en/faculties/applied-economic-sciences/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Patrizio Bianchi & Sandrine Labory (ed.), 2006. "International Handbook on Industrial Policy," Books, Edward Elgar Publishing, number 3451.
- Christophe Boone & Walter Hendriks, 2009. "Top Management Team Diversity and Firm Performance: Moderators of Functional-Background and Locus-of-Control Diversity," Management Science, INFORMS, vol. 55(2), pages 165-180, February.
- Hans Schenk, 2006. "Mergers and Concentration Policy," Chapters, in: International Handbook on Industrial Policy, chapter 8 Edward Elgar Publishing.
- Town, R J, 1992. "Merger Waves and the Structure of Merger and Acquisition Time-Series," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(S), pages 83-100, Suppl. De.
- William P. Barnett & Olav Sorenson, 2002. "The Red Queen in organizational creation and development," Industrial and Corporate Change, Oxford University Press, vol. 11(2), pages 289-325.
- Hans Schenk, 2008. "Firms, Managers and Restructuring: Implications of a Social Economics View," Chapters, in: The Elgar Companion to Social Economics, chapter 20 Edward Elgar Publishing.
When requesting a correction, please mention this item's handle: RePEc:ant:wpaper:2011006. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joeri Nys)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.