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The distortion of beliefs in the face of uncertainty

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Abstract

Judgements and beliefs often are distorted. They are affected by underlying values and reflect strong tendencies toward wishful thinking. In action, biased thinking may or may not be detrimental, and there is a very delicate balance to keep between the need to motivate oneself for forceful action, and to keep a realistic view of the possibilities of success. People encounter problems, calling for thought and the formation of constructs, only rather rarely, but when they do they tend to be in an unpleasant emotional state. Uncertainty is one such state, in which one encounters difficult problems and expects little success.

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  • Sjöberg, Lennart, 2002. "The distortion of beliefs in the face of uncertainty," SSE/EFI Working Paper Series in Business Administration 2002:9, Stockholm School of Economics.
  • Handle: RePEc:hhb:hastba:2002_009
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    File URL: http://swoba.hhs.se/hastba/papers/hastba2002_009.pdf
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    1. Michael Manove & A. Jorge Padilla, 1999. "Banking (Conservatively) with Optimists," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 324-350, Summer.
    2. Shanteau, James, 1992. "Competence in experts: The role of task characteristics," Organizational Behavior and Human Decision Processes, Elsevier, vol. 53(2), pages 252-266, November.
    3. Shanteau, James & Stewart, Thomas R., 1992. "Why study expert decision making? Some historical perspectives and comments," Organizational Behavior and Human Decision Processes, Elsevier, vol. 53(2), pages 95-106, November.
    4. Baron, Jonathan & Spranca, Mark, 1997. "Protected Values," Organizational Behavior and Human Decision Processes, Elsevier, vol. 70(1), pages 1-16, April.
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    1. Sjöberg, Lennart, 2002. "The Perceived Risk of Terrorism," SSE/EFI Working Paper Series in Business Administration 2002:11, Stockholm School of Economics, revised 16 Jan 2004.

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    Keywords

    thought biases; heuristics; judgement; decision making;

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