Focusing Failures in Competitive Environments: Explaining Decision Errors in the Monty Hall Game, the Acquiring a Company Problem, and Multi-Party Ultimatums

16 Journal of Behavioral Decision Making 353-374 (2003)

Harvard PON Working Paper No. 02-15

Harvard NOM Working Paper No. 02-15;

Harvard Business School Working Paper No. 02-080

47 Pages Posted: 17 Aug 2003 Last revised: 14 Mar 2015

See all articles by Avishalom Tor

Avishalom Tor

Notre Dame Law School

Max H. Bazerman

Harvard Business School - Negotiations, Organizations and Markets Unit

Date Written: June 1, 2003

Abstract

This paper offers a unifying conceptual explanation for failures in competitive decision making across three seemingly unrelated tasks: the Monty Hall game (Nalebuff, 1987), the Acquiring a Company problem (Samuelson & Bazerman, 1985), and multi-party ultimatums (Messick, Moore, & Bazerman, 1997). We argue that the failures observed in these three tasks have a common root. Specifically, due to a limited focus of attention, competitive decision-makers fail properly to consider all of the information needed to solve the problem correctly. Using protocol analyses, we show that competitive decision-makers tend to focus on their own goals, often to the exclusion of the decisions of the other parties, the rules of the game, and the interaction among the parties in light of these rules. In addition, we show that the failure to consider these effects explains common decision failures across all three games. Finally, we suggest that this systematic focusing error in competitive contexts can serve to explain and improve our understanding of many additional, seemingly disparate, competitive decision-making failures.

Keywords: perspective taking, rules of the game, focusing, bounded rationality, Monty Hall, Acquiring a Company, ultimatums

Suggested Citation

Tor, Avishalom and Bazerman, Max H., Focusing Failures in Competitive Environments: Explaining Decision Errors in the Monty Hall Game, the Acquiring a Company Problem, and Multi-Party Ultimatums (June 1, 2003). 16 Journal of Behavioral Decision Making 353-374 (2003), Harvard PON Working Paper No. 02-15, Harvard NOM Working Paper No. 02-15; , Harvard Business School Working Paper No. 02-080, Available at SSRN: https://ssrn.com/abstract=310200

Avishalom Tor

Notre Dame Law School ( email )

P.O. Box 780
Notre Dame, IN 46556-0780
United States

Max H. Bazerman (Contact Author)

Harvard Business School - Negotiations, Organizations and Markets Unit ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-6429 (Phone)
617-496-4191 (Fax)

HOME PAGE: http://www.people.hbs.edu/mbazerman

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