Article

Boom and Bust Behavior: On the Persistence of Strategic Decision Biases

Michael Shayne Gary, Giovanni Dosi and Dan Lovallo

in The Oxford Handbook of Organizational Decision Making

Published in print March 2008 | ISBN: 9780199290468
Published online September 2009 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780199290468.003.0002

Series: Oxford Handbooks in Business and Management C

 Boom and Bust Behavior: On the Persistence of Strategic Decision Biases

More Like This

Show all results sharing these subjects:

  • Business and Management
  • Business Strategy
  • Organizational Theory and Behaviour

GO

Show Summary Details

Preview

This article examines the underlying cognitive and behavioral factors responsible for strategic decisions driving B&B dynamics, discusses the reasons firms do not learn to avoid boom and bust, and identifies tentative strategies for mitigating B&B (Boom and Bust) behavior. At the same time, it conjecturally concludes, there might be a positive collective side to B&B behavior fostering accumulation of knowledge and physical infrastructure, especially regarding new technological paradigms. The next section discusses a number of real world cases of B&B dynamics. The examples illustrate quite common dynamic behaviors and highlight the crucial role of capacity investment decisions in B&B outcomes. Subsequent sections review the findings from prior experimental research on B&B dynamics and discuss some key decision biases and heuristics that play important roles in B&B decision making. The final section outlines some tentative strategies for moderating B&B decision making. The conclusion highlights some of the collectively positive aspects of booms and busts.

Keywords: strategic decisions; boom and bust; dynamic behaviors; investment decisions; heuristics; decision making

Article.  8456 words. 

Subjects: Business and Management ; Business Strategy ; Organizational Theory and Behaviour

Full text: subscription required

How to subscribe Recommend to my Librarian

Buy this work at Oxford University Press »

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.