Biased decisions concerning productivity increase options

Ola Svenson

Journal of Economic Psychology, 2011, vol. 32, issue 3, 440-445

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.

Keywords: Psychology; of; decision; making; Time-saving; bias; Productivity; Heuristic; Biased; decisions; concerning; productivity; increase; options (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:32:y:2011:i:3:p:440-445

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