Thinking, Fast and Slow

24: The Engine of Capitalism
you already feel fortunate
: Miriam A. Mosing et al., “Genetic and Environmental
Influences on Optimism and Its Relationship to Mental and Self-Rated Health: A Study of
Aging Twins,” 
Behavior Genetics
39 (2009): 597–604. David Snowdon, 
Aging with
Grace: What
the Nun Study Teaches Us About Leading Longer, Healthier, and More
Meaningful Lives
(New York: Bantam Books, 2001).
bright side of everything
: Elaine Fox, Anna Ridgewell, and Chris Ashwin, “Looking on
the Bright Side: Biased Attention and the Human Serotonin Transporter Gene,”
Proceedings of
the Royal Society B
276 (2009): 1747–51.
“triumph of hope over experience”
: Manju Puri and David T. Robinson, “Optimism and
Economic Choice,” 
Journal of Financial Economics
86 (2007): 71–99.
more sanguine than midlevel managers
: Lowell W. Busenitz and Jay B. Barney,
“Differences Between Entrepreneurs and Managers in Large Organizations: Biases and
Heuristics in Strategic Decision-Making,” 
Journal of Business Venturing
12 (1997): 9–30.
admiration of others
: Entrepreneurs who have failed are sustained in their confidence by
the probably mistaken belief that they have learned a great deal from the experience.
Gavin Cassar and Justin Craig, “An Investigation of Hindsight Bias in Nascent Venture
Activity,” 
Journal of Business Venturing
24 ( {>
influence on the lives of others
: Keith M. Hmieleski and Robert A. Baron, “Entrepreneurs’
Optimism and New Venture Performance: A Social Cognitive Perspective,” 
Academy of
Management Journal
52 (2009): 473–88. Matthew L. A. Hayward, Dean A. Shepherd,
and Dale Griffin, “A Hubris Theory of Entrepreneurship,” 
Management Science
52
(2006): 160–72.

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chance of failing was zero
: Arnold C. Cooper, Carolyn Y. Woo, and William C.
Dunkelberg, “Entrepreneurs’ Perceived Chances for Success,” 
Journal of Business
Venturing
3 (1988): 97–108.
given the lowest grade
: Thomas Astebro and Samir Elhedhli, “The Effectiveness of
Simple Decision Heuristics: Forecasting Commercial Success for Early-Stage Ventures,”
Management Science
52 (2006): 395–409.
widespread, stubborn, and costly
: Thomas Astebro, “The Return to Independent
Invention: Evidence of Unrealistic Optimism, Risk Seeking or Skewness Loving?”
Economic Journal
113 (2003): 226–39.
bet small amounts of money
: Eleanor F. Williams and Thomas Gilovich, “Do People
Really Believe They Are Above Average?” 
Journal of Experimental Social Psychology
44
(2008): 1121–28.
“hubris hypothesis”
: Richard Roll, “The Hubris Hypothesis of Corporate Takeovers,”
Journal of Business
59 (1986): 197–216, part 1. This remarkable early article presented a
behavioral analysis of mergers and acquisitions that abandoned the assumption of
rationality, long before such analyses became popular.
“value-destroying mergers”
: Ulrike Malmendier and Geoffrey Tate, “Who Makes
Acquisitions? CEO Overconfidence and the Market’s Reaction,” 
Journal of Financial
Economics
89 (2008): 20–43.
“engage in earnings management”
: Ulrike Malmendier and Geoffrey Tate, “Superstar
CEOs,” 
Quarterly Journal of Economics
24 (2009), 1593–1638.
self-aggrandizement to a cognitive bias
: Paul D. Windschitl, Jason P. Rose, Michael T.
Stalk-fleet, and Andrew R. Smith, “Are People Excessive or Judicious in Their
Egocentrism? A Modeling Approach to Understanding Bias and Accuracy in People’s
Optimism,” 
Journal of Personality and Social Psychology
95 (2008): 252–73.
average outcome is a loss
: A form of competition neglect has also been observed in the
time of day at which sellers on eBay choose to end their auctions. The easy question is: At
what time is the total number of bidders the highest? Answer: around 7:00 p.m. EST. The
question sellers should answer is harder: Considering how many other sellers end their
auctions during peak hours, at what time will there be the most bidders looking at my
auction? The answer: around noon, when the number of bidders is large relative to the
number of sellers. The sellers who remember the competition and avoid prime time get
higher prices. Uri Simonsohn, “eBay’s Crowded Evenings: Competition Neglect in
Market Entry Decisions,” 
Management Science
56 (2010): 1060–73.
“diagnosis antemortem”
: Eta S. Berner and Mark L. Graber, “Overconfidence as a Cause
of Diagnostic Error in Medicine,” 
American Journal of Medicine
121 (2008): S2–S23.
“disclosing uncertainty to patients”
: Pat Croskerry and Geoff Norman, “Overconfidence
in Clinical Decision Making,” 
American Journal of Medicine
121 (2008): S24–S29.
background of risk taking
: Kahneman and Lovallo, “Timid Choices and Bold Forecasts.”
Royal Dutch Shell
: J. Edward Russo and Paul J. H. Schoemaker, “Managing
Overconfidence,” 
Sloan Management Review
33 (1992): 7–17.

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