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):

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160–72.
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.

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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.