Week 9 Surveys (Versions A, B, C, and D) are on the GSB portal (Please refer to Prof. Womack's email for details.)

Week 9 Writing Assignment (if chosen, due in class):

How can a firm or organization maximize the extent to which its managers take the "outside view" (see Kahneman and Lovallo, pp. 24-25) in their decisions? Pick a particular type of organizational decision and be specific in your prescription.

Session 9: (March 3/4) Tools for Decision Making

PowerPoint slides (to be available March 5th)

Topics:

Scenario Planning and Strategic Thinking
Applications of MDM learning in Behavioral Finance

BEFORE-class Readings:

**** Schoemaker, "Scenario Planning: A Tool for Strategic Thinking", Sloan Management Review, Winter 1995 (has been handed out in class)

** Hersh, “IPOS: Initial Underpricing, Long-term Underperformance, And "Hot-Issue" Markets”, Chapter 17, Beyond Greed and Fear, CP #22

** Hersh, “Optimism In Analysts' Earnings Predictions And Stock Recommendations”, Chapter 18, Beyond Greed and Fear, CP #23

Class Preparation and Discussion Questions:

Compare and contrast Scenario Planning and Decision Tree. What are the similarities and differences?

In what way does Scenario Planning stretch and refocus our thinking in our decision making process?

What behavioral decision theories that we have covered in MDM can be applied to behavioral finance?

What are the heuritics that are often involved in IPO and analysts' recommendations? How do they create biases?