How it helps to explain human biases in programme and project business case options analysis and decision making
Behavioral Economics
Behavioral economics considers how human and social cognitive and emotional biases can influence the decision-making process. These biases can be explored through understanding neuroscience and the brain’s propensity for fast and slow thinking (or the dual process theory), cognitive framing, prospect theory (or loss aversion), mental accounting, and anchoring.
The purpose of this paper is to demonstrate how behavioral economics can provide insight into programme and project business case options analysis and the resulting decisions made by sponsors and commissioning organizations.
By understanding behavioral economics, we can minimize the psychological bias that can prevent us from making the most informed investment decision regarding the continued funding of both programmes and projects. The good news is that with increased awareness and understanding there are simple techniques that anyone can use to overcome these psychological traps.
