Organizational decision-maker bias supports merger wave formation: demonstration with logical formalization

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dc.contributor.authorPéli Gábor
dc.contributor.authorSchenk, Hans
dc.date.accessioned2024-01-18T06:20:47Z
dc.date.available2024-01-18T06:20:47Z
dc.date.issued2015
dc.description.abstractImitation of firms that opt for strategic reorganizations by opting for mergers and acquisitions facilitates market wave formation. Empirical evidence on mergers and acquisitions suggests that, under uncertainty, firms regret more not following their rivals’ merger moves of yet unknown outcome than possibly failing jointly by copying them. Looking for the rationale for this bandwagon behavior, we explore the underlying decision-making framework by using formal logic and search for behavioral premises consistent with the observed outcomes. We point out three biased expectations, modeled by using a belief modal operator, that filter out relevant scenarios from the consideration set of otherwise rationally behaving decision-makers. The theorems derived from the logic model highlight the drive to imitate competitors’ merger choices for all but one of the eight possible outcomes of the decision-making framework. For the latter case, a boundary condition is given that makes imitation the predicted strategy. Our approach goes against the view that human behavior defies logic-based rendering also if such behavior can be adequately described as non-rational in an economic sense. Logic is a flexible representation tool to model even faulty behavior patterns in a transparent way; it can also help exploring the consequences of the cognitive mistakes made. Our findings suggest that threats to wealth creation may not necessarily find their origins in morally questionable organizational behavior, but rather in modalities of decision-making under uncertainty.
dc.identifier.doi10.1007/s11135-014-0122-8
dc.identifier.issn1573-7845
dc.identifier.issn0033-5177
dc.identifier.mtmt2937251
dc.identifier.urihttps://krepozit.kre.hu/handle/123456789/713
dc.language.isoen
dc.relation.ispartofQual Quant (2015) 49:2459–2480
dc.titleOrganizational decision-maker bias supports merger wave formation: demonstration with logical formalization
dc.typeArticle
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