Smart Money Decisions Why You Do What You Do with Money (and How to Change for the Better)

by Bazerman, Max H.

• ISBN13: 9780471411260
• ISBN10: 0471411264
• Edition: 1st
• Format: Paperback
• Copyright: 2001-04-16
• Publisher: Wiley

Summary

Praise for Smart Money Decisions "If you need to negotiate anything . . . from a pay increase to buying or selling a house-this book covers all the bases. [Bazerman] has taught, tested, and proven his theories with thousands of executives and MBA students."-Donald P. Jacobs, Dean, J. L. Kellogg Graduate School of Management, Northwestern University "Max Bazerman provides a fascinating, easy-to-understand look at how we make money decisions and offers sound advice that will help you increase your net worth."-Roger E. Stricker, PhD, Vice President, Intellectual Property, Lucent Technologies "By holding a mirror up to our faces, Max Bazerman allows us to see all those dumb money mistakes each of us had no idea we were making."-Bill Bresnan, Financial Talk Show Host/Author When it comes to money matters, even the smartest of us make some pretty dumb decisions. This groundbreaking book gives you the necessary tools to think through financial issues practically and avoid costly blunders. A renowned expert in the field of decision-making and negotiation, Max Bazerman illustrates both how and why we make the decisions we do. He provides the essential understanding you need to identify your own approach to finances, recognize any inherent problems in your reasoning, and determine ways to overcome them. Packed with sound advice and expert recommendations, Smart Money Decisions is essential reading for anyone who has made the same mistake twice.

Author Biography

MAX H. BAZERMAN, PhD, is the Jesse Isador Straus Professor of Business Administration at the Harvard Business School, and formerly taught at the J. L. Kellogg Graduate School of Management at Northwestern University. He is the author and coauthor of more than 125 articles and 10 books, including Judgment in Managerial Decision Making (Wiley).

Table of Contents

Do I Hear $5 for a $100 Bill?	1	(12)
A Framework for Avoiding Money Mistakes	5	(3)
Top 10 Money Mistakes	8	(5)
Falling in Love with One Rather Than Three, and Other Common House-Buying Mistakes	13	(16)
Falling in Love with Three Rather Than One	15	(1)
Setting Limits---Based On Knowing Your Alternative	16	(2)
Bargain Hunting	18	(2)
Anchoring on the Listing Price	20	(3)
Where Do Listing Prices Come From?	23	(2)
The Agent: Trusted Advisor or Parasitic Intermediary?	25	(3)
Advice	28	(1)
I Got the Car for Less Than Invoice	29	(16)
Who Has the Power?	33	(3)
The Good Cop, Bad Cop Routine	36	(1)
50--50 Splits	36	(1)
Vivid Scares	37	(1)
Optimistic Illusions	38	(1)
Preparation Advice for Henry---and for You	39	(4)
Advice	43	(2)
Vivid Scares	45	(16)
Title Insurance	49	(4)
Sounds Good, but Where's the Payoff?	53	(1)
Vivid Makes Livid	54	(4)
When and How to Buy Insurance	58	(1)
Advice	59	(2)
Time's Up: How Much Is Your Time Worth?	61	(10)
What's Your Time Worth?	63	(3)
Managing Deadlines	66	(2)
Intertemporal Choices: Save It For Later	68	(2)
Advice	70	(1)
Have I Got a Mutual Fund for You!	71	(20)
Everyone's an Expert	73	(1)
Mutual Respect	74	(4)
The Psychology of Buying Active Funds	78	(9)
Too Good to Be True?	87	(3)
Advice	90	(1)
Which Job Offer Should I Accept? Negotiating with Yourself and Losing	91	(14)
Split Personality?	93	(2)
Timing Is Everything	95	(1)
Starving Artist or Corporate Sell-Out?	96	(1)
The Retirement Dilemma	97	(1)
Which Self Should Win?	98	(2)
Decision Theory	100	(1)
Negotiation Research	101	(2)
Advice	103	(2)
What's Fair and Why Do You Care?	105	(14)
Fairness Triumphant: Why We Sometimes Sacrifice Economic Considerations for Fair Outcomes	108	(2)
The Effects of Framing: Why Our Sense of Fairness Is Affected by How the Story Is Told	110	(3)
Keeping Up with the Joneses: Equality Derived from Social Comparison	113	(2)
The Role of Emotions in Fairness Decisions	115	(2)
Conclusion	117	(1)
Advice	118	(1)
Putting Yourself in the Other Guy's Shoes	119	(12)
A Quiz on the Winner's Curse	122	(3)
Real-World Markets	125	(2)
Solving the Winner's Curse	127	(2)
Conclusion	129	(1)
Advice	130	(1)
Knowing When to Quit	131	(14)
Somewhere over the Rainbow	134	(1)
The Fork in the Road	135	(1)
Risky Business	136	(2)
Why Do We Escalate?	138	(3)
Competitive Irrationality: When is a Winner a Loser?	141	(1)
Advice	142	(3)
Playing to Win	145	(16)
Calling All Competitors	148	(4)
Beating the Other Party Hurts All Parties	152	(5)
Conclusion	157	(2)
Advice	159	(2)
The Mythical Fixed Pie	161	(16)
Slicing Up the Pie	163	(1)
The Competitive Spirit	164	(1)
Expanding the Pie	165	(3)
These Buds Are for You	168	(1)
Bellying Up to the Bargaining Table	169	(4)
Is the Stein Half Empty or Half Full?	173	(1)
How Do You Solve the Mythical Fixed Pie?	174	(1)
Advice	175	(2)
Going, Going, Gone	177	(14)
What Makes It an Auction?	180	(3)
Why Do People and Companies Lose in Auctions?	183	(3)
Escalation of Commitment in Auctions	186	(3)
Conclusion	189	(1)
Advice	190	(1)
How Much Is It Worth to You?	191	(14)
Ownership Effects: Finders Keepers	193	(1)
What a Rip-Off!	194	(2)
What's Your Reference Point?	196	(3)
Compiling Losses and Gains	199	(2)
Egocentrism and Valuation of Worth	201	(3)
Advice	204	(1)
Avoiding Money Mistakes in the Future	205	(10)
Fool's Gold	205	(2)
You Only Need One	207	(4)
A Note on Uncertainty	211	(1)
Final Word	212	(3)
Endnotes	215	(14)
About the Author	229	(2)
Index	231