Behavioral Biases within Defense Acquisition

Abstract

This paper contributes to the process of building knowledge about what we term as behavioral acquisition, which explores defense acquisition from a behavioral standpoint, including the impact of psychology, organizational behavior, and politics. Behavioral acquisition studies the decisions acquisition professionals make in Department of Defense (DoD) acquisition programs. The paper focuses on one aspect of these decision processes in the defense acquisition environment: behavioral biases. In three defense acquisition programs studied, we find strong evidence that planning fallacy, difficulty in making trade-offs, over-optimism, and recency bias affected the management and decision-making within these programs. This research helps us better understand and predict how acquisition professionals and senior leaders think and make decisions about program strategy, managing resources, and leading people. A key element in this perspective is that important insights into these decisions derive from models in which agents are not fully rational. Behavioral acquisition is analogous to behavioral finance, which has successfully applied social science theories—especially from psychology—to improve the accuracy of predictions about the behavior of actors across the entire financial landscape.