BEHAVIORAL DECISION BIASES IN THE NAVY POM PROCESS: EVIDENCE FROM THE LITTORAL COMBAT SHIP
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Authors
Gunter, Nathan A.
Subjects
behavioral economics
program objective memorandum
Littoral Combat Ship
LCS
navy
acquisition
anchor
anchoring effect
loss aversion
shipbuilding
Planning
Programming
Budgeting
and Execution
PPBE
Congress
House Armed Services Committee
HASC
Office of the Secretary of Defense
OSD
program
prospect theory
Joint Capabilities Integration and Development System
JCIDS
program objective memorandum
Littoral Combat Ship
LCS
navy
acquisition
anchor
anchoring effect
loss aversion
shipbuilding
Planning
Programming
Budgeting
and Execution
PPBE
Congress
House Armed Services Committee
HASC
Office of the Secretary of Defense
OSD
program
prospect theory
Joint Capabilities Integration and Development System
JCIDS
Advisors
Wang, Chong
Tick, Simona L.
Date of Issue
2023-06
Date
Publisher
Monterey, CA; Naval Postgraduate School
Language
Abstract
The purpose of this study is to identify areas that may exhibit potential for systematic cognitive biases in a decision-making process, discuss forms these decision biases may take, and present ways in which they may be mitigated, based on behavioral economics literature and using the case of the Navy’s acquisition of the Littoral Combat Ship (LCS) between 2002 to 2022. The scope of this study is within the intersection of the Defense Acquisition System (DAS), Joint Capabilities Integration and Development System (JCIDS), and Planning, Programming, Budgeting, and Execution (PPBE) process. The analysis framework in this study is rooted in behavioral economics, which departs from classical economics to incorporate psychological and social influences into explanations of human behavior and decision-making. The study finds that the anchoring effect, loss aversion, and sunk-cost fallacy cognitive biases may have contributed to suboptimal outcomes for the Navy. Military and civilian Department of Defense leaders can apply the lessons learned from this study to other acquisition programs, including the new Constellation-class frigate, and the Next-Generation Guided-Missile Destroyer program, to recognize the potential for such decision biases, communicate and educate stakeholders involved, and attempt to mitigate their potential effects on decision-making processes such as the Program Objective Memorandum (POM).
Type
Thesis
Description
Series/Report No
Department
Department of Defense Management (DDM)
Organization
Identifiers
NPS Report Number
Sponsors
Funder
Format
Citation
Distribution Statement
Approved for public release. Distribution is unlimited.
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.