Behavioral Decision Biases in the Navy Pom Process: Evidence From the Littoral Combat Ship
Abstract
The purpose of this study is to identify areas that may exhibit potential for systematic cognitive biasesin 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 and 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).
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 2023
- Accession Number
- AD1213290
Entities
People
- Nathan A. Gunter
Organizations
- Naval Postgraduate School