The Worst-First Heuristic: How Decision Makers Manage Conjunctive Risk

Many important managerial outcomes hinge on the co-occurrence of multiple uncertain events, a situation termed conjunctive risk. Whereas past literature has addressed the psychology of choosing to enter situations with conjunctive risk, this article elucidates a novel way in which the psychology of managing conjunctive risk is importantly distinct. We examine a case in which there are two independent events, one is currently less likely than the other, both are required for overall success, and the decision maker must evaluate opportunities to increase the chance of the less-likely or more-likely requirement. We introduce the hypothesis of a worst-first heuristic. Decision makers intuitively evaluate improvements in conjunctive risk according to their impact on the biggest barrier to success, the least likely of the required events.