{"id":1100,"slug":"shefrin-statman-1985-disposition-effect-narrow-framing","title":"Shefrin & Statman 1985 (JoF) — disposition effect; narrow-framing / mental accounting of each vendor as separate account","kind":"reference","scope":"business","status":"current","audiences":["kevin","candid-team"],"topics":["behavioral-economics","trust-repair"],"reference_body":"**Claim:** Shefrin and Statman (1985) identified the disposition effect and proposed four contributing mechanisms: prospect-theory value function over realized gains and losses; **mental accounting tracking each position separately**; regret avoidance; self-control failure.\n\n**Source:** Shefrin, H., & Statman, M. (1985). \"The Disposition to Sell Winners Too Early and Ride Losers Too Long.\" *Journal of Finance* 40(3): 777–790.\n\n**Confidence:** Verified.\n\n**For Candid — narrow framing applied to vendor history:** Each prior vendor relationship is booked as a **separate mental account**. A closed-out loss generates an *active* aversion to opening a new account in the same category.\n\nIn expected-value terms, a previous bad marketing-vendor experience contains zero diagnostic information about a new vendor of different size, methodology, and contract structure. The GC's behaviour is not expected-value rational. It *is* rational under prospect theory's value function over realized losses, combined with [[rozin-royzman-2001-negativity-dominance]] and the competence-attribution dynamics of [[kim-ferrin-cooper-dirks-2004-competence-vs-integrity-trust-repair]]. The GC is not being unreasonable — he is applying a documented baseline cognitive pattern to a category in which he has accumulated negative-balance accounts.","rationale_body":null,"metadata":null,"links":{"outgoing":[{"slug":"research-brief-risk-aversion-post-failure-may-2026","title":"Research brief: risk aversion, loss aversion, and post-failure decision patterns in GC and trades-business decision-makers (May 2026)","kind":"reference","scope":"business","link_type":"relates-to"},{"slug":"rozin-royzman-2001-negativity-dominance","title":"Rozin & Royzman 2001 (PSPR) — negativity bias / negativity dominance; bad weighs more than the algebraic sum of equivalent goods","kind":"reference","scope":"business","link_type":"relates-to"},{"slug":"kim-ferrin-cooper-dirks-2004-competence-vs-integrity-trust-repair","title":"Kim, Ferrin, Cooper, Dirks 2004 (JAP) — competence violations repair via apology; integrity violations repair via denial; opposite mechanisms","kind":"reference","scope":"business","link_type":"relates-to"}],"incoming":[{"slug":"tversky-kahneman-1973-availability-recency-vs-once-burned","title":"Tversky & Kahneman 1973 (Cognitive Psychology) — availability heuristic; why \"once burned\" is NOT just recency bias","kind":"reference","scope":"business","link_type":"relates-to"},{"slug":"pitch-categories-pre-emptively-defeated-by-gc-cognitive-profile","title":"Pitch categories pre-emptively defeated by the GC cognitive profile — seven types this audience rejects before evaluating on merits","kind":"reference","scope":"business","link_type":"depends-on"},{"slug":"rule-engineer-explicit-kill-criteria-into-engagements","title":"R2 — Engineer explicit kill criteria into every multi-month engagement; date + metric in writing; converts open-ended commitment to bounded prospect","kind":"rule","scope":"business","link_type":"depends-on"}]},"created_at":"2026-05-25T13:13:31.000Z","updated_at":"2026-05-25T13:13:31.000Z"}