Tag Archives: Daniel Kahneman

Nothing to Lose: Effective Negotiating Even When “Powerless”

Most negotiators prefer to have a “fall back position.”
However, having no alternatives and less power than co-negotiators can improve outcomes, found INSEAD’s Michael Schaerer and Roderick Swaab with Adam Galinsky of Columbia.

A weak alternative can establish an unfavourably modest “anchor point,” according to Hebrew University’s late Amos Tversky and Daniel Kahneman of Princeton.

These “lowball” first offers usually undermine a negotiator’s final outcome.

Professional athletes and their agents provided examples of negotiating better deals when they have no “back up” offers and “nothing to lose.” They set more ambitious anchor points, and often negotiate a more favourable settlement.

Schaerer and team asked a hundred people whether they would prefer to negotiate a job offer with a weak alternative or without any alternative.
More than 90 percent of participants preferred an unattractive alternative offer, confirming that any alternative is usually seen as better than no alternative.

Schaerer asked volunteers to sell previously-owned music when they had:

No offers (no alternative),
One offer at USD $2 (weak alternative),
A bid at USD $8 (strong alternative).

Volunteers in each group proposed a first offer, and rated the degree of power they felt.
People with the “strong” alternative felt the most powerful and those with no alternative felt the least powerful.

Volunteers with a weak alternative felt more powerful than those with no alternative, but they made lower first offers.
This indicated that they had less confidence than participants with no alternative.
Conclusion: Having any alternative can help people feel powerful but can undermine negotiation performance.

Schaerer’s team asked a volunteer to “sell” a coffee mug to a potential “buyer,” who was a confederate of the researchers.

The volunteer “seller” received a phone call from “another buyer,” who was a confederate of the researchers, before the volunteer seller met the original potential buyer.
When half the “sellers” met the original purchase prospect, the “buyer” made a low offer.
The “buyer” declined to bid for the other half of “sellers.”

Sellers without an alternative offer said they felt less powerful, but made higher first offers and received significantly higher sales prices than negotiators with an unattractive alternative.

In another situation, half of the “sellers” concentrated on available alternatives (none, weak, or strong) and the remaining negotiators focused on the target price.

Volunteers with unappealing alternatives negotiated worse deals than those with no options when they focused on alternatives.
“Sellers” avoided this pitfall by concentrating on the target price.
Conclusion: Focus on the goal when alternatives are weak.

Negotiators with non-existent or unappealing alternatives can set audacious goals and make an ambitious opening offer because they have “nothing to lose.”
This strategy usually renders better results for the disadvantaged negotiator.

How do you overcome lowball anchoring when you have few negotiation alternatives?

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Comparative Rankings May Reduce Gender Bias in Career Advancement

Thinking in a Second Languages Reduces Decision Bias

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Boaz Keysar

People who can think in a foreign language are more able to rationally analyze risk compared with evaluating risk in their native language, found University of Chicago’s Boaz Keysar, Sayuri L. Hayakawa, and Sun Gyu An.

Sayuri Hayakawa

When volunteers analyzed risks presented in their native language, they were risk-averse when considering potential gains and more risk- tolerant when considering possible losses.
However, they were did not show this risk assessment bias when they considered the same risks vs rewards in a foreign language.
Using a foreign language reduced loss aversion and increased acceptance of hypothetical and real bets with positive expected values.

Micheline Favreau

This effect could occur because foreign languages are typically processed more slowly than in a native tongue, leading to more deliberate cognitive processing, argued Concordia University’s Micheline Favreau and Norman Segalowitz.

Norman Segalowitz

Foreign language processing generally requires greater cognition-intensive systematic, analytical effort, leading to increased emotional and cognitive distance than in a native tongue, suggested Princeton’s Daniel Kahneman in his distinction between Thinking Fast and Slow.

Stefano Puntoni

Even when people fully understand language nuances including colloquialisms, impolite words, terms of endearment and reproach, they react less emotionally in a foreign language, according to self-report and electrodermal measurements, found Erasmus University’s Stefano Puntoni, Bart de Langhe of University of Colorado, and Cornell’s Stijn M.J. van Osselaer.
As a result, more than half the participants preferred the riskier option presented in a foreign language instead of the native tongue.

Richard Thaler

This finding confirmed participants’ tendency toward myopic risk aversion, or greater sensitivity to losses when thinking and acting in their native language, described by University of Chicago’s Richard Thaler, Amos Tversky of Stanford, Princeton’s Kahneman, and Alan Schwartz of University of Illinois.

Amos Tversky

Among more than 140 native Korean speakers and more than 100 English speakers in Paris, Keysar’s team confirmed the same pattern of enhanced deliberation and reduced framing effects in a foreign language in hypothetical low-loss, high-gain bets.
Just 57 percent of Korean-speaking participants accepted bets offered in Korean, contrasted with 67 percent when offered in English, suggesting heightened deliberation in a second language.

Daniel Kahneman

Likewise, more than 50 English-speaking volunteers who spoke Spanish as a second language received $15 in $1 bills, which could be kept or bet on a coin toss.
For every lost toss, participants lost $1.
However, if they won, they kept the $1 and earned another $1.50, a significant return on the chance bet.
When conducted in participants’ native English language, 54% accepted bets, whereas when presented in Spanish, 71% agreed to bet.

Alan Schwartz

“They take more bets in a foreign language because they…are less affected by the typically exaggerated aversion to losses … People who routinely make decisions in a foreign language rather than their native tongue might be less biased in their savings, investment, and retirement decisions, as a result of reduced myopic loss aversion” wrote Keysar and colleagues.

-*How do you reduce “myopic risk aversion” in your native language?

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Debiasing Decisions: Combat Confirmation Bias, Overconfidence Bias

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Philip Meißner

Cognitive and behavioral biases can contribute to “blind spots” in decision-making, leading to less effective outcomes.
To improve decision outcomes, University of Marburg ’s Philip Meißner, Torsten Wulf of HHL Leipzig Graduate School of Management and HEC’s Olivier Sibony proposed a systematic checklist to identify potential decision derailment based on bias, along with rapid remedies.

Torsten Wulf

They argues that two types of bias contribute to most decisions that lead to undesirable results:

Confirmation bias, the unconscious tendency to believe new information that is consistent with existing beliefs and recent experiences, and to discount contradictory data,
Overconfidence bias, the out-of-awareness likelihood to overestimate one’s skills, insights, and judgment.
This leads to increased risk-taking based on illusory sureness of the decision and ability to mitigate adverse outcomes.

Olivier Sibony

Previously, Lovallo and Sibony articulated four related decision biases:

Pattern-recognition biases, countered by changing the “angle of vision,”
Action-oriented biases, mitigated by recognizing uncertainty,
Interest biases, minimized by explicitly highlighting these interests,
Social biases, reduced by depersonalizing debate.

Debiasing techniques such as checklists, can limit the negative effects of biases in decision-making by offering a disciplined, comprehensive analysis of downside risks and by systematically considering multiple viewpoints.

Atul Gawande

However, effectively implementing checklists requires consistent discipline, noted Harvard’s Atul Gawande, who cited examples of partial adherence leading to costly oversights and failures.

One approach, suggested by Princeton’s Daniel Kahneman and Gary Klein of McKinsey, is a “premortem.”
Decision makers imagine that the decision has failed and analyze sources and reasons for adverse outcomes, to more thoroughly assess points of failure and possible mitigation strategies.
Formal scenario-planning is another way to expose assumptions underlying a plan, as well as a competitor’s priorities and potential strategy.

Massimo Garbuio

Using a variety of debiasing techniques significantly increased the Return on Investment (ROI) in a study by University of Sydney’s Massimo Garbuio and Dan Lovallo and Olivier Sibony of HEC.
As a result, Michael Birshan, Ishaan Nangia, and Felix Wenger of McKinsey, argued that debiasing techniques should be embedded in formal organizational decision-making processes, particularly for high-impact, repetitive decisions.

Michael Birshan

Decision biases may be out of awareness, or unconscious, so it’s more effective to evaluate the process of developing a proposal, rather than focusing only on the content and merits of a proposal.

Decision-making safeguards can be built into standard analysis processes by including questions to expose:

Multiple data sources,
Diverse opinions and perspectives,
Downside risk,
Potential negative outcomes for company, industry, and broader ecosystem.

Daniel Kahneman

Proposals are considered ready for a decision only when multiple perspectives are available to mitigate confirmation bias and risk analysis is available to reduce overconfidence bias.
Responses to decision checklist questions can be quantified to indicate one of four action steps, according to Daniel Kahneman:

Decide, based on inclusion of robust safeguards against both confirmation bias and overconfidence bias,
Reach out, suggesting the need for gathering additional perspectives, opinions, and perspectives to prevent narrow assumptions to reduce confirmation bias.
The Vanishing-Options Test, proposed by Stanford’s Chip Heath and Dan Heath of Duke University, can generate new ideas by imagining that none of the current proposals are available.
Stress-test, by conducting a pre-mortem or analysis by external devil’s advocate or provocateur to reduce overconfidence risk by.
Reconsider when both more perspectives and risk analysis are required to reduce both overconfidence bias and confirmation bias.
This screening matrix helps reduce related decision-making biases:

Self-interest Bias
-To what extent is the proposal motivated by self-interest?

Ishaan Nangia

Recommendation
-Assess for over-optimism

Affect Heuristic
-How strong is the team’s emotional attachment to a specific proposal?
-To what extent were risks and costs fully considered for both preferred and non-preferred options?

Recommendations
-Assess for strongly-preferred outcomes
-Reintroduce analysis of all options

Groupthink
-How many dissenting opinions were analyzed?
-How adequately were all options explored?
-Was dissent discouraged?

Felix Wenger

Recommendations
-Encourage substantive disagreements as a valuable part of the decision process
-Solicit dissenting views from members of the recommending team, through private meetings

4. Saliency Bias
-To what extent are decisions made based on a potentially incomparable, but memorable success?
-What about the proposed analogy is comparable to the current situation?
-What are relevant examples from less successful companies? What happened in those cases?

Recommendation
-Carefully scrutinize analogies’ similarity to the current decision situation
–Solicit additional analogies using reference class forecasting:

.Select reference class,
.Assess distribution of outcomes,
.Intuitively estimate project’s position in distribution,
.Assess estimate’s reliability,
.Correct intuitive estimate.

Confirmation Bias
-What viable alternatives were included with the preferred recommendation?
-At what stage in the decision analysis were alternatives discarded?
-What efforts were undertaken to seek information to disconfirm the main assumptions and hypotheses?

Recommendation
-Request two additional alternatives to the main recommendation, including analysis of benefits and drawbacks
-Acknowledge unknowns, risks

Availability Bias

Max Bazerman

–If you had more time to gather date, what information would you seek?, asked Harvard’s Max Bazerman
-How can you access similar data now?

Recommendation
-Use checklists to ensure comprehensive analysis of data required for each decision type

Anchoring Bias
-What data sources are used to analyze decision?
-Which data are estimates? By whom? If so, from which data were estimates extrapolated?
-To what extent could there be:

Unsubstantiated numbers?
Extrapolation from non-equivalent previous situations?
Attraction to specific anchors?

Recommendations
-Present data from other sources, benchmarks, or models
-Request new analysis

8. Halo Effect
-To what extent does the analysis team expect that a person, organization, or approach previously successful in one context will be equally effective in different situation?

Phil Rosenzweig

Recommendations
-Question potentially inaccurate inferences
-Solicit additional comparable examples
-Question attributions of success and failure to leaders’ personalities instead of chance factors, advised IMD’s Phil Rosenzweig.

9. Sunk-Cost Fallacy, Endowment Effect
-To what extent are recommenders attached to past decisions?

Recommendation
–Disregard past expenditures when considering future costs and revenues

Overconfidence, Planning Fallacy, Optimistic Biases, Competitor Neglect
-To what extent is the comparison case unwarrantedly optimistic?

Recommendation
-Adopt an outside view by using relevant simulations or war games

Disaster Neglect
-To what extent is the worst case scenario realistically and sufficiently negative?
-How was the worst case generated?
-To what extent does the worst case consider competitors’ likely responses?
-What other scenarios could occur?

Recommendation
-Conduct a premortem, suggested by Gary Klein of Applied Research Associates: Imagine the worst case scenario occurred, then propose likely causes, mitigations

Loss Aversion
-To what extent is the evaluation and decision team risk averse?

Recommendation
-Realign incentives to share responsibility for the risk or to reduce risk

Planning Fallacy focuses only on the current case while ignoring similar projects’ history and statistical generalization from related cases.
-To what extent does the analysis rely on “top-down, outside-view” comparisons to similar projects?
-Did the evaluators use a “bottom-up, inside-view” to estimate time required for each step?

Recommendation
-Statistically analyze a broad range of similar cases to avoid over-estimates from “top-down, outside-view” approaches and underestimates from “bottom-up, inside-view”
-Differentiate accurate forecasts from ambitious targets

Loss aversion
-To what extent are evaluators more concerned with avoiding loss than achieving gains?
– How concerned are evaluators with being held responsible for a failed project?
-To what extent has the organization specified acceptable risk levels?

Recommendation
-Seek risk tolerance guidelines from organizational leaders.

Decision-making tools like checklists can significantly reduce unconscious biases, provided that they are consistently and systematically applied.

-*What strategies have you found most helpful in reducing biases in decision-making?

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Do “Hot” Emotions Lead to Better Decisions?

Perseverance Increases Skill Increases Luck: “The Harder I Work, The Luckier I Get”

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Samuel Goldwyn

Thomas Jefferson

Samuel Goldwyn recast Thomas Jefferson’s earlier observation: “I am a great believer in luck, and I find the harder I work, the more I have of it.”

Michael Mauboussin, of Columbia University, and previously Chief Investment Strategist at Legg Mason Capital Management Inc. investigated this relationship between effort and luck in his book, The Success Equation.

Michael Mauboussin

Mauboussin, an innovator in behavioral finance, adopted Harvard biologist Stephen Jay Gould’s “paradox of skill” to analyze the interaction of effort, skills, and luck, and best strategies to optimize outcomes in investing, sports, and career performance.

Stephen Jay Gould

He posits that as skill improves in activities where outcomes are affected by skill and luck, the standard deviation of skills narrows.
In this case, luck becomes more important in determining outcomes:

“Whenever you see an outlier in sports, it is always a combination of really good skill and really good luck… (Often) they are about one and a half or two standard deviations away from the average…not all skilled players have (winning) streaks, but all (winning) streaks are held by skillful players.”

For example, as investors become more sophisticated and have access to advanced computational tools, as athletes benefit from targeted training and development regimens, and as students are groomed for admission to top universities, differences among these skilled performers decreases.
Chance influences can determine outcomes.

Mauboussin says that luck has several elements:

Affects an individual or organization,
May be evaluated as “good” or “bad”
Another outcome could have occurred
The outcome is uncontrollable, but is comprised of several elements

To increase luck, he advises assessing each contender’s strength in the situation and finding “…something completely different to get you on the right side of the tail of the skill distribution,” such as employing an unusual or unexpected tactic.

The stronger player has positive asymmetric resources, so the effective strategy is to simplify the game.
In contrast the underdog should seek to complicate the game, such as through disruptive innovation, a flank strategy or a guerilla tactic.

Because most people have a bias toward optimism and overestimate personal capabilities, it may be difficult to assess oneself as an “underdog” in a performance situation.

Daniel Kahneman

Nobel Prize winner Daniel Kahneman and Amos Tversky explained that individuals who adopt an inside view gather substantial information, combine it with their own inputs, then project into the future without considering “distributional information” about a wide variety of previous instances.
This approach risks developing an idiosyncratic, overconfident perspective by underestimating costs, completion times, and risks of planned actions, while overestimating benefits.

Amos Tversky

In contrast, people who adopt the outside view consider the problem as an instance of a larger reference class and consider the entire distribution of outcomes when this type of situation occurred previously.
This approach can reduce overconfidence.
However, this approach could discourage entrepreneurs, who will realize that a small percentage actually succeeds.

In addition, besides the bias toward overconfidence, people tend to “under-sample” instances of failure when a previously successful approach is applied in a new situation and doesn’t succeed.

Nate Silver

Sabermetricians like Nate Silver, posit that worthwhile statistics provide:

Persistence or correlation from one period to the next, a strong indicator of high skill
Predictive value or high correlation with the target objective

The Oakland As baseball team uncovered these principles in determining that a superior measure of athletic performance in this sport is on-base percentage rather than the traditional measure, batting average.

In this case, on-base percentage has a higher correlation from one season to the next and a higher correlation with run production than batting average, fulfilling both criteria.

Daniel Kahneman also suggested that skill, expertise, and intuition render more uniform results in a predictable environment.

However, many organizational environments are unstable and non-linear, rendering experts less accurate because they cannot employ an effective predictive model.

Collective judgments through “the wisdom of crowds” may mitigate the challenges of unstable contexts because they provide more data points.

Mauboussin advocated considering the continuum of stability vs instability in which the issue is situated to determine strategy and to beware of applying simple heuristics that are vulnerable to bias, and social or situational influences.

He suggested the guideline “think twice” to prepare, detect and correct for common mental traps, including:

The Inside-only View
Tunnel Vision
Oversimplification
Situational Power
Overvaluing Expert Knowledge

-*How do you optimize your performance when chance elements can affect your outcomes?

©Kathryn Welds

Happiness-Money Connection: Halo Effect of Happy Mood? Part 2

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Daniel Kahneman

The Happiness-Money Connection: Halo Effect of Happy Mood? Part 1 outlined studies by Nobel Prize winner and psychologist Daniel Kahneman, with Angus Deaton and by British researchers Jan-Emmanuel De Neve and Andrew Oswald, documenting the long-term positive impact of subjective positive emotions on life outcomes including academic attainment, employment status, and income over time.Michael Norton’s research added the insight that money can buy happiness – if it’s used for other people.

Taken together, these findings point to the value of cultivating positive emotional states.

Martin Seligman

Distinguished psychologist Martin E. P. Seligman was one of the first researchers to empirically investigate correlates of happiness and well-being, and his recent book,

Flourish: A Visionary New Understanding of Happiness and Well-being recasts his

Flourish

earlier emphasis on Authentic Happiness: Using the New Positive Psychology to Realize Your Potential for Lasting Fulfillment.
He opined that “well-being” is a more accurate concept, defined by the acronym PERMA:

Positive Emotion
Engagement
Relationships
Meaning
Accomplishment

Authentic Happiness

Though this is largely a conceptual model, he offers several exercises like considering one’s “signature strengths” and “three blessings” or things that have gone well during a day.

Sonja Lyubomirsky of UC Riverside synthesized happiness-enhancing recommendations from self-help books in The How of Happiness: A New Approach to Getting the Life You Want, and provided familiar happiness-enhancing strategies:

Cultivate optimism, consciously stop negative thoughts
Avoid “overthinking“, social comparison
Practice kindness
Invest time in social relationships, family
Develop coping strategies
Forgive self, others
Increase “flow” experiences, do enjoyable things
Savor life’s joyful experiences
Live in the present
Commit to goals
Organize space, work, life
Participate in religious or meditative practice
Keep self-reflection Journals

The Happiness Project

Gretchen Rubin combined some of these recommendations with erudite references to great philosophers’ and thinkers’ guidance, health recommendations, and time-tested common sense in The Happiness Project.

Daniel Gilbert of Harvard’s bestseller, Stumbling on Happiness , synthesized social science research about imagined expected future outcomes and control over them in relation to the experience of happiness. Stumbling on Happiness

He noted that human imagination and prediction are inaccurate, so he suggested using “surrogates” of future events to more accurately test future satisfaction with real-life choices like having children, moving to a new home, or working in a new job.

Other ways to cultivate the Emotional Intelligence capabilities of positive emotional experience are highlighted in related Posts:

-*How have you cultivated happiness?
-*How have happiness and money been related in your experience?

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Happiness-Money Connection: Halo Effect of Happy Mood? Part 1

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Daniel Kahneman

“(More) Money can’t buy (more) happiness” has been demonstrated in a research study published in the Proceedings of the National Academy of Sciences by Nobel Prize winner and psychologist Daniel Kahneman, with Angus Deaton.

They analyzed more than 450,000 responses to the Gallup-Healthways Well-Being Index, a daily survey of 1,000 US residents conducted by the Gallup Organization, and distinguished two elements of “subjective well-being” or happiness:

Emotional well-being – Frequency and intensity of joy, stress, sadness, anger, and affection,leading to pleasant or unpleasant quality of life, measured by Cantril’s Self-Anchoring Scale of yesterday’s emotional experiences
Life evaluation – Subjective assessment of one’s life.

They found that as emotional well-being rises with income up to about $75,000 in 2010 US dollars, then does not continue increasing with higher income levels.
In addition, daily emotions were predicted by health status, care giving, loneliness, and smoking.

Life evaluation increased as income and education increased, and the study confirmed that low income exacerbates the emotional pain associated with divorce, ill health, and being alone.

Michael Norton

In fact, Michael Norton of Harvard Business School found that volunteers’ happiness increased with more money only when they spent money on others.

Replicated in Canada, Uganda, Rwanda, and other countries, his research found that happiness increases when people:

Select experiences over things
Spend money on others, regardless of the amount of money spent

He concluded that money can buy happiness when it’s spent on other people and experiences in Happy Money: The Science of Smarter Spending … a worthwhile reminder in this season of gift-giving.
Norton’s TED talk

British researchers investigated longitudinal connections between happiness and money, and found that people who express more positive emotions as teenagers have more positive life outcomes as adults, including higher education and income.

Jan-Emmanuel De Neve of University College London and Andrew Oswald of

Jan-Emmanuel De Neve

University of Warwick analyzed Carolina Population Center’s National Longitudinal Study of Adolescent Health (“Add Health”) profiles of more than 10,000 Americans at ages 16, 18 and 22 and their annual incomes at age 29.

De Neve and Oswald controlled for education level, IQ, height and self-esteem, all known to contribute to financial success.

Reported in Proceedings of the National Academy of Sciences, they found that those who express more positive emotions in their teen years, reported greater life satisfaction and optimism as young adults, were more likely to earn a university degree, secure employment, advance to higher-level roles, and have higher incomes by age 29.

The survey assessed life satisfaction on a 5-point scale, and found that an increase of 1-point at age 22 made translated to a $2,000 difference in later income measured in in 2012 US dollars, and the later income difference between the happiest and unhappiest participants was $8,000 by the same measure.

Andrew Oswald

DeNeve and Oswald validated the finding by comparing about 3,000 sibling pairs who shared the same parents and socioeconomic status.
They found that the happier siblings also had more positive emotions and life evaluation than less-happy participants.

One explanation of these findings is that observers generalize positive impressions of people who display more positive emotions in a “halo effect”, so these happier individuals are seen as more likeable, competent and attractive, and are offered more opportunities for education, employment, and social relationships.

These findings suggest the importance of increasing the “Emotional Intelligence” competencies of emotional self-regulation.
See The Happiness-Money Connection: Halo Effect of Happy Mood?Part 2 for research-based recommendations on developing happiness and well-being.

-*How do you view the connection between happiness and money?

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Biases in Unconscious Automatic Mental Processing, and “Work-Arounds”

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Leonard Mlodinow

Leonard Mlodinow’s Subliminal: How Your Unconscious Mind Rules Your Behavior reviews evidence of automatic, out-of-awareness brain processing that handles emotional experience and routine task execution, in the same vein as best sellers by Nobel laureate Daniel Kahneman (Thinking, Fast and Slow) and writer Malcolm Gladwell (Blink: The Power of Thinking Without Thinking).

Daniel Kahneman

All three authors outline the potential costs of rapid mental processing: error and bias in perception and decision-making, which are less present during mindful analytic problem-solving.

Mlodinow, a Physics Professor at CalTech, has collaborated with Stephen Hawking on two books, and like Kahneman and Gladwell, is a talented storyteller who explains implications of laboratory-based research on cognition and brain functioning.

Carol Tavris

Psychologist Carol Tavris discusses the cost of similar biases in cognitive processing in Mistakes Were Made (But Not by Me): Why We Justify Foolish Beliefs, Bad Decisions,

Numerous studies of erroneous eyewitness testimony demonstrate that memory is constructed of fragmentary elements “stitched” together to form a cohesive narrative.
This contrasts the notion that memory is a “snapshot” replica of an event.

Opportunities for cognitive error are apparent in this Constructivist view of perception and cognition.

Most authors suggest “mindful” practices to counteract inherent biases in cognitive short-cuts, consciously focusing in present perceptions and experiences.

Mlodinow’s previous book, The Drunkard’s Walk: How Randomness Rules Our Lives, demystifies the use of statistics in everyday life, and prepares readers with considered questions to avoid mis-judgments based on seemingly convincing quantitative data.

He demonstrates the prevalence of chance influences in life outcomes, and the pervasive illusion that people have control over many more outcomes than they actually do.

Mlodinow reminds readers that “success” and “failure” contain random influences, and “success” is more dependent on persistence and maintaining an optimistic outlook than raw ability.

-*What practices have helped you mitigate potential cognitive bias associated with rapid mental processing and cognitive “short-cuts”?

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Cooperative Instinct, Reflective Self-Interest

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David Rand

Harvard scientists, led by postdoctoral researcher David Rand found that volunteers who were asked to contribute to the greater good at their own expense at first tended toward generous and cooperative behavior, but upon reflection, they chose self-interest.
Evolutionary biologist Martin Nowak and psychology professor Joshua Greene collaborated with Rand in the study published in Nature .

Martin Nowak

Rand, Nowak, and Greene gave money to volunteers for use in games where they could earn more, depending on choices about cooperating with others.

The team found that people acted most generously when they made immediate decisions about how much to contribute, or were asked to report a time when their intuitions and emotions guided them to a good decision.

When volunteers took more time to consider decisions, or were asked to remember a time they benefitted because rational thinking or when an emotional response led them to an adverse decision, they contributed less to the common pool of money.

Joshua Greene

In one situation, four participants were given 40 cents each and told that they could contribute as much money as desired to the common pool, which would be doubled and then divided equally among the four people.

People decided most quickly on their contribution strategy were more willing to contribute than those who considered the choice for more than 10 seconds.

When researchers forced some volunteers to decide a strategy rapidly and others to wait at least 10 seconds before deciding, they again observed that those who decided most quickly contributed most.

Daniel Kahneman, a Nobel laureate and author of the book, Thinking, Fast and Slow, which examines the two cognitive systems and the role they play in decision-making.

The researchers suggest that people’s intuitive responses are associated with what they have learned to benefit them, through experiences in various situations.

They asked participants if their everyday interactions with others were typically cooperative or uncooperative.
Those who reported having mainly cooperative interactions made quick decisions to contribute more and gave less when they had more time to ponder the scenario.
In contrast, those who reported uncooperative interactions in daily life gave the same amount when they made fast vs more deliberate decisions.

These studies could suggest policies or incentives to encourage desired behavior.
One complication that researchers consider is that a monetary reward or a fine is introduced, people may begin to ignore their first response and weigh the costs and benefits.
This delay can lead to people acting more in self-interest, and less for the common good.

An example of this paradox is seen in a study of Israeli day care programs.
Monetary fines were levied when parents picked up their children late, and the number of parents who arrived late increased rather than decreased.

This finding is consistent with punishment’s lower efficacy in motivating behavior.

-*In which work situations do you favor cooperation with colleagues?
-*When do you find that “enlightened self-interest” is the more prudent approach at work?

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Kathryn Welds, PhD | Curated Research + Commentary

Consulting Organizational Psychologist | Change Consultant | Leadership+Career Master Coach | Coach Supervisor+Mentor Coach |

Tag Archives: Daniel Kahneman

Nothing to Lose: Effective Negotiating Even When “Powerless”

Comparative Rankings May Reduce Gender Bias in Career Advancement

Thinking in a Second Languages Reduces Decision Bias

Do “Hot” Emotions Lead to Better Decisions?

Perseverance Increases Skill Increases Luck: “The Harder I Work, The Luckier I Get”

Happiness-Money Connection: Halo Effect of Happy Mood? Part 2

Happiness-Money Connection: Halo Effect of Happy Mood? Part 1

Biases in Unconscious Automatic Mental Processing, and “Work-Arounds”

Cooperative Instinct, Reflective Self-Interest

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