Tag Archives: Elizabeth Phelps

Beware of Seeking, Acting on Advice When Anxious, Sad

Just as wise grandmothers advise, it’s best to avoid decisions when upset, anxious, or sad.

Maurice Schweitzer

Maurice Schweitzer

Maurice Schweitzer and Alison Wood Brooks of Wharton and Harvard Business School’s Francesca Gino validated Grandmother Wisdom in eight experiments that demonstrated anxiety’s impact on lowering self-confidence, impairing information processing, and impeding ability to distinguish advice from neutral advisors and those with a conflict of interest.

Alison Wood Brooks

Alison Wood Brooks

They found that people experiencing anxiety tend to seek advice and act on it, but they are less able to differentiate poor advice from valid recommendations, and these results are applicable to making decisions about crucial medical treatment, financial investments, or even guidance counseling.

Francesca Gino

Francesca Gino

The team evoked anxious feeling among volunteers by presenting potentially frightening film clips and music, and asked them to judge a person’s weight based on a photograph or number of coins in a jar or solve a complex math problem.

Participants were offered money for correct judgments, and the opportunity to receive advice from others when they were uncertain.
Those who heard the scary music or saw the alarming film clip rated themselves as less confident of their decision, and were more likely to ask others for advice.
These effects were not observed when volunteers were shown a film clip that could provoke anger.

Schweitzer, Brooks, and Gino concluded that people vary in their receptivity to advice based on:

  • Advisor’s characteristics, such as expertise, consistent with Cialdini’s observation

    Robert Cialdini

    Robert Cialdini

  • Perceived difficulty of the decision
  • Decision maker’s emotional state when receiving advice

The researchers advised decision-makers to:

  • Monitor their internal states for anxiety
  • Use feedback from multiple sources when making important decisions
  • Work toward developing increased self-confidence
  • Evoke calm state, often possible with systematic breathing or mindful attention and equanimity
Catherine Hartley

Catherine Hartley

Catherine Hartley, then of New York University and Elizabeth Phelps of New York University contributed to the neuroeconomic analysis of anxiety’s impact on decision- making when they reported that brain structures responsible for regulating fear and anxiety are also involved in economic decision-making under uncertain conditions.

Elizabeth Phelps

Elizabeth Phelps

Specifically, the amygdala is crucial in learning, experiencing, and regulating both fear and anxiety and it is also implicated in decision-making in situations of potential loss.
The prefrontal cortex is specialized in controlling fear and is also involved in decisions containing risk elements.

Hartley and Phelps suggest that techniques for altering fear and anxiety may also improve economic decisions-making.

Rajagopal Raganathan

Rajagopal Raganathan

Rajagopal Raghunathan, then of New York University and Michel Tuan Pham of Columbia University demonstrated the same connection between anxiety and making decisions about gambling and job selection.

Michel Tuan Pham

Michel Tuan Pham

They conducted three experiments and found that sad individuals select high risk / high-reward gambling and job options, whereas anxious individuals are biased in favor of low-risk / low-reward options.

Raghunathan and Pham posit that anxiety tends to motivate people to reduce uncertainty whereas sadness moves people to replace rewards.
They suggest suggesting two different decision biases related to mood states.

Raghunathan and Pham add to Schweitzer, Brooks, and Gino’s recommendations for mitigating decision bias:

  • “Monitor feelings”
  • Consider alternate options
  • Speculate on future moods and preferences if each option were selected: “What would I feel better about . . .?

-*How do you mitigate the potential decision bias when anxious or sad?

Related posts:
Memorable Business Stories: Ideas and Numbers
Business Influence as “Enchantment”

Useful Fiction: Optimism Bias of Positive Illusions

Tali Sharot

Tali Sharot

Tali Sharot of University College London investigated people’s tendency toward unsubstantiated optimism after she observed this bias in her neuropsychological experiments on memory processes of envisioning future events and consequences.

Shelley Taylor

Shelley Taylor

She, like Shelley Taylor of UCLA decades before, argued that this bias was an evolutionary adaptation that enabled people to survive under difficult conditions.  Sharot added to Taylor’s work by suggesting that a majority of people demonstrate the optimism bias by a margin of 5:3.3.

The Optimism BiasSharot’s The Optimism Bias: A Tour of the Irrationally Positive Brain
compares optimism bias to other perceptual illusions, such as sometimes-fatal spatial disorientation among airplane pilots and other frequently-cited optical illusions like “Young Lady or Old Woman”, “Vase or Two Profiles”, and Thatcher illusion.

An example of optimism bias is the well-documented “superiority illusion”, that most people rate their skills, knowledge, and tendencies as above average in a variety of dimensions.

Ellen Langer

Ellen Langer

Another example was identified in 1975 by Ellen Langer of Harvard, who suggested that a pervasive “illusion of control” causes most people to overestimate their ability to control events, even those over which they have no influence.
This cognitive bias has been suggested as prevalent among “problem gamblers” and those who believe in paranormal phenomena.

Elizabeth Phelps

Elizabeth Phelps

Sharot and Elizabeth Phelps of New York University extended Taylor’s early work with neuropsychological research, and reported that the brain’s frontal cortex communication with the posterior hippocampus enables people to envision future possibilities and events.

They observed amygdala and the rostral anterior cingulate cortex activity when people demonstrate the optimism bias and noted that malfunctions in these brain areas are associated with a bias toward pessimism and related depression.

Lauren Alloy

Lauren Alloy

These findings were foreshadowed by Lauren Alloy of Temple University and Lyn Abramson of University of Wisconsin in their 1979 study, which found that people with depression are better able to predict future events accurately, whereas people not burdened with depression have inaccurately optimistic predictions.

Lyn Abramson

Lyn Abramson

“Depressive realism,” just as optimism bias can actually influence or alter future outcomes, as demonstrated in Robert Rosenthal’s classic Pygmalion in the Classroom study and “self-fulfilling prophecy,” leading to the idea that “perception is reality.”

Robert Rosenthal

Robert Rosenthal

Though inaccurate, optimism bias has positive effects. It has been observed to:

  • Reduce perceived stress
  • Improve physical health
  • Increase life span
  • Increase likelihood of people following recommended health practices like exercising, following low-fat diets, taking vitamins.

Sharot suggested that increasing awareness of optimism bias can help people enjoy the benefits of this positive illusion while watching for pitfalls of unrealistic optimism.

-*How do you capitalize on the optimism bias and mitigate its drawbacks?

Related Post:
Oxytocin Receptor Gene’s Link to Optimism, Self-Esteem, Coping with Stress

Sharot’s TED Talk

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