Decision Making →
- 04 Oct 2007
- Working Paper Summaries
Fair (and Not So Fair) Division
"Fair" could be defined as what people of good will would want to be. This does not constitute an operational definition, however. This paper provides a specific procedure to calculate what could be considered fair and reasonable for various situations that require a fair division. A simple example would be a family that has inherited objects of artistic and/or sentimental value and wants to divide them up fairly while taking into account differences in taste. Laymen, mathematicians, and economists all have their own proposals for creating a fair division. Pratt suggests a procedure that, when put to the test of a range of examples, produces outcomes that accord with our intuitive sense of what is fair and desirable while previously proposed procedures do not. Key concepts include: The procedure measures the value of each object in terms of its desirability to the various participants. It allocates the objects so that the participants receive the same total value (or value proportional to their entitlements if they are unequal), without envy or waste ("money left on the table"). Randomization is used if needed to accomplish this. Many procedures work well on average problems. Indeed, all reasonable procedures are much alike in near-symmetric problems. It is the lopsided examples that test the procedures, especially with more than two participants. Participants are not penalized for receiving objects of no value to anyone else or for being honest about their values for such objects. Closed for comment; 0 Comments.
- 03 Oct 2007
- Research & Ideas
Dealing with the ‘Irrational’ Negotiator
"Negotiators who are quick to label the other party 'irrational' do so at great potential cost to themselves," say HBS professors Deepak Malhotra and Max H. Bazerman. Their new book, Negotiation Genius, combines expertise in psychology with practical examples to show how anyone can improve dealmaking skills. In this excerpt, Malhotra and Bazerman describe what to do when the other party's behavior does not make sense. Open for comment; 0 Comments.
- 01 Oct 2007
- Research & Ideas
Encouraging Dissent in Decision-Making
Our natural tendency to maintain silence and not rock the boat, a flaw at once personal and organizational, results in bad—sometimes deadly—decisions. Think New Coke, The Bay of Pigs, and the Columbia space shuttle disaster, for starters. Here's how leaders can encourage all points of view. Key concepts include: All organized human groups are susceptible to suppression of views deemed contentious or disruptive to an organization's foundational beliefs. Decisions are seldom better for silence, and overcoming that is a key task for the leader of any organization. Candor should be rewarded and incentives designed to encourage opposing points of view. An aware, open, and inquiring senior team is critical to sound decision-making. Closed for comment; 0 Comments.
- 06 Sep 2007
- Working Paper Summaries
Why We Aren’t as Ethical as We Think We Are: A Temporal Explanation
People commonly predict that they will behave more ethically in the future than they actually do. When evaluating past (un)ethical behavior, they also believe they behaved more ethically than they actually did. These misperceptions, both of prediction and of recollection, have important ramifications for the distinction between how ethical we think we are and how ethical we really are, as well as understanding how such misperceptions are perpetuated over time. This paper draws on recent research in psychology and decision-making to gain insight into these forces. It also provides recommendations for reducing them. Key concepts include: All individuals have an innate tendency to engage in self-deception around their own ethical behavior. Organizations worried about ethics violations should pay attention to understanding these psychological processes at the individual level rather than focus solely on the creation of formal training programs and education around ethics codes. Closed for comment; 0 Comments.
- 15 May 2007
- Working Paper Summaries
I’ll Have the Ice Cream Soon and the Vegetables Later: Decreasing Impatience over Time in Online Grocery Orders
How do people’s preferences differ when they make choices for the near term versus the more distant future? Providing evidence from a field study of an online grocer, this research shows that people act as if they will be increasingly virtuous the further into the future they project. Researchers examined how the length of delay between when an online grocery order is completed and when it is delivered affects what consumers order. They find that consumers purchase more "should" (healthy) groceries such as vegetables and less "want" (unhealthy) groceries such as ice cream the greater the delay between order completion and order delivery. The results have implications for public policy, supply chain managers, and models of time discounting. Key concepts include: Consumers spend less and order a higher percentage of "should" items and a lower percentage of "want" items the further in advance of delivery they place a grocery order. Encouraging people to order their groceries up to 5 days in advance of consumption could influence the healthfulness of the foods that people consume. Similarly, asking students in schools to select their lunches up to a week in advance could considerably increase the healthfulness of the foods they elect to eat. Online and catalog retailers that offer a range of goods as well as different delivery options might be able to improve their demand forecasting by understanding these findings. Closed for comment; 0 Comments.
- 04 May 2007
- What Do You Think?
How Do Managers Think?
"Uncertainty sometimes is essential for success" asserts a new book, How Doctors Think. The work of doctors raises intriguing questions about managing, says Jim Heskett, since diagnostics are an important part of managerial decision-making, too. Jim sums up nearly 60 responses from readers around the world, including practicing physicians. Closed for comment; 0 Comments.
- 25 Apr 2007
- Research & Ideas
Feeling Stuck? Getting Past Impasse
Feeling "stuck," as psychologically painful as it is, is the first step to awareness of new opportunities in career and in life, says Harvard Business School's Timothy Butler. In this Q&A and excerpt from his new book, Getting Unstuck, he explains six steps for getting from here to there. Key concepts include: A psychological impasse is developmentally necessary for human beings. Although impasse is usually first expressed as a failure, it is a requirement for individuals to change their way of thinking about themselves and their role in the world. There is a six-phase plan for recognizing and overcoming impasse, starting with feeling stuck and ending with finally taking action. Each phase has its predictable challenges, but some people find one phase more difficult than another. Closed for comment; 0 Comments.
- 08 Feb 2007
- Working Paper Summaries
Managing Know-How
For many firms, the ability to create, organize, and disseminate know-how is a key factor in their ability to succeed. But should all companies engage in formal knowledge management? If not, which companies derive most value from a formal knowledge system? Conditional on implementing such a system, should the company focus more on learning from successes or learning from failures? Should such knowledge systems simply capture all experience, or should they be more selective? This paper develops and applies an economic framework to examine these questions. Key concepts include: Supporting firms' focus on best practice, information about successes is typically more useful than information about failures. Past successes can guide future successes, while past failures only point out certain pitfalls. Recording mediocre know-how can be counter-productive by inefficiently reducing employees' incentive to experiment. Larger firms with high turnover potentially gain the most from knowledge systems, but should also be the most selective when encoding information. The framework in this paper can be used to explore other questions on knowledge management. As knowledge management continues to grow in importance, a systematic economic perspective may shed important insights. Closed for comment; 0 Comments.
- 11 Sep 2006
- Research & Ideas
Negotiating When the Rules Suddenly Change
Following the adoption of a collective bargaining agreement in 2005, National Hockey League GMs had one month to absorb the new rules and put a team together. How to best negotiate in an uncertain environment? Michael Wheeler advises looking to military science for winning strategies. Key concepts include: Traditional negotiation theory says little about crafting strategy in highly dynamic markets—but the military knows all about strategy and uncertainty. Make an informed bet on how you think events will unfold, but also identify the greatest threats to success. Prepare to make good decisions on the fly. Situational awareness and the ability to learn as you go are critical. Closed for comment; 0 Comments.
- 31 Jul 2006
- Research & Ideas
When Not to Trust Your Gut
Most of us trust our intuition more than we should, especially when the pressure is on in negotiations. Professors Max Bazerman and Deepak Malhotra on negotiating more rationally. From Negotiation. Key concepts include: Too much trust in intuition can lead to irrational decisions. Employ "System 2" thinking to apply logic even in times of stress and indecision. In negotiations, schedule more time than you think you will need. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Do We Listen to Advice Just Because We Paid for It? The Impact of Cost of Advice on Its Use
People make decisions every day by weighing their own opinions with advice from other sources. But do we know whether people use advice in a way that is helpful to them? In two experiments performed under controlled, laboratory conditions, Gino found that all else being equal, people weigh advice differently according to the amount of money they pay for it. Also, the cost of advice affects the degree to which people use it. Key concepts include: Decision makers may rely on costly advice more heavily than free advice. The cost of advice did not affect the value gained by following the advice. Cost-of-advice research results might interest the consulting and medical professions. We need to better understand decision makers' sensitivity to the cost they pay to gain advice. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Effects of Task Difficulty on Use of Advice
We make most of our choices by weighing other people's advice counter to our own opinions. People generally underweight advice from others, though the practice is not universal. In two studies, it is determined that people overweight advice on difficult tasks but underweight it on the easy ones. Key concepts include: Understand built-in biases when weighing advice, especially on difficult tasks. Don't automatically give more credence to the opinions of advisers or consultants over your own experience. Closed for comment; 0 Comments.
- 29 May 2006
- Research & Ideas
Why CEOs Are Not Plug-and-Play
Company-specific skills may be valuable in a new job under the right conditions, say Harvard Business School's Boris Groysberg, Andrew N. McLean, and Nitin Nohria. They studied GE; here's an excerpt from Harvard Business Review. Closed for comment; 0 Comments.
- 30 Jan 2006
- Research & Ideas
Looking Behind Bad Decisions
In a recent HBS Working Paper, HBS professor Max Bazerman and colleagues explore how biases and human psychology impede policy-making efforts that could vastly improve people's lives. Closed for comment; 0 Comments.
- 16 Jan 2006
- Research & Ideas
Adam Smith, Behavioral Economist?
Adam Smith is best known for The Wealth of Nations, but professor Nava Ashraf believes another of his works, The Theory of Moral Sentiments, presaged contemporary behavioral economics. Closed for comment; 0 Comments.
- 03 Oct 2005
- Research & Ideas
The Truck Driver Who Reinvented Shipping
Malcolm P. McLean (1914-2001) hit on an idea to dramatically reduce labor and dock servicing time. An excerpt from In Their Time: The Greatest Business Leaders of the Twentieth Century by Harvard Business School's Anthony J. Mayo and Nitin Nohria. Closed for comment; 0 Comments.
- 22 Aug 2005
- Research & Ideas
Balancing the Future Against Today’s Needs
It's hard to dream five years out when your organization is doing all it can to take care of the here and now. This article from Harvard Management Update offers a new lens for positioning growth efforts within your company while staying focused on your core strengths today. Closed for comment; 0 Comments.
- 08 Aug 2005
- Research & Ideas
Decision Rights: Who Gives the Green Light?
Four steps to ensure that the right decisions are made by the right people. HBS professor emeritus Michael C. Jensen explains in Harvard Management Update. Closed for comment; 0 Comments.
- 27 Jun 2005
- Research & Ideas
Asian and American Leadership Styles: How Are They Unique?
Business leadership is at the core of Asian economic development, says HBS professor D. Quinn Mills. As he explained recently in Kuala Lumpur, the American and Asian leadership styles, while very different, also share important similarities. Closed for comment; 0 Comments.
Does Judgment Trump Experience?
It's a question as relevant for business as for the U.S. presidential campaign, says HBS professor Jim Heskett. If "judgment capability" is a function of experience, what kind of experience is important? Does plenty of experience really improve judgment? Online forum now CLOSED. Closed for comment; 0 Comments.