Theory →
- 15 Jul 2009
- Working Paper Summaries
Policy Bundling to Overcome Loss Aversion: A Method for Improving Legislative Outcomes
Citizens hope their elected representatives will pass legislation that creates net gains that outweigh net harms—in other words, legislation that has positive expected value for society. However, economist Joseph Stiglitz has noted that legislators often fail to pass such legislation, even when its net positive expected value is highly significant. The psychology and economics literature suggests that legislators face an uphill battle when proposing legislation that has both costs and benefits due to the power of loss aversion, a cognitive bias that has been found to cause individuals to dramatically overweight losses relative to gains. Here the authors propose and test a new type of policy bundling technique in which related bills that have both costs and benefits are combined in a way that reduces the harmful effects of loss aversion. Key concepts include: Because losses loom larger than gains psychologically, policies that would create net benefits for society but that would also involve costs may frequently be defeated. This policy bundling technique has the potential to help citizens and legislators who are struggling to pass legislation with salient costs that are outweighed by important benefits. While the behavioral decision research literature has shown it is difficult to fully de-bias human judgment, recent research suggests it is possible to design decision-making contexts in ways that lead to wiser choices. Closed for comment; 0 Comments.
- 08 Jul 2009
- Working Paper Summaries
Truth in Giving: Experimental Evidence on the Welfare Effects of Informed Giving to the Poor
It is often difficult for donors to predict the value of charitable giving because they know little about the persons who receive their help. While there is substantial evidence that individuals use information about recipients to decide how generous a donation to make, we know surprisingly little about how much donors care to help their preferred types. To start closing this gap, HBS professor Felix Oberholzer-Gee and Carnegie Mellon University coauthor Christina Fong study transfers of income to real-world poor people in the context of experimental games. Their findings have implications for governments and nongovernmental organizations that seek to increase the financial and political support for wealth transfer programs. Key concepts include: From a government and NGO perspective, it is important to produce credible signals about deservedness that are hard to ignore. There is clear evidence that a significant group of donors is willing to invest resources to achieve a distribution of income that better matches its preferences. Facing a deserving person without much "moral wiggle room" to justify self-interested decisions leads to increased donations to the poor. Closed for comment; 0 Comments.
- 06 Jul 2009
- What Do You Think?
Are You Ready to Manage in an Irrational World?
It is becoming clear that human behavior is much less rational than we assumed, says HBS professor Jim Heskett. Judging from replies to this month's question, there are many nuances to managing in an irrational world. (Online forum now closed. Next forum begins August 7.) Closed for comment; 0 Comments.
- 11 Jun 2009
- Working Paper Summaries
Social Influence Given (Partially) Deliberate Matching: Career Imprints in the Creation of Academic Entrepreneurs
How do people select partners for relationships? Most relationships arise from a matching process in which individuals pair on a limited number of high-priority dimensions. Although people often match on just a few attributes, it may be that some set of additional characteristics, which was not considered when a choice was made to develop the relationship, results in the social transmission of attitudes and behaviors. For this reason, social matching is only "partially" deliberate. HBS professor Toby Stuart and coauthors observe this phenomenon in an analysis of the origins and consequences of the matching of postdoctoral biomedical scientists to their faculty advisers. This work shows the imprints of postdoctoral advisers on the subsequent choices of the scientists-in-training who travel through their laboratories. The researchers' findings contribute to a burgeoning literature on the interface between academic and commercial science. Key concepts include: The fact that matching is only partially deliberate clearly opens avenues for the unforeseen transmission of attitudes and behaviors. In certain circumstances, the attributes to which we are unexpectedly exposed can matter. Particularly when these exposures take place in the context of relationships with long durations or ones in which there are notable status or experience differentials between partners, chance exposures can fundamentally change individuals' points of view. In long running, asymmetric relationships (such as those between protégés and advisers), the length of interaction provides ample opportunity for the standard pathways of influence to take hold. And when these experiences occur in the process of professional development as seen in this study, they may result in turning points that reorient actors' career trajectories. Such partially deliberate matching may permeate the sociology of the economy, as many social relationships in market contexts arise from a limited set of economic imperatives, but subsequently become pipelines for social influence. Closed for comment; 0 Comments.
- 20 May 2009
- Working Paper Summaries
On Good Scholarship, Goal Setting, and Scholars Gone Wild
When confronted by anecdotal evidence and some causal evidence, how should scholars—and indeed businesses and society—react? In this response to a critique in the journal Academy of Management Perspectives, the authors articulate the aims of their article "Goals Gone Wild: How Goals Systematically Harm Individuals and Organizations," describe points of disagreement with the critics, offer a definition of good scholarship, and suggest a program of research for future studies of goal setting. Key concepts include: Future research should investigate both the constructive and harmful effects of goals. These studies will require new and creative approaches. Anecdotal evidence matters. Given that one large negative effect can overwhelm the influence of many positive effects, anecdotes and empirical results linking goals with harmful outcomes deserve more attention and systematic research. As financial crises, Ponzi schemes, and the collapse of the automotive industry demonstrate, the combination of unethical behavior, risk-taking and poor judgment can be toxic. Three areas of research with significant prospects for illuminating potential problems are the links between goal setting and unethical behavior, goal setting and excessive risk-taking, and goal setting and judgment. Closed for comment; 0 Comments.
- 16 Apr 2009
- Working Paper Summaries
Phenomenological Assumptions and Knowledge Dissemination within Organizational Studies
Field-wide integration of knowledge generated by subfield specialists is critical for new discoveries and for a more comprehensive and accurate understanding of complex phenomena. In spite of the value of broadly disseminating knowledge within the social and physical sciences, scholarly discourse tends to be contained within subfields of research. Further constraining innovation and understanding, knowledge dissemination between academics and practitioners or clinicians is often limited and inaccurate. In this article, UCLA professor Corinne Bendersky and HBS professor Kathleen L. McGinn introduce "phenomenological assumptions"—revealed beliefs about the fundamental qualities of the phenomenon under investigation and its relationship to the environment in which it occurs—as barriers limiting the integration of knowledge generated within a subfield into the broader intellectual discourse of its field. Key concepts include: Explicating assumptions underlying academic research may make new information more transparent and easily adopted. Assumptions can pose a barrier limiting the integration of knowledge generated within a subfield into the broader intellectual discourse of its field. Specifically, assumptions that negotiations are one-shot "at the table" interactions make it more difficult for non-negotiations organizational scholars to recognize and appreciate the relevance of the findings to broader organizational research. The negotiation studies in this data set, spanning 15 years of published research in top-tier journals, seldom were explicit about the assumptions made and seldom acknowledged reasonable boundary conditions for their findings. Closed for comment; 0 Comments.
- 19 Mar 2009
- Working Paper Summaries
Beyond Gender and Negotiation to Gendered Negotiations
How does gender affect negotiations within organizations or rather how do organizations affect gender relations? Deborah Kolb, a professor at Simmons College School of Management, and HBS professor Kathleen McGinn explore how definitions of work, specified roles in organizations, status hierarchies, and the politics and practices of organizational realities affect how gender plays out in organizations. Considering gender in organizations from a "negotiated order perspective"—that is, from the perspective that cultural patterns and work practices are the result of past interaction and negotiation—not only expands the range of issues that are potentially negotiable, it also turns attention to rethinking certain dimensions of the negotiation process itself. Key concepts include: Following recent scholarship, the authors distinguish between "first generation" gender discrimination involving intentional acts of bias from "second generation" gender issues, practices that are embedded in organizational workings, that seem unbiased in isolation, but result in different experiences for and treatment of women and men. Certain roles may be deemed more suitable to men than women and vice versa, setting up the need to negotiate for opportunities and fit. A woman's effectiveness as a leader, and the authority she can claim, is often judged differently from that of her male counterparts. Access to networks and flexible work arrangements give rise to the need to negotiate and this need often falls along gendered lines. Closed for comment; 0 Comments.
- 20 Feb 2009
- Working Paper Summaries
When Does Domestic Saving Matter for Economic Growth?
The researchers begin with a simply stated question: Can a country grow faster by saving more? Long-run growth theories imply that a country can grow faster by investing more in human or physical capital or in R&D, but that a country with access to international capital markets cannot grow faster by saving more. Domestic saving is therefore not considered an important ingredient in the growth process because investment can be financed by foreign saving. From the point of view of standard growth theory, the positive cross-country correlation between saving and growth that many commentators have noted appears puzzling. HBS professor Diego Comin and colleagues develop a theory of local saving and growth in an open economy with domestic and foreign investors. Key concepts include: Domestic saving is more critical for adopting new technologies in developing rather than developed economies. Familiarity with the technology frontier reduces its cost of adoption. Advanced countries readily adopt the frontier technology, but for countries far from the technology frontier, it is too expensive to adopt such technology without outside help. Entrepreneurs in these countries need to rely on foreign investors. However, domestic entrepreneurs may not deliver on their input contribution unless they have invested sufficient capital in the project. This co-investment is in turn financed out of domestic saving, highlighting the role of domestic saving in economic growth. Closed for comment; 0 Comments.
- 19 Feb 2009
- Working Paper Summaries
Dishonest Deed, Clear Conscience: Self-Preservation through Moral Disengagement and Motivated Forgetting
Why do people engage in unethical behavior repeatedly over time? In Everybody Does It! (1994), Thomas Gabor documents the pervasive immorality of ordinary people. Challenging the stereotype that only criminals violate the law, Gabor describes the numerous transgressions of everyday life and suggests that the excuses people make for their dishonest behavior parallel the justifications criminals make for their crimes. This common tendency of people to justify and distance themselves from their unethical behavior has captured the attention of several psychologists, and a long stream of research has documented differences in the way people think about their own ethical behavior and that of others. Harvard Business School's Lisa Shu and Max Bazerman, with colleague Francesca Gino, show that seemingly innocuous aspects of the environment can promote the decision to act ethically or unethically. Key concepts include: Once people behave dishonestly, they are able to morally disengage, setting off a downward spiral of future bad behavior and ever more lenient moral codes. However, this slippery slope can be forestalled with simple measures, such as honor codes, that increase people's awareness of ethical standards. Moral disengagement is not always a necessary condition leading to dishonesty, but it may in fact result from unethical behavior. The decision to behave dishonestly changes levels of moral disengagement, and the awareness of ethical standards affects the decision to engage in unethical behavior. Closed for comment; 0 Comments.
- 17 Feb 2009
- Research & Ideas
What’s Good about Quiet Rule-Breaking
If your company quietly allows employees to break some rules with the tacit approval of management, that's a moral gray zone. And your company is not alone. When rules are broken but privileges are not abused, such unspoken pacts between workers and management can allow both to achieve their respective goals of expressing professional identity and sustaining efforts in positive ways, says HBS professor Michel Anteby. Q&A Key concepts include: Moral gray zones in organizations rely on trust. Even if monitoring of employees increases, such gray zones are here to stay. Moral gray zones test middle management's ability to manage and to prevent abuses of mutual trust. Strong communities within occupations provide the unstated but necessary guidelines to ensure proper use of moral gray zones. Closed for comment; 0 Comments.
- 03 Dec 2008
- What Do You Think?
Can Housing and Credit be “Nudged” Back to Health?
Did human frailty cause this crisis? Several thinkers have come forward with a suggestion for improvements to fiscal policy that are based on fostering better decisions while preserving consumer choice, says HBS professor Jim Heskett. What should be done? What do you think? (Online forum now closed. Next forum begins January 7.) Closed for comment; 0 Comments.
- 17 Nov 2008
- Research & Ideas
Decoding the Artful Sidestep
Do you notice when someone changes the subject after you ask them a question? If you don't always notice or even mind such conversational transformations, you're not alone. New research by Todd Rogers and Harvard Business School professor Michael I. Norton explores the common occurrence of "conversational blindness." Q&A with Rogers. Key concepts include: In the study, speakers who dodged a question suffered no ill will from their listeners and paid no price. People prefer, trust, and like a question-dodger who is smooth and sounds confident over a question-answerer who is unsmooth and stammers. If you're a listener who wants to avoid conversational blindness on important matters, here's a tip: Remember your question. Closed for comment; 0 Comments.
- 15 Oct 2008
- Working Paper Summaries
The Artful Dodger: Answering the Wrong Question the Right Way
Individuals frequently attempt to avoid questions they do not want to answer, from politicians dodging reporters' requests to clarify their position on when life begins, to employees sidestepping their bosses' questions as to why they are late for the third straight day. Rogers, a recent PhD grad from HBS, and Norton, an assistant professor in the Marketing unit, suggest that when faced with unwanted queries, question-dodgers sometimes exploit conversational blindness—a phenomenon whereby listeners fail to notice when speakers respond to a different question than the one they are asked—by responding with answers that seem to address the question asked, but which in fact address an entirely different question. In the context of political debates, two studies demonstrate conversational blindness, exploring both the conditions that impact the likelihood of such dodges going unnoticed, and how speakers' successful—and failed—attempts to capitalize on conversational blindness impact listeners' opinions of them. Key concepts include: Conversational blindness occurs in part because real-world conversations occur as a continuous ebb and flow, leaving little time for people to reflect on how every statement links to each previous statement. A successful dodge occurs when a speaker's answer to the wrong question is so compelling that the listener both forgets the right one, and rates the dodger positively. In some cases, speakers end up better off by answering the wrong question well rather than the right question poorly. These results add to the growing literature on people's surprising unawareness to changes in their environment. Closed for comment; 0 Comments.
- 09 Oct 2008
- Working Paper Summaries
Dirty Work, Clean Hands: The Moral Psychology of Indirect Agency
When powerful people do morally questionable things, they rarely interact directly with their putative victims. Mobsters have hit men. CEOs have vice presidents, lawyers, and accountants. More specifically, the powerful are likely to carry out their intentions through the actions of other agents, with varying degrees of explicit direction and control. This working paper describes four studies that explore the effects of such "indirect agency" on moral judgment. Key concepts include: Results of these studies suggest that heightened awareness of people's sometimes dubious motivations for acting indirectly, and the organizational structures that facilitate them, may be a useful safeguard against the abuse of power. Acting indirectly through another can hide the fact that one has caused harm, hide the fact that one knowingly chose to cause harm, and hide the extent of one's control over the harmful outcome. Causing harm indirectly through another can protect harm-doers, and thus harm society in a more subtle and insidious way. This is important to know, given that many of the greatest crimes against society are perpetrated by powerful people who carry out their intentions through others. Closed for comment; 0 Comments.
- 02 Oct 2008
- Working Paper Summaries
Nameless + Harmless = Blameless: When Seemingly Irrelevant Factors Influence Judgment of (Un)ethical Behavior
Most of us regularly make ethical judgments about others' behavior and make decisions regarding whether or not to punish others' unethical behavior. Although many of us know how we would rationally like to behave in these situations, little prior research has explored the systematic errors we commit in the process of evaluating others' unethical behavior and acting upon it. The present research by Gino, Shu, and Bazerman focuses on the effects of both the outcome of unethical acts and the identifiability of the victim of wrongdoing on ethical judgments and decisions to punish unethical behavior. Key concepts include: The decision to withhold or disclose information about the victims and outcomes of a behavior can be a powerful determinant of the ethical perception of that behavior. Decision-makers should anticipate being judged less for the ethics of their actions than for the consequences of those actions and the identifiability of the victim of their wrongdoing. No matter how ethical the decisions of a manager or a company may be, judges (such as customers, citizens, or employees) might punish the manager or company if things go wrong or if the victims are clearly identified. Closed for comment; 0 Comments.
- 28 Aug 2008
- Working Paper Summaries
How Can Decision Making Be Improved?
While scholars can describe how people make decisions, and can envision how much better decision-making could be, they still have little understanding of how to help people overcome blind spots and behave optimally. Chugh, Milkman, and Bazerman organize the scattered knowledge that judgment and decision-making scholars have amassed over several decades about how to reduce biased decision-making. Their analysis of the existing literature on improvement strategies is designed to highlight the most promising avenues for future research. Key concepts include: People put great trust in their intuition. The past 50 years of decision-making research challenges that trust. A key task for psychologists is to identify how and in what decision-making situations people should try to move from intuitive, emotional thinking to more deliberative, logical thinking. The more that researchers understand the potentially harmful effects of some biased decision-making, the more important it is to have empirically tested strategies for reaching better decisions. Closed for comment; 0 Comments.
- 14 Aug 2008
- Working Paper Summaries
The Agglomeration of U.S. Ethnic Inventors
The higher concentration of immigrants in certain cities and occupations has long been noted. There has been very little theoretical or empirical work to date, however, on the particular agglomeration of U.S. immigrant scientists and engineers. This scarcity is disappointing given the scale of these ethnic contributions and the importance of innovation to regional economic growth. William R. Kerr's study contributes to our empirical understanding of agglomeration and innovation by documenting patterns in the city-level agglomeration of ethnic inventors (e.g., Chinese, Indian) within the United States from 1975 through 2007. It is hoped that the empirical platform developed in this study provides a foothold for furthering such analyses. Key concepts include: Ethnic scientists and engineers are an important and growing contributor to U.S. technology development. The Chinese and Indian ethnicities, in particular, are now an integral part of U.S. invention in high-tech sectors. The data collected and analyzed in this research document with greater detail than previously available the powerful growth in U.S. Chinese and Indian inventors during the 1990s. These ethnic inventors also became more spatially concentrated across U.S. cities. The combination of such growth and concentration helps stop and reverse long-term declines in overall inventor agglomeration evident in the 1970s and 1980s. Closed for comment; 0 Comments.
- 02 Jun 2008
- Research & Ideas
Spending on Happiness
Money can't buy love but it can buy happiness—as long as it's spent on someone else. Research by Michael I. Norton and colleagues looks into how and why spending on others promotes happiness. Closed for comment; 0 Comments.
- 19 May 2008
- Research & Ideas
Connecting School Ties and Stock Recommendations
School connections are an important yet underexplored way in which private information is revealed in prices in financial markets. As HBS professor Lauren H. Cohen and colleagues discovered, school ties between equity analysts and top management of public companies led analysts to earn returns of up to 5.4 percent on their stock recommendations. Cohen explains more in our Q&A. Closed for comment; 0 Comments.
In Favor of Clear Thinking: Incorporating Moral Rules into a Wise Cost-Benefit Analysis
Policy decisions may be the most important set of decisions we make as a society. In this realm, moral rules often play an active and dysfunctional role. The typical way in which we make decisions—by weighing them individually—leads us to overuse moral rules in a manner that is inconsistent with the more reflective set of preferences we would identify through joint consideration of options. In their response to a companion article in Perspectives on Psychological Science, Max Bazerman, of HBS, and Joshua D. Greene, of Harvard University, argue that cost-benefit analysis (CBA) is unfairly stereotyped. The critique of CBA in the companion article could be better framed as a set of considerations that can contribute to more careful CBAs. Key concepts include: Good decision analysts pay attention to potential misapplications of cost-benefit analysis. CBA is not perfect, for many reasons. But CBA needs to be compared against an alternative, and the development of that alternative thus far is limited. Closed for comment; 0 Comments.