Hightechfever.tv is a live, weekly Cambridge local access TV show that focuses on entrepreneurship and technology. Despite its humble profile the show pulls in an amazingly great range of guests due to, MIT lecturer and host, Joost Bonsen’s extensive network. On September 10th I sat down with Joost to discuss several judgment and decision-making topics including behavioral economics, prospect theory, anchoring, and cognitive reflection testing. Prominent scholars mentioned include Kahneman, Tversky, Ariely, Prelec, Loewenstein, Frederick, and Thaler. The Youtube link above shows the most relevant segment of the interview.
Tuesday, September 30, 2008
Sunday, September 21, 2008
(Above: Mooby the Golden Calf Idol)
Who is an iconoclast in this context? As Berns puts it, iconoclasts are those rare individuals that have “truly novel ideas that tear down existing ways of thought and put something new in its place.” Obviously, most people are not iconoclasts. Professor Berns gives one explanation for this rarity by pointing to brain physics and psychology’s efficiency principle. Our brains have limited hardware. For example, the human brain apparently gets by on only 40 Watts of energy. Similarly limited, the bandwidth of the human eye is slower than a cable modem at only 10MBs per second (from researchers at my dear old Penn. The show claimed 1MB/s). To function on such limited capacity we need to use thinking short cuts; however, to be creative the brain has to get out of this efficiency mode. Iconoclasts have this capability and exercise it.
One of the show’s callers, a fan of Harvard’s E. O. Wilson, provided the additional insight that iconoclastic behavior in animals tends to get them killed. For example, the maverick iconoclast in a school of fish that turns right when everyone else turns left is the one most likely to be eaten. Evolution itself is against iconoclasts.
Nonetheless, at a cultural level (Ashbrook’s one good comment) we value iconoclasts (or at least we think we do) and many of us want to be one. Berns spends most of the show explaining three primary factors related to iconoclasm and innovation along with a few hints at how to enhance your own iconoclastic behavior.
1) Perception: The mental images in our imagination are usually based on past experiences. It takes novel stimuli and juxtaposition to trigger the perception shift necessary for new thought.
2) Fear: As Berns puts it, the “fear of loosing the status quo is one of the greatest inhibitors of change and innovation.” To be an iconoclast you must suppress fear. Fear resides in the amygdala and Berns believes its impact can be overridden by conscious thought. “Cognitive Reappraisal” can control fear by reframing the view of the problem.
3) Social Intelligence: To be a proper iconoclast you have to be able to sell your ideas. People don’t like change so iconoclasts have to sell them on changing their minds.
One could question this list. Does an iconoclast really need all three of these abilities? An organization could exhibit iconoclastic behavior without any one individual who possesses all these abilities. For instance, a creative genius coward could be paired with a fearless leader spokesperson with the social intelligence to sell the ideas. In practice this too seems a rare combination yet it is not clear how Berns’s observation apply at the organizational behavior level. Iconoclastic behavior of teams seems like a great topic for further research.
Friday, September 19, 2008
As discussed previously, research by Christopher Hsee describes how people incorporate unjustifiable information into their decision-making. The vast majority of people do not want to see themselves as making unethical decisions. As such, Hsee’s hypothesis is that people will only incorporate unjustifiable information when the decision-weighting of the justifiable information is vague and elastic. Unjustifiable information is thus incorporated indirectly and subconsciously through readjusting the weighting of the justifiable information. People thereby make unjustified decisions yet preserve their self image as ethical and just.
As an example of the phenomenon, one of Hsee’s studies uses a scenario involving a condo appraiser who, for different subject groups, is motivated either to deflate or inflate the valuation of a property. Their motivation derives from an unjustifiable conflict of interest where the condo seller/buyer is actually the fiancée of the appraiser. Hsee shows that appraisers only inflate/deflate values when there is substantial elastic wiggle room in how the appraiser evaluates the justifiable attributes of the apartment like age of the appliances, carpeting, etc. and that they do not make biased assessments when the attribute weightings are not subjective.
Hsee’s experimental results and those of others seem to strongly support this theory and it is very likely correct. However, let’s consider an alternative explanation centered on motivated forgetting. First, grant the assumption that people do not want to consider themselves as unjust. Next, assume decision subjects are at least conscious of the temptation to incorporate unjustifiable information. I believe Hsee would agree with this awareness. However, motivated forgetting goes further to suggest that at the time of the decision subjects are consciously aware of their incorporation of unjustified information. These subjects are conscious of their transgression yet are careful to lay out a logical story of how the same conclusion could be reached using only justifiable information. The story may partially be constructed to explain the decision to others but the story serves a larger purpose for the decision maker himself. After the story is created the subject very promptly and conveniently forgets the true basis of their decision. Then, if necessary at some future point, they can follow the story like “breadcrumbs of self-deception” to retain their world view as a just individual. Like Hsee, the motivated forgetting approach assumes subjects will only incorporate unjustifiable information when a decision biased by motive can be justified based on a manipulation of the justifiable information. This is because without sufficient nuggets of justifiable information to weave a breadcrumb story around, the motivated forgetting mechanism would not function. Subjects know when they would not be able to fool themselves.
As a theory, motivated forgetting seems to add little value here as it predicts the same outcomes as Hsee’s elasticity hypothesis. Also, in practice it would be extremely difficult to verifiably demonstrate that motivating forgetting is occurring. Perhaps someone brighter than me will have an idea for a good experiment.
Wednesday, September 17, 2008
Several weeks ago I met with Columbia University Marketing Professor Leonard Lee. Over a fantastic pistachio milkshake at Tom’s Café (of Seinfeld fame), we got on the topic of moral decision-making research. Leonard suggested that I read an older paper by Chicago Professor Christopher Hsee. The paper, “Elastic justification: How unjustifiable factors influence judgments,” describes how unjustifiable information can subconsciously creep into the decision-making process. To summarize, Hsee breaks information into two primary categories:
- Justifiable: Information that is directly relevant to the judgment being made by the accepted criteria of the decision-maker (e.g. a candidate’s experience)
- Unjustifiable: Information the decision-maker may wish to take into consideration but that he knows, by the criteria of what is acceptable, should not come to bear on the decision. (e.g. a candidate’s race or sex)
Hsee’s studies show that decision-makers do not include unjustifiable information in their decisions except under certain conditions relating to the JUSTIFIABLE information. The degree of "elasticity" in how to weigh the justifiable factors determines how much influence the unjustifiable information has on the judgment. If the importance weighting assigned to various justifiable attributes is clearly defined and fixed (inelastic), unjustifiable information does not influence the decision. However, if the weighting is vague and open to interpretation (elastic), unjustifiable information will influence the decision by reweighting the importance of the justifiable factors. Since past literature shows that people try to make justified decisions and line up consistent facts/evidence for those decisions, Hsee concludes that people do not knowingly incorporate unjustifiable information. The process is subconscious.
The paper’s findings stand out because they are contrary to normative decision theory which would not recognize a split between justifiable and unjustifiable information. Instead, the normative approach takes in all information, assigns each factor a relevant weight according to its probable utility impact, and concludes with the utility maximizing decision (see for example Jon Baron’s work on Multi-Attribute Utility Theory). In contrast, Hsee’s work shows that decision-makers exclude unjustifiable information in certain cases. Reweighting utility impact for a given factor is also non-normative.
In the paper Hsee sites three historical studies as evidence as well as two of his own. It is the second of Hsee’s studies with which I take some issue. In this second study subjects were given a “language intuition test” by which they were asked to select from a multiple choice list the meaning of unfamiliar Chinese characters. 20 questions were asked of each subject, only 10 of which counted towards a total score. Subject later self reported their score with a financial incentive for higher scores. Hsee suggests that two factors would influence the self reported score: 1) actual performance and 2) desire to report a high score for the financial incentive. He then asserts that the former is a justifiable factor and the later is unjustifiable and also predicts that the degree of elasticity in the grading process will determine the amount the unjustifiable factor will influence scores upward. In the inelastic condition subjects were asked to score only odd numbered questions. In the elastic condition, scores were based on the subject’s evaluation of the “ying/yang nature of the symbols” – a highly vague and subjective approach. Subjects were to count the 10 questions whose symbols they found to be the most “yang” in nature. As anticipated, subjects in the elastic condition reported higher overall scores.
Unfortunately the study design does not seem well suited as a test of Hsee’s theory. I do not believe it is possible to determine whether or not subjects are indirectly incorporating unjustifiable information by reweighting the justifiable or merely directly incorporating their “unjustifiable” desire for a high score. In fact, in the elastic condition there is not a justifiable method of selection provided to subjects at all. How does one justifiably assess the “yangness” of a character? Faced with a process such as this one it is no surprise that subjects did not feel unjustified in selecting questions that they happened to get right as yang characters. The the yangness approach may break a social contract with the subjects, allowing them to have free reign in “cheating” on their scoring. One might ask what the selection process of students who did not wish to cheat would have looked like. The study would be better formed if it provided a subjective yet seemingly justifiable procedure for selection.
I do not wish to discard the entire paper based on Study #2. Hsee has a very interesting theory with significant merit conferred by the other studies. There are also some very interesting additional questions the follow from the study. Further research seem warranted to answer the following:
- Can we evaluate the specific weighting assigned by subjects to justifiable factors? For example in Hsee’s study #1 involving real estate appraisal, what relative weights do subjects place on living room size, appliances, carpets, etc?
- Can we demonstrate that the weight assigned to a specific factor changed? For instance can we demonstrate that subjects specifically reweighted the value of good appliances relative to carpets as a means to indirectly incorporate unjustifiable factors? Perhaps this can be solicited by asking subjects to assign numeric weightings or at least by rank ordering the importance of the factors.
- How might we prove/disprove that this process takes place subconsciously? Perhaps subjects instead make conscious decisions and then use a purposeful forgetting/self-deception mechanism to remain justified in their own eyes – (more forthcoming on a "breadcrumbs of self-deception" idea). There would seem to be significant moral implications if this is a conscious process.