We want others to find us good, fair, responsible and logical; and we place even more importance on thinking of ourselves this way. Therefore, when people behave in ways that might appear selfish, prejudiced, or perverted, they tend to engage a host of strategies designed to justify questionable behavior with rational excuses: "I hired my son because he's more qualified." "I promoted Ashley because she does a better job than Aisha." Or, "I read Playboy for the articles." In this chapter from a forthcoming book, HBS doctoral student Zoë Chance and professor Michael I. Norton describe various means of coping with one's own questionable behavior: through preemptive actions and concurrent strategies for re-framing uncomfortable situations, forgoing decisions, and forgetting those decisions altogether.
The art and science of negotiation has evolved greatly over the past three decades, thanks to advances in the social sciences in collaboration with other disciplines and in tandem with the practical application of new ideas. In this paper, HBS doctoral student Chia-Jung Tsay and professor Max H. Bazerman review the recent past and highlight promising trends for the future of negotiation research. In the early 1980s, Cambridge, Massachusetts, was a hot spot on the negotiations front, as scholars from different disciplines began interacting in the exploration of exciting new concepts. The field took a big leap forward with the creation of the Program on Negotiation, an interdisciplinary, multicollege research center based at Harvard University. At the same time, Roger Fisher and William Ury's popular book Getting to Yes (1981) had a pronounced impact on how practitioners think about negotiations. On a more scholarly front, a related, yet profoundly different change began with the publication of HBS professor emeritus Howard Raiffa's book The Art and Science of Negotiation (1982), which for years to come transformed how researchers would think about and conduct empirical research.
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.
Published in 2008
The Gambler's Fallacy refers to the belief that chance is a self correcting process. The longer the random run of one outcome, the stronger the belief that the opposite outcome is due to appear. This paper asks whether the way we acquire information, by sequential experience or by simultaneous description, plays a critical role in the emergence of the bias in a binary prediction task (betting on red or black roulette outcomes, for example). The results show that the fallacy only occurs when decision makers experience outcomes over time and not when past outcomes are revealed all at once. The question is interesting since several recent papers on decisions from experience and descriptions suggest that the way people acquire information can have a significant effect on behavior.
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.
Managers of the ABRY Fund V were so successful they had investors waiting to pour in an additional $3 billion. But to invest that much would require trade-offs that could jeopardize the chemistry that made the fund successful in the first place. Take the money or walk away? From HBS Bulletin.
Online forum closed. Summing Up. According to Gerald and Lindsay Zaltman, nearly all research techniques commonly used today probe humans only at their conscious level, though it is the subconscious level that really determines behavior.
This paper considers allocation and bargaining problems, and introduces conditions that one might expect fair procedures to satisfy. However, not all conditions one might hope for can be satisfied simultaneously. Furthermore, some apparently plausible and widely proposed axioms and procedures have consequences whose undesirability clearly goes far beyond what can be excused in this way. Thus pitfalls lurk in the field of fair division.
Earnings management behavior may be divided into two categories: 1) the opportunistic exercise of accounting discretion; and 2) the opportunistic structuring of real transactions.
This paper focuses on the latter by providing evidence that managers use retail-level marketing actions (price discounts, feature advertisements, and aisle displays) to influence the timing of consumers' purchases in relation to their firms' fiscal calendars and financial performance. The results will be of interest to practitioners negotiating with suppliers as well as those responsible for setting price and promotion strategy in response to competitor actions, and practitioners responsible for designing incentive-based compensation as well as regulators monitoring reporting of fiscal period-ending promotion.
How do chief executives establish strategic practices around their visions and intents? How do such practices make it possible to create both high commitment and high performance? The central puzzle for HBS professor emeritus Michael Beer and colleagues is not the creation of high commitment per se, but the kind of commitment that is useful for the implementation of strategy and sustainable performance. Beer et al. sought out major companies in North America and Europe that had a history of sustainable, above-average financial performance, and where there were indications of the companies being high-commitment organizations. They then conducted in-depth interviews with 26 CEOs of such companies, asking about activities and practices that help create commitment and performance.
Online forum now closed. For managers, sustainability can mean the integration and intersection of social, environmental, and economic responsibilities. The concept is admirable, says Jim Heskett, but does it also confuse managers entrusted with the bottom line? How should they make trade-offs? Jim sums up reader responses.
Published in 2007
"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.
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.
"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.
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.
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.
Published in 2006
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.
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.
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.
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.
