Human behavior and decision-making

Human behavior and decision-making is a featured research topic at Harvard Business School.
 
Ever since their origins about three decades ago, the Behavioral Science areas of economics, ethics and managerial psychology have been rapidly evolving. In the 1980's and 1990's, early work by Max Bazerman in judgment and negotiation, Matthew Rabin in behavioral economics, and James Sebenius in negotiations was instrumental in shaping research on Human Behavior & Decision-Making. Today, our research focuses on individual and interactive judgment and decision making and explores the role of personal bias, cognition and learning, time, perception, ethics and morality, and emotion.  
  1. Task Selection and Workload: A Focus on Completing Easy Tasks Hurts Long-Term Performance

    Diwas S. KC, Bradley R. Staats, Maryam Kouchaki and Francesca Gino

    How individuals manage, organize, and complete their tasks is central to operations management. Recent research in operations focuses on how under conditions of increasing workload individuals can increase their service time, up to a point, in order to complete work more quickly. As the number of tasks increases, however, workers may also manage their workload by a different process – task selection. Drawing on research on workload, individual discretion, and behavioral decision making we theorize and then test that under conditions of increased workload individuals may choose to complete easier tasks in order to manage their load. We label this behavior Task Completion Bias (TCB). Using two years of data from a hospital emergency department we find support for TCB and also show that it improves short-term productivity. However, although it improves performance in the short-term we find that an overreliance on this task selection strategy hurts performance – as measured both by speed and revenue – in the long run. We then turn to the lab to replicate conceptually the task selection effect and show that it occurs due to the positive feelings individuals get from task completion. These findings provide an alternative mechanism for the workload-speedup effect from the literature. We also discuss implications for both research and the practice of operations in building systems to help people succeed in both the short and long run.

    Citation:

    KC, Diwas S., Bradley R. Staats, Maryam Kouchaki, and Francesca Gino. "Task Selection and Workload: A Focus on Completing Easy Tasks Hurts Long-Term Performance." Harvard Business School Working Paper, No. 17-112, June 2017. View Details
  2. Profits and Sustainability: A History of Green Entrepreneurship

    G. Jones

    This book explores the question whether profits and sustainability are compatible through the lens of a history of green entrepreneurship worldwide between the nineteenth century and today. It tells the story of the extraordinary and often eccentric men and women who defied convention and imagined that business could help save the planet, rather than consume it. The social and religious beliefs that drove many of these individuals are explored, as the book looks at how they overcame huge obstacles to execute their strategies in industries as diverse as renewable energy, organic food, natural beauty, eco-tourism, recycling, architecture, and finance. The pioneering efforts to build certification schemes and environmental reporting are examined, alongside the contested relationship between green business and governments. The struggles of early pioneers appear to have been rewarded by the growth of environmental awareness among consumers, business leaders, and others in recent years, but the Earth's environmental health continues to deteriorate. If profits and sustainability have proved challenging to reconcile, the book argues that one reason was how they were both defined.

    Keywords: Environmental Entrepreneurship; business history; Green Business; sustainability; Entrepreneurship; Ethics; Business History; Religion; Environmental Sustainability; Agriculture and Agribusiness Industry; Banking Industry; Beauty and Cosmetics Industry; Consumer Products Industry; Alternative Energy Industry; Financial Services Industry; Food and Beverage Industry; Green Technology Industry; Tourism Industry; Africa; Asia; Europe; Latin America; North and Central America; Oceania;

    Citation:

    Jones, G. Profits and Sustainability: A History of Green Entrepreneurship. New York: Oxford University Press, 2017. View Details
  3. Repositioning and Cost-Cutting: The Impact of Competition on Platform Strategies

    Robert Seamans and Feng Zhu

    Organizational structures are increasingly complex. In particular, more firms today operate as multi-sided platforms. In this paper, we study how platform firms use repositioning and cost-cutting in response to competition, elucidate external and internal factors that constrain or enable these responses, and examine how the firms’ responses affect their performance. Our empirical context is the U.S. newspaper industry, which has experienced increased competition following the entry of Craigslist, an online provider of classified ads. We find that when Craigslist enters a newspaper’s market, the newspaper repositions itself away from other newspapers by changing its content. This results in greater differentiation between newspapers in a market but occurs primarily in markets in which reader preferences are heterogeneous. When reader preferences are homogeneous, newspapers are more likely to engage in cost-cutting. Both responses are more pronounced for newspaper firms whose sister firms have already experienced Craigslist’s entry. We also find that failure to design the right response harms competitive viability. These findings offer important implications for many platform firms operating in today’s digital economy.

    Keywords: multi-sided platforms; platform strategy; repositioning; cost-cutting; intra-firm learning; Multi-Sided Platforms; Cost Management; Product Positioning; Organizational Structure; Competitive Strategy; Knowledge Acquisition; Journalism and News Industry;

    Citation:

    Seamans, Robert, and Feng Zhu. "Repositioning and Cost-Cutting: The Impact of Competition on Platform Strategies." Strategy Science 2, no. 2 (June 2017): 83–99. View Details
  4. The Surprising Effectiveness of Hostile Mediators

    Ting Zhang, Francesca Gino and Michael I. Norton

    Contrary to the tendency of mediators to defuse negative emotions between adversaries by treating them kindly, we demonstrate the surprising effectiveness of hostile mediators in resolving conflict. Hostile mediators generate greater willingness to reach agreements between adversaries (Experiment 1). Consequently, negotiators interacting with hostile mediators are better able to reach agreements in incentive-compatible negotiations than those interacting with nice mediators (Experiments 2). By serving as common enemies, hostile mediators cause adversaries in conflict to feel more connected and become more willing to reach agreement (Experiments 3 and 4). Finally, we manipulate the target of mediators’ hostility to document the moderating role of common enemies: mediators who directed their hostility toward both negotiators (bilateral hostility)—becoming a common enemy—increased willingness to reach agreement; those who directed hostility at just one negotiator (unilateral hostility) did not serve as common enemies, eliminating the hostile mediator effect (Experiment 5). We discuss theoretical and practical implications and suggest future directions.

    Keywords: mediation; conflict; negotiation; emotions; hostility; Negotiation Style; Emotions; Conflict and Resolution;

    Citation:

    Zhang, Ting, Francesca Gino, and Michael I. Norton. "The Surprising Effectiveness of Hostile Mediators." Management Science 63, no. 6 (June 2017): 1972–1992. View Details
  5. Blunted Ambiguity Aversion During Cost-Benefit Decisions in Antisocial Individuals

    Joshua W. Buckholtz, Uma R. Karmarkar, Shengxuan Ye, Grace M. Brennan and Arielle Baskin-Sommers

    Antisocial behavior is often assumed to reflect aberrant risk processing. However, many of the most significant forms of antisocial behavior, including crime, reflect the outcomes of decisions made under conditions of ambiguity rather than risk. While risk and ambiguity are formally distinct and experimentally dissociable, little is known about ambiguity sensitivity in individuals who engage in chronic antisocial behavior. We used a financial decision-making task in a high-risk community-based sample to test for associations between sensitivity to ambiguity, antisocial behavior, and arrest history. Sensitivity to ambiguity was lower in individuals who met diagnostic criteria for Antisocial Personality Disorder. Lower ambiguity sensitivity was also associated with higher externalizing (but not psychopathy) scores and with higher levels of aggression (but not rule breaking). Finally, blunted sensitivity to ambiguity also predicted a greater frequency of arrests. Together, these data suggest that alterations in cost-benefit decision-making under conditions of ambiguity may promote antisocial behavior.

    Keywords: ambiguity; neuroscience; Neuroeconomics; choice; psychology; Decision choice and uncertainty; Behavior; Decision Choices and Conditions; Cost vs Benefits; Health Disorders;

    Citation:

    Buckholtz, Joshua W., Uma R. Karmarkar, Shengxuan Ye, Grace M. Brennan, and Arielle Baskin-Sommers. "Blunted Ambiguity Aversion During Cost-Benefit Decisions in Antisocial Individuals." Art. 2030. Scientific Reports 7 (2017). View Details
  6. Predicting Consumer Tastes with Big Data at Gap

    Ayelet Israeli and Jill Avery

    CEO Art Peck was eliminating his creative directors for The Gap, Old Navy, and Banana Republic brands and promoting a collective creative ecosystem fueled by the input of big data. Rather than relying on artistic vision, Peck wanted the company to use the mining of big data obtained from Google Analytics and the company’s own sales and customer databases to select the next season’s assortment. Peck was betting that intelligence fueled by big data could outperform a fashion industry creative director at predicting the future fashion trends and tastes of consumers.

    Keywords: marketing; marketing strategy; retailing; brands and branding; consumer behavior; Preference elicitation; big data; predictive analytics; artificial intelligence; e-commerce; fashion; Marketing; Marketing Strategy; Marketing Channels; Brands and Branding; Consumer Behavior; Demand and Consumers; Data and Data Sets; Forecasting and Prediction; Apparel and Accessories Industry; Consumer Products Industry; Fashion Industry; Retail Industry; United States; Canada; North America;

    Citation:

    Israeli, Ayelet, and Jill Avery. "Predicting Consumer Tastes with Big Data at Gap." Harvard Business School Case 517-115, May 2017. View Details
  7. Expressive Voting and Its Cost: Evidence from Runoffs with Two or Three Candidates

    Vincent Pons and Clémence Tricaud

    In French parliamentary and local elections, candidates ranked first and second in the first round automatically qualify for the second round, while a third candidate qualifies only when selected by more than 12.5% of registered citizens. Using a fuzzy RDD around this threshold, we find that the third candidate attracts both “switchers,” who would have voted for one of the top two candidates if she were not present, and “loyal” voters, who would have abstained. Switchers vote for the third candidate even when she is very unlikely to win. This disproportionately harms the candidate ideologically closest to her and causes his defeat in one fifth of the races. These results suggest that a large fraction of voters value voting expressively over behaving strategically to ensure the victory of their second best. We rationalize our findings by a model in which different types of voters trade off expressive and strategic motives.

    Keywords: Expressive voting; Strategic voting; regression discontinuity design; French elections; Voting; Political Elections; Behavior; France;

    Citation:

    Pons, Vincent, and Clémence Tricaud. "Expressive Voting and Its Cost: Evidence from Runoffs with Two or Three Candidates." Harvard Business School Working Paper, No. 17-107, May 2017. View Details
  8. Vicki Fuller: Chief Investment Officer of New York State's $150+ Billion Employee Pension Fund

    Steven Rogers and Valerie Mosley

    Fuller traveled from a four-room tenement bordering Chicago’s infamous Cabrini-Green Housing projects to speaking at conferences around the world and typically holding court wherever she went. As a teenager, she helped raise her siblings. As a Wall Street executive, she navigated the investment management world to generate attractive investment results for clients. And as the Chief Investment Officer of New York State Employees’ Common Retirement Fund (CRF), she helped manage the third largest state pension fund in the United States. Fuller’s 5’2” height understated her reputational stature, as audiences where she was featured anxiously awaited hearing her market outlook, innovative investment allocations and industry insights for effective state pension fund strategies.

    Keywords: Change Management; Transformation; Public Sector; Investment Return; Investment Portfolio; Governance; Government Administration; Employee Relationship Management; Compensation and Benefits; Selection and Staffing; Leading Change; Mission and Purpose; Corporate Social Responsibility and Impact; Organizational Change and Adaptation; Experience and Expertise; Asset Management; Financial Strategy; Financial Management; Investment Funds; Recruitment; Organizational Culture; Performance Improvement; Attitudes; Trust; Financial Services Industry; Public Administration Industry; United States; New York (state, US); New York (city, NY);

    Citation:

    Rogers, Steven, and Valerie Mosley. "Vicki Fuller: Chief Investment Officer of New York State's $150+ Billion Employee Pension Fund." Harvard Business School Case 317-044, May 2017. View Details
  9. Designing an Agile Software Portfolio Architecture: The Impact of Coupling on Performance

    Alan MacCormack, Robert Lagerstrom, Martin Mocker and Carliss Y. Baldwin

    The modern industrial corporation encompasses a myriad of different software applications, which must work in concert to deliver functionality to end users. However, the increasingly complex and dynamic nature of competition in today’s product markets dictates that this software portfolio be continually evolved and adapted in order to meet new business challenges. This ability—to rapidly update, improve, remove, replace, and reimagine the software applications that underpin a firm’s competitive position—is at the heart of what has been called IT agility. Unfortunately, little work has examined the antecedents of IT agility with respect to the choices a firm makes when designing its “Software Portfolio Architecture.” We address this gap in the literature by exploring the relationship between software portfolio architecture and IT agility at the level of the individual applications in the architecture. In particular, we draw from modular systems theory to develop a series of hypotheses about how different types of coupling impact the ability to update, remove, or replace the software applications in a firm’s portfolio. We test our hypotheses using longitudinal data from a large financial services firm, comprising over 1,000 applications and over 3,000 dependencies between them. Our methods allow us to disentangle the effects of different types and levels of coupling. Our analysis reveals that applications with higher levels of coupling cost more to update, are harder to remove, and are harder to replace than those with lower coupling. The measures of coupling that best explain differences in IT agility include all indirect dependencies between software applications (i.e., they include coupling and dependency relationships that are not easily visible to the system architect). Our results reveal the critical importance of software portfolio design decisions in developing a portfolio of applications that can evolve and adapt over time.

    Keywords: Software; Design; Decisions; Performance;

    Citation:

    MacCormack, Alan, Robert Lagerstrom, Martin Mocker, and Carliss Y. Baldwin. "Designing an Agile Software Portfolio Architecture: The Impact of Coupling on Performance." Harvard Business School Working Paper, No. 17-105, May 2017. View Details
  10.  
See all faculty publications on Human Behavior and Decision Making »