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. Classtivity: Payal’s Pirouette

    Jeffrey J. Bussgang and Olivia Hull

    A few months after launching a new fitness technology product, the small staff of New York startup Classtivity gathers on a Saturday in April 2013 to take stock. With one successful pivot under their belt, Classtivity is finally generating revenue and enthusiasm among customers. But cofounder and CEO Payal Kadakia has some doubts. There are signs that customers love the offering, but studios are less enthusiastic. Efforts to get customers to return to the studios after their monthly packs expire have largely failed. Kadakia must decide, preserve the product or pivot to a new business model?

    Keywords: product pivot; boutique fitness; fitness industry; market sizing; consumer technology; bundling; subscription model; two-sided marketplace; ClassPass; Entrepreneurship; Venture Capital; Business Startups; Transition; Customer Focus and Relationships; Technological Innovation; Organizational Change and Adaptation; Customer Value and Value Chain; Marketing Strategy; Failure; Business Strategy; Technology Industry; Health Industry; New York (city, NY);

    Citation:

    Bussgang, Jeffrey J., and Olivia Hull. "Classtivity: Payal’s Pirouette." Harvard Business School Case 817-002, January 2017. View Details
  2. Using Charity Performance Metrics as an Excuse Not to Give

    Christine L. Exley

    There is an increasing pressure to "give wisely." In a series of experiments, this paper indeed confirms that individuals give less to charities with lower performance metrics. Part of this reduction in giving, however, appears to be driven by individuals overweighting their dislike of low performance metrics as an excuse not to give. Excuse-driven responses to performance metrics persist even when steps are taken to increase the associated cognitive dissonance and are more likely among individuals who give less in general. These results suggest that charities need to carefully consider how and with whom to share performance information.

    Keywords: charitable giving; prosocial behavior; altruism; excuses; self-serving biases; Decision Choices and Conditions; Giving and Philanthropy;

    Citation:

    Exley, Christine L. "Using Charity Performance Metrics as an Excuse Not to Give." Working Paper, December 2016. View Details
  3. United Housing — Otis Gates

    Steven Rogers and Mercer Cook

    Otis Gates has built a successful affordable housing firm. Along the way, he and his partners have engaged in large amounts of community service in the neighborhoods wherein they own properties. Now 80 and ready to retire, Gates is creating a request for proposal for his firm. In doing so, he has to evaluate his firm’s total value and decide whether their social-good mission is helping or harming their bottom line.

    Keywords: affordable housing; real estate; community engagement; social-good; request for proposal; diversity; entrepreneurship; Social Entrepreneurship; Moral Sensibility; Fairness; Corporate Entrepreneurship; Housing; Real Estate Industry;

    Citation:

    Rogers, Steven, and Mercer Cook. "United Housing — Otis Gates." Harvard Business School Case 317-059, January 2017. View Details
  4. Visual Attention to Powerful Postures: People Avert Their Gaze from Nonverbal Dominance Displays

    Elise Holland, Elizabeth Baily Wolf, Christine Looser and Amy Cuddy

    This paper investigates whether humans avert their gaze from individuals engaging in nonverbal displays of dominance. Although past studies demonstrate that both humans and nonhuman primates direct more visual attention to high-status others than low-status others, nonhuman primates avert their gaze when high-status conspecifics engage in nonverbal dominance displays (e.g., chest pounding). In two experiments, participants were eye-tracked while viewing photographs of men and women adopting either dominant, high-power (i.e., expansive and open) or submissive, low-power (i.e., contractive and closed) nonverbal postures. Results demonstrated that humans, like primates, avert their gaze from the faces and upper bodies of individuals displaying dominance compared to those displaying submissiveness. Not only did participants look less often at the faces and upper bodies of dominance-displaying individuals, they also fixated on these regions for shorter durations. Our findings ultimately suggest that nonverbal dominance displays influence humans’ visual attention in ways that are likely to shape how social interactions unfold.

    Keywords: Nonverbal Behavior; eye-tracking; power and influence; dominance; Nonverbal Communication; Interpersonal Communication; Power and Influence;

    Citation:

    Holland, Elise, Elizabeth Baily Wolf, Christine Looser, and Amy Cuddy. "Visual Attention to Powerful Postures: People Avert Their Gaze from Nonverbal Dominance Displays." Journal of Experimental Social Psychology 68 (January 2017): 60–67. View Details
  5. Should You Sleep on It? The Effects of Overnight Sleep on Subjective Preference-based Choice

    Uma R. Karmarkar, Baba Shiv and Rebecca M.C. Spencer

    Conventional wisdom and studies of unconscious processing suggest that sleeping on a choice may improve decision-making. Though sleep has been shown to benefit several cognitive tasks, including problem solving, its impact on everyday choices remains unclear. Here we explore the effects of "sleeping on it" on preference-based decisions among multiple options. In two studies, individuals viewed several attributes describing a set of items and were asked to select their preferred item after a 12-hour interval that either contained sleep or was spent fully awake. After an overnight period including sleep, individuals showed increases in positive perceptions of the choice set. This finding contrasts with previous research showing that sleep selectively enhances recall for negative information. In addition, this increase in positive recall did not translate into a greater desire to purchase their preferred item or into an overall benefit for choice satisfaction. Time-of-day controls were used to confirm that the observed effects could not be explained by circadian influences. Thus we show that people may feel more positive about the choice options, but not more confident about the choice after "sleeping on" a subjective decision. We discuss how the valence of recalled choice set information may be important in understanding the effects of sleep on multi-attribute decision making, and suggest several avenues for future research.

    Keywords: decision making; choice; sleep; choice sets; confidence; consumer behavior; consumer psychology; consumer preferences; Decision Choices and Conditions; Consumer Behavior;

    Citation:

    Karmarkar, Uma R., Baba Shiv, and Rebecca M.C. Spencer. "Should You Sleep on It? The Effects of Overnight Sleep on Subjective Preference-based Choice." Journal of Behavioral Decision Making 30, no. 1 (January 2017): 70–79. View Details
  6. Ebony Magazine

    Steven Rogers and Derrick Jackson

    For nearly 75 years, the Johnson Publishing Company has been the most successful African American magazine publisher. Its flagship Ebony magazine was an iconic coffee table fixture for decades in black households of all classes, making founder John H. Johnson the first African American to make the Forbes 400 list of richest Americans. But the privately-held company was now in the hands of his daughter and faced the bracing, debilitating winds besetting the entire magazine and newspaper industry. Linda Johnson Rice now had to decide what to do with the publications and brands of the company.

    Keywords: Business restructuring; Decisions; media; race characteristics; corporate entrepreneurship; business history; social history; contemporary history; Innovation and Management; fairness; brands and branding; crisis management; culture; adaptation; consolidation; Fairness; Race; Corporate Entrepreneurship; Adaptation; Consolidation; Culture; Brands and Branding; Journals and Magazines; Decisions; Business History; Restructuring; Innovation and Management; Crisis Management; Media and Broadcasting Industry; Journalism and News Industry; Publishing Industry; Chicago;

    Citation:

    Rogers, Steven, and Derrick Jackson. "Ebony Magazine." Harvard Business School Case 317-043, December 2016. View Details
  7. Populism and the Return of the 'Paranoid Style': Some Evidence and a Simple Model of Demand for Incompetence as Insurance Against Elite Betrayal

    Rafael Di Tella and Julio J. Rotemberg

    We present a simple model of populism as the rejection of “disloyal” leaders. We show that adding the assumption that people are worse off when they experience low income as a result of leader betrayal (than when it is the result of bad luck) to a simple voter choice model yields a preference for incompetent leaders. These deliver worse material outcomes in general, but they reduce the feelings of betrayal during bad times. Some evidence consistent with our model is gathered from the Trump-Clinton 2016 election: on average, subjects primed with the importance of competence in policymaking decrease their support for Trump, the candidate who scores lower on competence in our survey. But two groups respond to the treatment with a large (between 5 and 7 percentage points) increase in their support for Donald Trump: those living in rural areas and those that are low educated, white, and living in urban and suburban areas.

    Keywords: corruption; betrayal; populism; incompetence; Literacy; Crime and Corruption; Income; Ethics; Political Elections; Race; Residency;

    Citation:

    Di Tella, Rafael, and Julio J. Rotemberg. "Populism and the Return of the 'Paranoid Style': Some Evidence and a Simple Model of Demand for Incompetence as Insurance Against Elite Betrayal." Harvard Business School Working Paper, No. 17-056, December 2016. View Details
  8. Public Mission, Private Funding: The University of California, Berkeley

    William C. Kirby and Joycelyn W. Eby

    UC Berkley, long known as one of the leading public universities in both the U.S. and the world, has seen turbulent times recently. While student enrollment and costs have increased steadily in recent years, the school, which has been fiercely proud of its public mission, received ever diminished funding from the State of California. Although Berkeley survived the financial crisis of 2008 under the leadership of Chancellor Robert Birgeneau, new Chancellor Nicholas Dirks inherited an ongoing structural deficit and a divided faculty. New controversies arose over the process of strategic planning, the building of a “Global Campus” in neighboring Richmond Bay, and allegations of sexual misconduct on the part of faculty and administrators. Can Berkeley overcome these challenges and maintain its distinguished reputation with its current governance structure and status as a privately funded public university?

    Keywords: higher education; Public University; university administration; conflict management; State Funding; competition; Faculty Governance; University of California Berkeley; Change Management; Volatility; Diversity; Residency; Higher Education; Giving and Philanthropy; Globalization; Policy; Leading Change; Crisis Management; Growth and Development Strategy; Organizational Design; Privatization; Problems and Challenges; Education Industry; United States;

    Citation:

    Kirby, William C., and Joycelyn W. Eby. "Public Mission, Private Funding: The University of California, Berkeley." Harvard Business School Case 317-023, December 2016. View Details
  9. Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation

    Rafael Di Tella, Juan Dubra and Alejandro Lagomarsino

    We analyze the role of people’s beliefs about the rich in the determination of public policy in the context of a randomized online survey experiment. A question we study is the desirability of government-private sector meetings, a variable we argue is connected to State capacity. Survey respondents primed with negative views about business leaders want fewer meetings as well as higher taxes for the top 1% and more regulation. We also study how these effects change when subjects are (additionally) primed with positive/negative views about government officials. Distrust in the government increases the preferred tax rate on the top 1% only when business legitimacy is low. A model with multiple equilibria helps interpret these findings. In one of the equilibria, meetings are allowed, business legitimacy is high, and people set a low income tax rate for businesspeople. In the other, meetings are forbidden, business legitimacy is low, and people set high taxes to punish the businesspeople for their corrupt behavior.

    Keywords: Business Legitimacy; state capacity; Meetings; taxes; Top 1%; regulation; Prejudice and Bias; Values and Beliefs; Taxation; Business and Government Relations;

    Citation:

    Di Tella, Rafael, Juan Dubra, and Alejandro Lagomarsino. "Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation." Harvard Business School Working Paper, No. 17-046, December 2016. View Details
  10. Fixing Discrimination in Online Marketplaces

    Ray Fisman and Michael Luca

    Online marketplaces such as eBay, Uber, and Airbnb have the potential to reduce racial, gender, and other forms of bias that affect the off-line world. And in the early days of Internet commerce, the relative anonymity of transactions did make it harder for participants to discriminate. But as listings began to include photos, names, and other means of identification, bias emerged in areas ranging from labor markets to credit applications to housing—sometimes made worse by a lack of regulation, the absence of in-person interactions, and the use of automation and big data. How can companies reverse the tide? The key lies in more intentional platform design, say the authors, who offer a framework for creating a thriving marketplace while minimizing the risk of discrimination. For starters, they say, companies must track and report on potential problems and carefully test choices that may influence the extent of discrimination. And they should thoroughly examine four design decisions, asking themselves the following questions: 1) Are we providing too much information? In many cases, the simplest, most effective change a platform can make is to withhold information such as race and gender until after a transaction has been agreed to; 2) Could we further automate the process? Features such as “instant book,” allowing a buyer to sign up for a rental, say, without the seller’s prior approval, can reduce discrimination while increasing convenience; 3) Can we make discrimination policies more top of mind? Presenting them during the actual transaction process, rather than burying them in fine print, makes them less likely to be broken; 4) Should we make our algorithms discrimination aware? To ensure fairness, designers need to track how race or gender affects the user experience and set explicit objectives. Seemingly small design features can have an outsize impact on discriminatory behavior. Smart choices and transparent experimentation can create markets that are both more efficient and more inclusive.

    Keywords: Prejudice and Bias; Market Platforms; Online Technology; Race; Gender;

    Citation:

    Fisman, Ray, and Michael Luca. "Fixing Discrimination in Online Marketplaces." Harvard Business Review 94, no. 12 (December 2016): 88–95. View Details
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