Human behavior and decision-making

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, David Garvin in decision-making, and James Sebenius in negotiations was instrumental in shaping today’s research on Human Behavior & Decision-Making.  The multi-disciplinary nature of our research brings together faculty from various academic units here at the business school as well as from Harvard Kennedy School, our economics and psychology departments, and other top-tier Universities.  We are continuously learning and bringing real-world experience to our research as we advise companies spanning a multitude of industries and governments across the globe.  Our research focuses on the individual and explores several topic areas such as: 
  • The influence of personal biases on judgment and decision-making
  • Cognition and learning processes
  • How the perception of self and others influences behavior and choices
  • The impact of ethics on moral judgment
  • How emotion-induced incentives drive motivation
Our collaborative studies are conducted both in the field as well as the laboratory. As an example, take Michael Norton of the School's Marketing unit and his large field experiment on over 350 visitors at an American amusement park ride and study of over 150 undergraduate students to investigate drivers of prosocial behavior, or Francesca Gino, of the Negotiations, Organizations & Markets unit, and her laboratory experiments on hundreds of University students to test the relationship between honesty and creativity.  As our research provides insights into the underpinnings behind how individuals and organizations think and behave, we are helping to improve the world's understanding of how to make individual and organizational decisions more productive and positive going into the future.
 
 
 
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  1. Thought Calibration: How Thinking Just the Right Amount Increases One’s Influence and Appeal

    Previous research suggests that people draw inferences about their attitudes and preferences based on their own thoughtfulness. The current research explores how observing other individuals make decisions more or less thoughtfully can shape perceptions of those individuals and their decisions, and ultimately impact observers' willingness to be influenced by them. Three studies suggest that observing others make more (versus less) thoughtful decisions generates more positive reactions when a choice is difficult, but more negative reactions when a choice is easy. In essence, people perceive the quality of others' decisions to be greater when other individuals engage in the right amount of thinking for the situation. These assessments then affect observers' own decisions and openness to influence.

    Keywords: thoughtfulness; attitudes; liking; social influence; Decisions; Attitudes; Cognition and Thinking; Power and Influence;

    Citation:

    Kupor, Daniella, Zakary L. Tormala, Michael I. Norton, and Derek D. Rucker. "Thought Calibration: How Thinking Just the Right Amount Increases One’s Influence and Appeal." Social Psychological & Personality Science 5, no. 3 (2014): 263–270.
  2. When Does a Platform Create Value by Limiting Choice?

    We present a theory for why it might be rational for a platform to limit the number of applications available on it. Our model is based on the observation that even if users prefer application variety, applications often also exhibit direct network effects. When there are direct network effects, users prefer to consume the same applications to benefit from consumption complementarities. We show that the combination of preference for variety and consumption complementarities gives rise to (i) a commons problem (to better satisfy their individual preference for variety, users have an incentive to consume more applications than the number that maximizes joint utility); (ii) an equilibrium selection problem (consumption complementarities often lead to multiple equilibria, which result in different utility levels for the users); and (iii) a coordination problem (lacking perfect foresight, it is unlikely that users will end up buying the same set of applications). The analysis shows that the platform can resolve these problems and create value by limiting the number of applications available. By limiting choice, the platform may create new equilibria (including the allocation that maximizes users' utility); eliminate equilibria that give lower utility to the users; and reduce the severity of the coordination problem faced by users.

    Keywords: platform governance; direct network effects; indirect network effects; complements; tragedy of the commons; equilibrium selection; coordination; foresight; consumer behavior; Network Effects; strategy; value creation; Strategy; Value Creation; Technology Platform; Balance and Stability; Decision Choices and Conditions; Consumer Behavior; Software; Network Effects;

    Citation:

    Casadesus-Masanell, Ramon, and Hanna Halaburda. "When Does a Platform Create Value by Limiting Choice?" Journal of Economics & Management Strategy 23, no. 2 (Summer 2014): 259–293.
  3. Mobilizing Culture for Public Action: Community Participation and Child Rights in Rural Uttar Pradesh

    Community-based initiatives that work to empower the poor and promote their participation have gained strong support among scholars and practitioners of development. Yet the questionable assumptions about culture and development that inform these initiatives render it unclear as to whether and how community participation can be promoted in practice, especially in settings that depart from the ideal conceptions of community. Through a detailed case study of the UNICEF-IKEA Bal Adhikar Pariyojana (BAP), a grassroots initiative that seeks to advance child rights in India, this paper examines how traditionally disempowered community members learn to mobilize collectively around child education and health in the least-likely setting of rural Uttar Pradesh. Building on the recent literature on culture and public action, and relying on extensive field research, village-level comparisons and interviews with key stakeholders, this paper traces the process by which BAP fieldworkers and community members make strategic use of the cultural understandings, norms and identities that govern family, gender and caste relations to build new community-based networks that promote the rights of children. Yet there are serious drawbacks to these cultural strategies when attempting to scale up participation directed at an unresponsive state. To maintain ties with different caste groups, BAP takes an apolitical posture and does not actively build the capacity of communities to mobilize politically and make demands on state agencies. The findings suggest that cultural strategies for promoting community participation in rural India need to be understood within a broader political context of poor local governance and caste politics.

    Keywords: india; culture; child rights; caste relations; child education; child health; India;

    Citation:

    Mangla, Akshay. "Mobilizing Culture for Public Action: Community Participation and Child Rights in Rural Uttar Pradesh." Harvard Business School Working Paper, No. 14-100, April 2014.
  4. Leveraging Crowdsourced Peer-to-Peer Assessments to Enhance the Case Method of Learning

    Many marketing educators use the case method to help their students strengthen their decision-making skills. Rigorous class participation is essential to achieving learning objectives in case method learning. One challenge for case method instructors is the assessment of students' class participation, particularly in large classes. This article offers a solution that mines the practices of peer-to-peer feedback and crowdsourcing to enhance the assessment of learning and student-to-student interactions in face-to-face class sessions. The article outlines a technique used in an MBA marketing course for crowdsourced peer-to-peer assessment of class participation during case discussions and empirically validates how crowdsourced peer-to-peer assessment compares to students' self-assessment and to the instructor's assessment of class participation performance, based on five years of data (N=7,025) across ten sections. The article demonstrates that crowdsourced peer-to-peer assessment (unlike self-assessment) offers ratings that are highly correlated with instructor assessment and demonstrate strong inter-rater reliability. Results show that crowdsourced peer-to-peer assessments are perceived as fair and accurate. Educators can leverage peer-to-peer sharing to enhance the assessment of class participation during face-to-face case discussions.

    Keywords: marketing; Case method teaching; Marketing; Business Education; Teaching; Education Industry;

    Citation:

    Avery, Jill. "Leveraging Crowdsourced Peer-to-Peer Assessments to Enhance the Case Method of Learning." Journal for Advancement of Marketing Education 22, no. 1 (Spring 2014): 1–15.
  5. Fiscal Risk and the Portfolio of Government Programs

    This paper proposes a new approach to social cost-benefit analysis using a model in which a benevolent government chooses risky projects in the presence of market failures and tax distortions. The government internalizes market failures and therefore perceives project payoffs differently than do individual private actors. This gives it a "social risk management" motive -- projects that generate social benefits are attractive, particularly if those benefits are realized in bad economic states. However, because of tax distortions, government financing is costly, creating a "fiscal risk management" motive. Government projects that require large tax-financed outlays are unattractive, particularly if those outlays tend to occur in bad economic times. At the optimum, the government trades off its social and fiscal risk management motives. Frictions in government financing create interdependence between two otherwise unrelated government projects. As in the theory of portfolio choice, the fiscal risk of a project depends on how its fiscal costs covary with the fiscal costs of the government's overall portfolio of projects. This interdependence means that individual projects should not be evaluated in isolation.

    Keywords: Risk Management; Programs; Government and Politics;

    Citation:

    Hanson, Samuel G., David S. Scharfstein, and Adi Sunderam. "Fiscal Risk and the Portfolio of Government Programs." Working Paper, April 2014.
  6. The Cost of Friendship

    We investigate how personal characteristics affect people's desire to collaborate and whether this attraction enhances or detracts from performance in venture capital. We find that venture capitalists who share the same ethnic, educational, or career background are more likely to syndicate with each other. This homophily reduces the probability of investment success, and the detrimental effect is most prominent for early-stage investments. A variety of tests show that the cost of affinity is most likely attributable to poor decision making by high-affinity syndicates after the investment is made. These results suggest that "birds-of-a-feather-flock-together" effects in collaboration can be costly.

    Keywords: Venture Capital; Partners and Partnerships; Decision Making; Identity;

    Citation:

    Gompers, Paul A., Vladimir Mukharlyamov, and Yuhai Xuan. "The Cost of Friendship." Working Paper, 2014.
  7. Who Donates Their Bodies to Science? The Combined Role of Gender and Migration Status Among California Whole-body Donors

    The number of human cadavers available for medical research and training, as well as organ transplantation, is limited. Researchers disagree about how to increase the number of whole-body bequeathals, citing a shortage of donations from the one group perceived as most likely to donate from attitudinal survey data—educated white males over 65. This focus on survey data, however, suffers from two main limitations: First, it reveals little about individuals’ actual registration or donation behavior. Second, past studies’ reliance on average survey measures may have concealed variation within the donor population. To address these shortcomings, we employ cluster analysis on all whole-body donors’ data from the Universities of California at Davis, Irvine, Los Angeles, and San Francisco. Two donor groups emerge from the analyses: One is made of slightly younger, educated, married individuals, an overwhelming portion of whom are U.S. born and have U.S.–born parents, while the second includes mostly older, separated women with some college education, a relatively higher share of whom are foreign born and have foreign-born parents. Our results demonstrate the presence of additional donor groups within and beyond the group of educated and elderly white males previously assumed to be most likely to donate. More broadly, our results suggest how the intersectional nature of donors’ demographics, in particular, gender and migration status, shapes the configuration of the donor pool, signaling new ways to possibly increase donations.

    Keywords: altruism; donations; body; whole-body; clinical anatomy; Medical Specialties; California;

    Citation:

    Asad, Asad L., Michel Anteby, and Filiz Garip. "Who Donates Their Bodies to Science? The Combined Role of Gender and Migration Status Among California Whole-body Donors." Social Science & Medicine 106 (April 2014): 53–58.
  8. Can an 'Ethical' Bank Support Guns and Fracking?

    A case study is presented on business ethics and bank management. The situation facing the president of a community bank established to operate as a green business and to consider ethical issues of bank loans when it is considering an application for a large commercial loan by a firearms industry company in its community is examined.

    Citation:

    Marquis, Christopher, and Juan Almandoz. "Can an 'Ethical' Bank Support Guns and Fracking?" R1404L. Harvard Business Review 92, no. 4 (April 2014): 123–127.
  9. Learning by Thinking: How Reflection Aids Performance

    Research on learning has primarily focused on the role of doing (experience) in fostering progress over time. In this paper, we propose that one of the critical components of learning is reflection, or the intentional attempt to synthesize, abstract, and articulate the key lessons taught by experience. Drawing on dual-process theory, we focus on the reflective dimension of the learning process and propose that learning can be augmented by deliberately focusing on thinking about what one has been doing. We test the resulting dual-process learning model experimentally, using a mixed-method design that combines two laboratory experiments with a field experiment conducted in a large business process outsourcing company in India. We find a performance differential when comparing learning-by-doing alone to learning-by-doing coupled with reflection. Further, we hypothesize and find that the effect of reflection on learning is mediated by greater perceived self-efficacy. Together, our results shed light on the role of reflection as a powerful mechanism behind learning.

    Keywords: learning by thinking; reflection; knowledge creation; learning; self-efficacy; Perception; Performance; Learning; Knowledge; Cognition and Thinking; India;

    Citation:

    Di Stefano, Giada, Francesca Gino, Gary Pisano, and Bradley Staats. "Learning by Thinking: How Reflection Aids Performance." Harvard Business School Working Paper, No. 14-093, March 2014.
  10. Martini Klinik: Prostate Cancer Care

    Since its establishment in 2005, Hamburg’s Martini Klinik had single-mindedly focused on prostate cancer care with a commitment to measure long term health outcomes for every patient. A wholly owned subsidiary of the Hamburg University Hospital, Martini was a “hospital in a hospital” in close proximity to other hospital departments and services. By 2013, Martini Klinik had become the largest prostate cancer treatment program in the world with 5,000 outpatient cases and more than 2,200 surgical cases annually, with patients coming from all over Germany and from other countries. However, German private insurers were cutting reimbursement for prostate cancer by 15 percent, and denying extra payment for some new procedures, while reimbursement by public health plans was not covering costs. Dr. Hartwig Huland, Martini’s founder and Medical Director, was considering how to respond.

    Keywords: health care; Germany; Michael Porter; "Jens Deerberg-Wittram"; Clifford Marks; prostate cancer; health care policy; value agenda; integrated practice units; outcomes measurement; Value; Health Disorders; Insurance; Medical Specialties; Outcome or Result; Business Processes; Insurance Industry; Health Industry; Germany;

    Citation:

    Porter, Michael E., Jens Deerberg-Wittram, and Clifford Marks. "Martini Klinik: Prostate Cancer Care." Harvard Business School Case 714-471, March 2014.
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