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.
 
  1. Management Practices, Relational Contracts and the Decline of General Motors

    General Motors was once regarded as one of the best managed and most successful firms in the world, but between 1980 and 2009 its share of the US market fell from 62.6 to 19.8 percent, and in 2009 the firm went bankrupt. In this paper we argue that the conventional explanation for this decline—namely high legacy labor and health care costs—is seriously incomplete, and that GM's share collapsed for many of the same reasons that many of the other highly successful American firms of the 50s, 60s and 70s were forced from the market, including a failure to understand the nature of the competition they faced and an inability to respond effectively once they did. We focus particularly on the problems GM encountered in developing the relational contracts essential to modern design and manufacturing. We discuss a number of possible causes for these difficulties: including GM's historical practice of treating both its suppliers and its blue collar workforce as homogeneous, interchangeable entities, and its view that expertise could be partitioned so that there was minimal overlap of knowledge amongst functions or levels in the organizational hierarchy and decisions could be made using well-defined financial criteria. We suggest that this dynamic may have important implications for our understanding of the role of management in the modern, knowledge-based firm, and for the potential revival of manufacturing in the United States.

    Keywords: Organizational Design; Management Practices and Processes; Insolvency and Bankruptcy; Manufacturing Industry; Auto Industry; United States;

    Citation:

    Helper, Susan, and Rebecca Henderson. "Management Practices, Relational Contracts and the Decline of General Motors." Journal of Economic Perspectives 28, no. 1 (Winter 2014): 49–72. View Details
  2. The Interrelationships Between Brand and Channel Choice

    We propose a framework for the joint study of the consumer’s decision of where to buy and what to buy. The framework is rooted in utility theory where the utility is for a particular channel/brand combination. The framework contains firm actions, the consumer search process, the choice process, and consumer learning. We develop research questions within each of these areas. We then discuss methodological issues pertaining to the use of experimentation and econometrics. Our framework suggests that brand and channel choices are closely intertwined, and therefore studying them jointly will reveal a deeper understanding of consumer decision making in the modern marketing environment.

    Keywords: brand choice; channel choice; learning; utility theory; Marketing; Electronics Industry; Auto Industry; Information Technology Industry; Telecommunications Industry; Aerospace Industry;

    Citation:

    Neslin, Scott, Kenshuk Jerath, Anand Bodapati, Eric T. Bradlow, John A. Deighton, Sonja Gensler, Leonard Lee, et al. "The Interrelationships Between Brand and Channel Choice." Marketing Letters 25, no. 3 (September 2014): 319–330. View Details
  3. Advancing Consumer Neuroscience

    In the first decade of consumer neuroscience, strong progress has been made in understanding how neuroscience can inform consumer decision making. Here, we sketch the development of this discipline and compare it to that of the adjacent field of neuroeconomics. We describe three new frontiers for ongoing progress at both theoretical and applied levels. First, the field will broaden its boundaries to include genetics and molecular neuroscience, each of which will provide important new insights into individual differences in decision making. Second, recent advances in computational methods will improve the accuracy and out-of-sample generalizability of predicting decisions from brain activity. Third, sophisticated meta-analyses will help consumer neuroscientists to synthesize the growing body of knowledge, providing evidence for consistency and specificity of brain activations and their reliability as measurements of consumer behavior.

    Keywords: Consumer neuroscience; Neuroeconomics; Social neuroscience; Genes; Machine learning; Meta-analysis; Consumer Behavior; Decision Making; Science;

    Citation:

    Smidts, Ale, Ming Hsu, Alan G. Sanfey, Maarten A. S. Boksem, Richard B. Ebstein, Scott A. Huettel, Joe W. Kable, et al. "Advancing Consumer Neuroscience." Marketing Letters 25, no. 3 (September 2014): 257–267. View Details
  4. Dangerous Expectations: Breaking Rules to Resolve Cognitive Dissonance

    When entering task performance contexts we generally have expectations about both the task and how well we will perform on it. When those expectations go unmet, we experience psychological discomfort (cognitive dissonance), which we are then motivated to resolve. Prior research on expectancy disconfirmation in task performance contexts has focused on the dysfunctional consequences of disconfirming low performance expectations (i.e., stereotype threat). In this paper we focus on the dysfunctional consequences of disconfirming high performance expectations. In three studies, we find that individuals are more likely to break rules if they have been led to expect that achieving high levels of performance will be easy rather than difficult, even if breaking rules means behaving unethically. We show that this willingness to break rules is not due to differences in legitimate performance as a function of how easy people expect the task to be, or whether their expectations are set explicitly (by referring to others’ performance) or implicitly (as implied by their own prior performance). Instead, using a misattribution paradigm, we show that cognitive dissonance triggered by unmet expectations drives our effects.

    Keywords: Rule breaking; Unethical Behavior; Expectancy Disconfirmation; cognitive dissonance; Misattribution;

    Citation:

    Moore, Celia, S. Wiley Wakeman, and Francesca Gino. "Dangerous Expectations: Breaking Rules to Resolve Cognitive Dissonance." Harvard Business School Working Paper, No. 15-012, August 2014. View Details
  5. The Power of Noticing: What the Best Leaders See

    This book will examine the common failure to notice critical information due to bounded awareness. The book will document a decade of research showing that even successful people fail to notice the absence of critical and readily available information in their environment due to the human tendency to focus on a limited set of information. This work is still in its formative stages, and I welcome comments about how bounded awareness affects you and your organization and how you have created solutions to such problems.

    Keywords: Interpersonal Communication; Judgments; Negotiation; Negotiation Process; Relationships;

    Citation:

    Bazerman, Max. The Power of Noticing: What the Best Leaders See. New York: Simon & Schuster, 2014. View Details
  6. Agglomeration and Innovation

    This chapter reviews academic research on the connections between agglomeration and innovation. We first describe the conceptual distinctions between invention and innovation. We then describe how these factors are frequently measured in the data and some resulting empirical regularities. Innovative activity tends to be more concentrated than industrial activity, and we discuss important findings from the literature about why this is so. We highlight the traits of cities (e.g., size, industrial diversity) that theoretical and empirical work link to innovation, and we discuss factors that help sustain these features (e.g., the localization of entrepreneurial finance).

    Keywords: Industry Clusters; Innovation and Invention;

    Citation:

    Carlino, Gerald, and William R. Kerr. "Agglomeration and Innovation." Harvard Business School Working Paper, No. 15-007, August 2014. View Details
  7. Brand Tourists: How Non-Core Users Enhance the Brand Image by Eliciting Pride

    This research examines how core consumers of selective brands react when non-core users obtain access to the brand. Contrary to the view that non-core users and downward brand extensions pose a threat to the brand, this work investigates the conditions under which these non-core users enhance rather than dilute the brand image. A distinction between two types of non-core users based on how they are perceived by current users of core products is introduced: "brand immigrants" who claim to be part of the in-group of core users of the brand and "brand tourists" who do not claim any membership status to the brand community. A series of studies shows that core consumers respond positively to non-core users when they are perceived as brand tourists. The brand tourism effect is mediated by core users' pride and moderated by brand patriotism and selectiveness of the brand.

    Keywords: Consumer Behavior; Attitudes; Brands and Branding;

    Citation:

    Bellezza, Silvia, and Anat Keinan. "Brand Tourists: How Non-Core Users Enhance the Brand Image by Eliciting Pride." Journal of Consumer Research 41, no. 2 (August 2014): 397–417. View Details
  8. The (Perceived) Meaning of Spontaneous Thoughts

    Spontaneous thoughts, the output of a broad category of uncontrolled and inaccessible higher-order mental processes, arise frequently in everyday life. The seeming randomness by which spontaneous thoughts arise might give people good reason to dismiss them as meaningless. We suggest that it is precisely the lack of control over and access to the processes by which they arise that leads people to perceive spontaneous thoughts to reveal meaningful self-insight. Consequently, spontaneous thoughts potently influence judgment. A series of experiments provides evidence supporting two hypotheses. First, we hypothesize that the more a thought is perceived to be spontaneous, the more it is perceived to provide meaningful self-insight. Participants perceived more spontaneous kinds of thought to reveal greater self-insight than more controlled kinds of thought in Study 1 (e.g., intuition versus deliberation), and perceived thoughts with the same content and target to reveal greater self-insight when spontaneously than deliberately generated in Studies 2 and 3 (i.e., childhood memories and impressions formed, respectively). Second, we hypothesize that greater self-insight attributed to thoughts that are (perceived to be) spontaneous leads those thoughts to more potently influence judgment. Participants felt more sexually attracted to an attractive person whom they thought of spontaneously than deliberately in Study 4, and reported their commitment to a current romantic relationship would be more affected by the spontaneous than deliberate recollection of a good or bad experience with their partner in Study 5.
    Much human thought arises unbidden, spontaneously intruding upon consciousness. The thought and name of a former lover might come to mind during dinner with one's spouse. Or worse, it may be blurted out during an intimate moment. Because no trace of the past lover is present, the thought lacks an apparent cause. In the latter case it almost certainly occurs without intent, given its potential consequences. The seeming randomness of such thoughts might provide reason to dismiss them as the wanderings of a restless mind. We propose that it is precisely the lack of control over and access to the process by which spontaneous thoughts come to mind that leads them to be perceived to reveal special self-insight. Drawing on previous theory and research, we propose that the greater self-insight they are attributed leads spontaneous thoughts to exert a greater impact on attitudes and behavior than similar deliberate thoughts.
    Compare a wife's thought of a former lover while perusing her yearbook to that same thought during an intimate moment with her husband. In the former case, the reason for the production of that thought is clear ("I thought of him because I looked at his picture while reminiscing about the past"). In the latter case, she lacks both control over the thought and access to its origin. We suggest that its apparent spontaneity should lead her to attribute it special meaning ("Why would I think of him in this moment unless it is important?"), and it should consequently exert a greater influence on her judgment ("I must still have feelings for him"). In this paper, we report a series of five studies examining how the perceived spontaneity of thought influences the extent to which it is believed to yield meaningful self-insight and influences judgment.

    Keywords: Spontaneous Thoughts; Self-Insight; Meaning; attribution; Judgment and Decision Making; Decision Making; Cognition and Thinking;

    Citation:

    Morewedge, Carey K., Colleen Giblin, and Michael I. Norton. "The (Perceived) Meaning of Spontaneous Thoughts." Journal of Experimental Psychology: General 143, no. 4 (August 2014): 1742–1754. View Details
  9. Don't Take 'No' For An Answer: An Experiment With Actual Organ Donor Registrations

    Over 10,000 people in the U.S. die each year while waiting for an organ. Attempts to increase organ transplantation have focused on changing the registration question from an opt-in frame to an active choice frame. We analyze this change in California and show it decreased registration rates. Similarly, a "field in the lab" experiment run on actual organ donor registration decisions finds no increase in registrations resulting from an active choice frame. In addition, individuals are more likely to support donating the organs of a deceased who did not opt-in than one who said "no" in an active choice frame.

    Keywords: Decision Choices and Conditions; Health Care and Treatment; Giving and Philanthropy; Health Industry;

    Citation:

    Kessler, Judd B., and Alvin E. Roth. "Don't Take 'No' For An Answer: An Experiment With Actual Organ Donor Registrations." NBER Working Paper Series, No. 20378, August 2014. View Details
  10. Consumer Lending in France and America: Credit and Welfare

    Why did America embrace consumer credit over the course of the twentieth century, when most other countries did not? How did American policy makers by the late twentieth century come to believe that more credit would make even poor families better off? This book traces the historical emergence of modern consumer lending in America and France. If Americans were profligate in their borrowing, the French were correspondingly frugal. Comparison of the two countries reveals that America's love affair with credit was not primarily the consequence of its culture of consumption, as many writers have observed, nor directly a consequence of its less generous welfare state. It emerged instead from evolving coalitions between fledgling consumer lenders seeking to make their business socially acceptable and a range of non-governmental groups working to promote public welfare, labor, and minority rights. In France, where a similar coalition did not emerge, consumer credit continued to be perceived as economically regressive and socially risky.

    Keywords: Attitudes; Credit; France; United States;

    Citation:

    Trumbull, J. Gunnar. Consumer Lending in France and America: Credit and Welfare. Cambridge University Press, 2014. View Details
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