Executive Summary
Concept
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Description
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Decision Making
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Default Bias
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Need more evidence to change already
made decision than accept status quo
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Misconception of Chance
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Due to previous successes, think that chance of failure is low
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Overconfidence
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Poor correlation between accuracy
and confidence
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Sampling on Dependent Var.
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Looking at the outcome of interest
and ignoring other possibilities - the inverse
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-Confirmation Bias
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Only seeking information that
confirms (and not disproves) your hypotheses
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Framing Effects
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Risk preference depends on whether
outcome framed in gains or losses (losses increase risk taking
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Perception (Judging Others)
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Fundamental Attribution Error
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Overestimate extent to which is
target is responsible for behavior and discounts situational explanations
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Alex Trebek Effect
Contrast Effect
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Perceptions of others influences
perceptions of the target
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Halo Effect
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General perception of target
influences perceptions of a particular dimension
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Anchoring & Insufficient Adj.
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We form judgments quickly and fail
to adjust properly (related: primacy effect & recency effect)
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Similar-to-me Bias
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People more similar to self
perceived more positively
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Self-fulfilling Prophecy
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Target's behavior in response to
perceiver's first impressions confirms perceive
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Seemingly-fulfilled Prophecy
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Target put in positions where
impossible to disprove initial impressions
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Kelley's Covariation Model
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Model to use in order to perceive
others accurately: consistency, consensus, distinctiveness
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Influence
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Identifying Allies
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Look for those who are similar, lack
conviction or sit on the periphery
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Framing Dissent
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Frame in such a way that it attacks
the issue itself not the majority/individuals
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Symbolism
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To argue point in logical and
understandable manner
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Timing
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Choose good timing for best impact
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Voting
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Minorities ask for private vote
(encourage dissent); when majority ask for public vote (spotlight
effect)
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Hyper-rationality
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Dissenters must appear overly
rational, use emotion sparingly, and use effective questions
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Foot-in-the-Door
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After committing to a position
people more likely to comply with consistent requests
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Demonstrations
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Rarely used, but highly effective;
people believe what they see, not
hear
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Emotion
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The contrast matters; use only when
it is situation appropriate
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Four Walls Technique
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Ask a series of leading questions to
box the target into the desired response (encyclopedia salesman)
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Interpersonal Influence
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Use Push (persuading/asserting) as
the majority and pull (attracting/bridging) as the minority
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Networking
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Heidi Roizen’s Techniques
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Consistency & performance >
frequency; empathetic; pro at rejection; blends professional/personal
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Reciprocity Ring
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Circle of give and take mutually
beneficial to everyone involved
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Network Building
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Seek interaction, help others, ask
for help, follow-up consistently; must be two-way, not unilateral
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Optimal Network Design
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Structures (strong, diverse
contacts) and processes (trust, mutually beneficial, consistent) yield >
returns
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Reciprocity Distinction
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Level 1: focus on getting, Level 2:
focus on transaction, Level 3: focus on contribution (communal)
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Motivation
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Expectancy Model
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Motivation is a form of Effort,
Performance and Outcome
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SMART Goals
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Specific, Measurable, Achievable,
Reasonable, Timebound (clear)
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Inspection v. Expectation
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“You get what you inspect, not what
you expect.” Set goals very carefully.
(Kerr, “On the Folly…”)
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Reinforcement Approach
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Positive (attractive consequence),
Negative (removal of adversity), Punishment (aversive consequence)
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Intrinsic v. Extrinsic
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Intrinsic (sense of achievement and
accomplishment); Extrinsic (material or social reward)
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Loss Aversion
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Losses are more painful than gains
are satisfying; difficult to avoid in bonus-based systems; expectation!!
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Negotiation
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BATNA
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Best Alternative to Negotiated
Agreement; must identify for yourself and partner to set “target point”
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Compromising
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Splitting the difference; only
effective on “zero-sum,” distributive
issues
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Logrolling
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Integrative bargaining; Trading
important issues with you with those important to your partner
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Sandbagging
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Strategic Misrepresentation, when
one or more party misrepresent their interests to feign compromising
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Preparation Tips
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80/20; Assess: (1) Self, (2)
partner, (3) situation; identify BATNA, “target points,” negotiation scope,
etc.
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Mediation
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Hobson’s Choice
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A “take it or leave it” choice;
avoid during negotiation
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Aggregation Bias
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Diffuse it. We aggregate metrics together and
forget costs associated with alternatives (e.g. guy rating the girl)
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Communication
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Modeling
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Effective modeling should be
Authentic, Observable and Routine
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Illusion of Transparency
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We assume others understand what we
are thinking (e.g. tapping a song)
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Social Proof
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Viewing behavior as correct in a
given situation to the extent that others are performing it; “We are sheep”
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Diffusion of Responsibility
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Bystander Effect; Tendency to accept
less responsibility as group size increases (Kitty Genovese murder)
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Individuation
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Diffusion falls when we are individually
identified or reminded of ourselves (Diener, Halloween candy)
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Persuading (Speech)
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Analogies, Integrate setting, Common
purpose, Build momentum & urgency, Repetition (Anaphora), Pauses
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Decision Making
· o
Confirmation
Bias: Seeking information to prove the hypothesis and disparaging
information inconsistent with our beliefs
§
Escalation
of Commitment: Putting more effort into a obvious failed cause. even though project is failing, we put resources into it because we have been working on it for a long time.
False consensus effect:
Eg: drinking at GSB- everyone must do it because I do it.
Grades at GSB: no one cares bcoz I dont
Uniqueness bias: underestimate the # of people who do good and overestimate the # of people who do bad.
Eg: I think everyone steals pencils
I think no one shares their notes
Pluralistic Ignorance: we fail to realize that others think similar to us when under similar pressure. There is sense of false polarization.
Eg: we are all tired of studying. but we think everyone else wants to go out even though they are just as tired. therefore we go out.
Moral Credentialing: I do something good at 1 place and that makes me feel that I can do a little bad at another place. eg. charity on 1 side and low labor wages on another.
Perception (Judging Others)
· ·
Fundamental
Attribution Error – We assume you are responsible for an account and
discount the situation; we do not give people the benefit of the doubt
o
Alex
Trebek effect - everyone thinks Alex
Trebek is a genius
o
Ex: Your buss is unresponsive; you’ll blame him,
and not that he is busy
·
Halo
Effect: The perceiver’s general impression of a target influences his or
her perception of the target on specific dimensions
o
Similar to the confirmation bias, but we
collapse into a course evaluation
§
Ex: A
subordinate who has made a good overall impression on a supervisor is rated as
performing high quality work and always meeting deadlines regardless of work
that is full of mistakes and late.
o
Primacy
Effect: We remember the beginning (first impression)
Recency Effect:
·
Similar-to-me
Bias: People perceive others who are more similar to themselves more
positively than they perceive those who are more dissimilar
o
We like people like us
o
Ex: Promotions, hiring, etc.
o
Ex: Women in symphony auditions (blind testing)
Self serving bias: in survey, husband and women were asked what % of household work done
by them? The result showed sum of their work was ~120%, 130% etc.
·
Self-fulfilling
prophecy: We treat people
differently based on our initial impressions of them
o
1. We form certain beliefs of people
o
2. We communicate those expectations with
various cues.
o
3. People tend to respond to these cues by
adjusting their behavior to match
o
4. The result is that the original expectation
becomes fulfilled.
o
Study: Eye color experiment, students ended up
doing objectively worse on exams
·
Kelley's
Covariation Model: Question to ask to overcome:
o
Consensus: What do others do in the situation
o
Consistency: What has the subject done in the
past?
o
Distinctiveness: What has the subject done in
other situations?
·
Influence
·
Hard to influence large groups alone, but it is
possible
·
Techniques used by Henry Fonda in Twelve Angry Men
o
Emotional
Contrast: Emotion can be used to capture attention, but people can
desensitize to it, so you need an emotional contrast to attract attention. Quickly return to equilibrium. Examples:
§
Physical proximity (e.g. looking over shoulders)
§
Voice volume
o
Push v.
Pull Techniques: Better to use push techniques (persuading, asserting) when
majority; better to use pull techniques (attracting, compromise, bridging) when
minority
§ Create new outcomes so it’s not you v. me, could
be a third answer
o
Framing
Dissent: Dissent must be framed to
attack the issue, not the majority.
§
Frame the question in a favorable way (not
trying to prove innocence, just see if we are 100% sure he is guilty)
§
Don’t act like you’re standing in the way of the
group
o
Identify
Allies: Look for those who are
similar, lack conviction, or sit on the periphery.
§
Similarity (sympathy), lack of conviction
(wavering), or dissatisfaction with the majority (Periphery)
o
Rationality:
Effective dissenters must appear “hyper-rational.” Emotion must be
situation appropriate, or professionally displayed.
§
Asking questions
§
Let opponents make difficult-to-defend, absolute
statements, then disprove (knife example)
o
Voting: When
in the minority, ask for a private vote to encourage dissent; when in the majority,
ask for a public vote to discourage dissent.
o
Silence
is awkward, and people will often try to fill the air and end up offering
compromise; it also enables catharsis,
letting others vent their emotions; no one can sustain high emotion for too
long
·
Foot in
the Door Technique: After committing to a position, people are more likely
to comply with requests that are consistent with their original position
(commitment and consistency)
o
Study: Sign-in yard; agreement rate went from
17% to 76%
o
Ex: “Can you do me a favor?” before asking for
favor
·
Four
Walls Technique: operates when a series of interview questions box the
target into a tight space, forcing compliance (each question acts as a wall,
closing in on the target).
o
Ex: Encyclopedia salesman example
Robert Cialdini
•Liking:
People
like those who like them. Two
keys ways to develop liking: similarity & genuine praise. Positive
remarks abt
person’s attitude, traits, performance.
Reciprocity:
give
what you want to receive. “glad
to help. I know how important it is for me to count on your help when I need
it.”
Social
Proof: use
peer power whenever available.
Eg: if
friends donate, probability of our donation increases
Testimonials
from fellow customers work better than sales man’s pitch
Eg:
canned laughter, salting “tip jars”
•Consistency:
make
their commitments active, public and voluntary
Once
people commit to something in public, they stay consistent.
Eg: if
u get something in writing, odds are high that it will get done. People live up
to what they have written down to demonstrate consistency.
Eg: ask
for a small favor to support a cause, then ask more more
favor…(commitment & consistency)
Principle
of Authority: Expose
your expertise, don’t assume its self-evident.
Very
often, people mistakenly assume that others recognize and appreciate their
experience.
Eg:
physical therapy doctors
Scarcity:
people
want more of what they cant get. Highlight
unique benefit and exclusive information. Frame
your conversation in terms of what people stand to loose
Networking
· ·
Optimal
Network Design: Certain structures (strong, diverse contacts) and processes
(trust, mutually beneficial, consistent) yield greater returns
· Your network is not just people who you are friends with.
Nucelie of network are important.
Motivation
Cash vs Gift: gift is better. because people compare cash to what they already have.·
Unexpected rewards increase the value. rewards must be aligned with strategy. You get what you inspect and not what you expect.
Direct supervisors have the most influence over
employee motivation -- not peers, or subordinates, or even top leaders.
·
Extrinsic
motivation – desire to perform a behavior to acquire material rewards (pay,
benefits, etc.) or to avoid punishment.
o
Amount of pay
o
Quality of fringe benefits
o
Having job security
·
o
SMART
Goals: Specific // Measurable // Achievable // Reasonable // Timetable
·
Positive
Reinforcement (increase desired behavior) does not necessarily lead to the
same incentivized outcome as negative
reinforcement (reduce undesirable behavior) Overall, negative reinforcement helps achieve performance above a critical threshold and then positive reinforcement helps above that.
o
E.G. “Stop hitting your brother,” but real goal
is to stop pestering
o
But must use negative reinforcement as well (or
children become quitters)
o
Shorter intervals are better than longer ones
·
Loss
Aversion: Losses are more painful than gains are satisfying
o
Loss aversion is difficult to avoid in
bonus-based incentive systems
·
Unexpected rewards produce dopamine, but expected rewards do not.
·
Intrinsic
motivation –
o
Learning something new
o
Accomplishing something worthwhile
o
Developing skills and abilities
o
Most people underestimate the extent and
importance of intrinsic motivation
§
Ex: giving blood example, tenure, grade
non-disclosure
·
How To Increase Intrinsic Motivation As A
Manager
o
Autonomy:
What can I do to give my subordinate more independence?
§
Have people choose their own workstreams
o
Mastery:
How can I help my subordinate improve/demonstrate their competence?
§
People like to be good at what they do and work
harder when they believe they’ll get better
o
Relatedness:
How can I help my subordinate feel connected to others?
§
Relationships (Study: Grant & Hoffman, 2010, Hand hygiene)
§
Responsibility
§
Recognition
·
We are not wired to give people the benefit of
the doubt and assume they are appreciative or thankful. eg. Say thank you!
o
Purpose:
How can I remind my employee of the greater purpose?
§
Purpose can be to win, impact, help, lead, etc –
but must be shared
§
Ex: Genentech showed customer testimonials to its R&D employees.
·
o
Four factors explain why so many fouled-up
reward systems:
§
Fascination with “objective” criterion (managers
seek quantifiable standards that may not be relevant)
§
Overemphasis on highly visible behaviors
(behaviors that are hard to observe and measure are also hard to reward)
o
o
Ex: insurance, tracks returned checks and
complaints, so “when in doubt, pay it out”
We
hope for…
|
But
we often reward…
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Long-term growth
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Quarterly earnings
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Teamwork
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Individual effort
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Setting challenging “stretch”
objectives
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Achieving goals, “making the
numbers”
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Downsizing, rightsizing,
restructuring
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Adding staff, adding budget
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Commitment to total quality
|
Shipping on schedule, even with
defects
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Candor, surfacing bad news early
|
Reporting good news, agreeing with
the boss
|
Negotiation
·
Distributive
Issues – Are they equally important to all parties? “Zero-sum issue”
o
Compromising
or Splitting the difference is
only optimal if issues are equally distributive
·
· o
Logrolling,
or integrative bargaining = trading issues that are important to you with issues important to your partner.
·
·
Sandbagging
(Strategic Misrepresentation): Offering seeming concessions that benefits
the offerer more than the recipient (Ex: Roosevelt pamphlet)
o
But if they learn about this, this reduces trust
in future negotiations
o
Must ask the right questions and take the
other’s perspective
o
Always
better to work with multiple issues at a time to identify tradeoffs
§
Learn to offer packages and be careful offering
ranges
§
BATNA:
Best Alternative To Negotiated Agreement
o
First
offers: If you are more clear on the bargaining range, better to make first
offer
§
Initial offer can be a signal of its value
§
Ex: eBay starting price
o
You don’t get what you don’t ask for!!! Many people are afraid to initiate
negotiations (e.g. for salary increases)
·
Mediation
facilitate perspective taking
Communication
·
·
Illusion
of transparency: we assume others understand what’s in our head (Ex: tapping
a song)
·
Social
Proof: People are more likely to comply with requests if they are
consistent with what similar others are doing: “We are sheep, we are lemmings”
o
Ex: Canned laughter, salting tip jars, sidewalk
study (looking up), fads, etc.
o
Ex: “If operators are busy, please call again.”
o
Ex: Hotel says other guests are reusing towels
(Robert Caildini study at Holiday Inn)
o
Ex: “Every year, thousands of people steal
fossils…” Caused 3x increase in theft
o
Ex: Time Magazine article on “Tax Cheating: Bad
and getting worse”
o
Ex: “Discipline of Market Leaders” book, authors
bought books to win NYT bestseller
·
Relative
information is far more valuable than absolute because we remember it
longer and process it instantly; absolute data without any benchmarks is almost
useless
· Dark side of social proof is Diffusion
of responsibility (bystander effect): Tendency to accept less
responsibility as group size increases; Everyone assumes others are handling it
o As a manger, to avoid: (1) Enhance individual
accountability, (2) Watch out for large group size, (3) Clarify job
responsibilities
·
