Decision-making incorporating behavioral economics


Vienna Debate Workshop-Finale

The McKinsey quarterly delivers the goods once again. Check out Allen Webb’s article based on his interview with Chip Heath and Olivier Sibony. Read the article and sign up for the newsletter. There is the occasional business jargony fluff piece, but there are also enough gems to make it worth tolerating the daily emails.

About the only thing that we disagree on is the need for more debate to make better decisions. In theory, I guess debating would help. However, one of the dynamics that they miss is that debate generally entails people with their mind already made up, squaring off with each other in an effort to make themselves look smarter than their counterpart. No one really ‘wins’ a corporate debate…the team with more power – whether formal or informal – gets their way. Debating also represents a gamble on the part of the more junior person. No matter what they say, there are many people who feel, at a visceral level, that debate equates to disloyalty. If you are the junior guy or gal, there is nothing in it for you to risk that the more senior personnel in the room are not That Guy. If you really want a better decision, aggregate independently-formed viewpoints.

Having picked apart the article, however, the point above is the only one with which I can find fault. It was especially helpful for the pointers on approaching people about improving their decision-making…or negotiation skills. I.e. no matter how obvious it is to those of us in the know, one cannot directly tell people they are biased and expect to sell them something. (getting nervous and starting to tremble) .

These guys actually won me over with their clear disdain for bureaucracy and slowness…even pointing out that the word ‘process’ conjures up painful connotations. They continued their courtship with examples of the confirmation bias…one that is almost impossible to miss once you understand it. Finally they sealed the deal with their emphasis on experimentation – i.e. getting back to reality.

If they would have spoken about prediction markets, they would have had an expedited selection to the TPS Report’s Hall of Fame. You know, if that existed.


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One Response to “Decision-making incorporating behavioral economics”

  1. Makrand Morar Says:

    This is truly perfect 😀 Thankyou for posting this

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