From Max Bazerman’s “Judgement In Managerial Decision Making”
Debias Your Judgement: (from p. 226)
Debiasing refers to a procedure for reducing or eliminating biases from the cognitive strategies of the decision maker. Fischhoff (1982) proposed four steps that decision-making teachers or trainers can follow to encourage their students to make wiser judgments:
(1) offer warnings about the possibility of bias,
(2) describe the direction of the bias,
(3) provide a dose of feedback, and
(4) offer an extended program of training with feedback, coaching, and whatever else it takes to improve judgment.
Fischhoff also argues that debiasing is an extremely difficult process that must be closely monitored and guided by a psychological framework for change. For example, research on the hindsight bias (Fischhoff, 1977), described in Chapter 3, has shown that even when the bias is explicitly described to participants and they are instructed to avoid it, the bias remains.
In contrast, a review by Larrick (2004) paints a rosier picture of our ability to overcome bias through training. Yet Larrick (2004) also notes that most successful debiasing strategies tend to be context- and bias-specific; training and testing must be closely linked and must occur in close time proximity. For example, research on the overconfidence bias has found that intensive, personalized feedback is moderately effective in improving judgment (Lichtenstein & Fischhoff, 1980), but only in the short term. Occasionally, a broader effect of training has been documented. For example, simply encouraging people to “consider the opposite” of whatever they are deciding reduces overconfidence, hindsight, and anchoring effects (Larrick, 2004; Mussweiler, Strack, & Pfeiffer, 2000). Larrick (2004) also highlights the partial debiasing success of using groups instead of individuals, training in statistical reasoning, and making people accountable for their decisions (Lerner & Tetlock, 1999).
Based on Lewin’s framework outlined in Chapter 1, Fischhoff’s debiasing research, Larrick’s review, and our own judgment-training programs with MBA and executive students, this section makes specific suggestions for debiasing judgment. Unfreezing Chapter 1 noted that many behaviors at the individual, group, and organizational levels are ingrained, or part of a standard repertoire, and are therefore quite difficult to change. Factors that inhibit individuals from changing their behavior include satisfaction with the status quo, risk aversion, and a preference for the certain outcomes of known behavior to the uncertain outcomes of innovative behavior. For improved decision making to occur and continue over time, an explicit “unfreezing” process of ingrained thinking and behaviors must take place. For at least three key reasons, unfreezing old strategies is crucial to changing the decision-making processes of individuals.
First, individuals will have typically relied on their current intuitive strategy for many years. To want to change would be to admit that past strategies were flawed, and this realization is likely to be disturbing. Thus, individuals may be motivated to avoid the disconcerting truth about their judgmental deficiencies.
Second, individuals who have achieved a certain level of professional success (such as students in MBA and executive education programs) are likely to have received positive reinforcement for many of their past decisions. According to the basics of reinforcement theory, individuals tend to continue behaviors that are positively rewarded. For example, because many successful executives rise to the top using intuitive strategies, they tend to resist information indicating that their judgment is systematically deficient in some demonstrable manner.
A third, related point has to do with balance theory (Heider, 1958), which suggests that individuals try to manage their cognitions into a consistent order. For successful managers, the notion that “there is something fundamentally wrong with my decision-making processes” clashes with their awareness of their success. The belief “I am currently an excellent decision maker” is much more harmonious with the notion of success; therefore, according to balance theory, that cognition is more likely to dominate. Overall, a pattern emerges of an intelligent manager who has multiple reasons for believing in the high quality of his or her decision-making processes and resisting any change to his or her intuitive strategies. Most successful people will be motivated to view their intuition as a talent rather than a handicap. In fact, this book has provided substantial evidence that there is significant room for improvement in the intuitive strategies of even the brightest, most successful managers. Thus, we conclude that improving on intuition is an important activity for successful managers to attempt, but that cognitive resistance to change is a predictable pattern.
This book has sought to create changes in your judgment by exposing you to concrete evidence that leads you to question your current strategies. The quiz and feedback format was designed specifically to unfreeze your decision-making processes. Most readers make a substantial number of mistakes on these items and are then ready to learn where they went wrong and how they could have performed better. This format unfreezes the notion that your decision-making processes do not require improvement. As you begin to question your current strategies, you become receptive to alternatives. In other cases (such as the dollar auction), vivid examples were intended to unfreeze your thinking by leading you to identify with individuals who fell victim to judgmental deficiencies.
Change
Once you has unfrozen past behaviors, you will become willing to consider alternatives. The next stage consists of making the change itself. However, change is far from guaranteed; internal resistance is likely, causing you to continually reassess the desirability of change. There are three critical steps to changing your decision-making process: (1) clarification of the existence of specific judgmental deficiencies, (2) explanation of the roots of these deficiencies, and (3) reassurance that these deficiencies should not be taken as a threat to your self-esteem. The first step consists of abstracting from the concrete example that was used for unfreezing to identify the more general bias that exists. In addition, for the bias to have face validity to you, an explanation of why the bias exists is necessary; this often consists of clarifying the heuristic or phenomenon that underlies the bias. Finally, this information may be threatening enough to increase the resistance that you partially overcame in the unfreezing stage. Thus, it is critical that you understand that virtually everyone is subject to judgment biases and that having them does not imply that you are a poor decision maker, but simply human.
Perhaps the most general-purpose debiasing strategy is what Lord, Lepper, and Preston (1984) call “consider the opposite.” They advise us to play devil’s advocate with ourselves and to think about reasons our tentative conclusions could be wrong. This strategy is obviously most useful for counteracting the confirmation trap—the tendency to seek out information that supports our chosen point of view while overlooking disconfirming evidence. Baron (1994) has given more specific advice. He suggests that, when assessing any piece of data, you should do two things.
First, ask yourself: “How likely is a yes answer, if I assume that my hypothesis is false?” For instance, imagine you are considering investing money in a friend’s new business idea. You take it as a good sign that his business plan projects he will turn a profit in one year. The hypothesis you’ve been entertaining is that this is a good investment for your money. But what if you assume the hypothesis is false: that this investment is a terrible idea because it puts both your money and your friendship in peril? Is it possible that your friend came up with a plausible business plan but that his chances of success are not particularly great?
Second, try to think of alternative hypotheses, then choose a test most likely to distinguish them. Could you devise a test that could tell whether your friend’s plan was actually a viable one? Maybe the fact that he has had trouble getting start-up funding from banks or venture capitalists is a sign that his business plan doesn’t stack up that well against those of other aspiring entrepreneurs. This process is useful not only for counteracting the confirmation bias but also for reducing overconfidence. Admittedly, it’s not always fun to consider ways in which we might be wrong, but this is a crucial step when sound decisions and accurate judgments are more important than ego gratification.
Refreezing
After we make a positive change, it is tempting to revert to past practices and bad habits. The old biases still exist and can be easily and even accidentally used. Meanwhile, the new procedures are foreign and must develop into intuitive strategies, a process that takes place with practice over time. As you consciously
use new strategies in multiple applications, these strategies slowly become second nature, taking the place of old patterns. However, frequent application and overviews of past training are necessary if change is to last.
For refreezing to occur, you must continue to examine your decisions for bias long after you have finished this book. You should schedule routine “checkups” to evaluate your recent important decisions—those you made on your own, as a negotiator, and as a member of a group—while remaining aware of the limits of
your judgment