Tuesday, September 7, 2010

Positive group think hurts decision-making


Never Saw it Coming: Cultural Challenges to Envisioning the Worst by Karen Cerulo explores another approach to behavioral economics through looking at the sociology of tail events. Her strong view is that we are inherently optimists so that we discount the chance of a large negative event. We do not believe that worst case scenarios will occur. This optimism is reinforced by cultural practices. We create environments where it is hard to be negative. It is not just an issue that we make behavior mistakes as individuals. We actually institutionalize our behavior as optimists.

Cerulo argues that there is positive asymmetry in societies which cause individuals to have a tendency to focus on and exaggerate the best. This asymmetry causes us to avoid discussing or believing that the worst could happen. The positive view is the dominant way of seeing events. Positive asymmetry exists with our loves, our parenting, and in almost every part of our daily routines. So when we are asked to make worst case scenarios we naturally will be more optimistic or reduce the chances of a bad event happening. Positive asymmetry will occur in small groups which are subject to group think. Risk shifting and lack of intervention all exist because we are less willing to think the worst. No one wants to be overly negative in a group.

There are some exceptions to this asymmetry like medical practitioners and computer programmers who seem to be able to rise above the natural positive tendencies They show a tendency to look for problems whether through diagnosis of disease or bugs in programs. They have a formal knowledge, high individuality, a service orientation, and open boundaries that make it more likely that they will be able to look for the negative.

The author argues that symmetrical vision can be achieved but it takes a high degree of work and self-analysis. This is not different from what many other decision books will tell you, but the stress on group dynamics and cultural aspects provides a slightly different perspective.

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