People are often swayed by advice, even if that advice goes against their better judgement. Should following the advice lead to a poor outcome, many believe they will not feel as guilty about the decision if they were following someone’s advice than if they made the decision on their own. The opposite is true. A […]
Read More… from Ignore the Advisor and Stick with Your Better Judgement
Enthusiasm for your job is usually an asset. However, new research reveals that on Wall Street, such enthusiasm may backfire as the rush of winning triggers physiological changes that undermine rational thinking and decision-making. Specifically, the research studies the impact of increased testosterone levels on the buy-and-sell decisions of 140 traders taking part in a […]
Read More… from How Testosterone Leads to Overpricing on Wall Street
Most people make moral judgements intuitively: we feel what is right or wrong. For example, imagine a dilemma in which a runaway trolley is racing toward five people, who will be killed if the trolley is not stopped. A man named Adam stands on a footbridge overlooking the trolley tracks. In an effort to save […]
Read More… from We Trust People Who Believe in Absolute Moral Rules
Companies that regularly evaluate the performance of business units, acquire and divest assets, and adjust resource allocations based on each division’s relative market opportunities have a significant edge over those that do not; according to Stephan Hall, Dan Lovallo and Reiner Musters, they will be worth an average of 40% more after 15 years. In […]
Read More… from Reallocating Resources to Realize Strategic Goals
January 2008 to April 2011 was a shocking time for France Telecom, when more than 60 employees committed suicide — a large number leaving behind notes blaming stress and misery at work. Though initially labelled isolated incidents, the company eventually took note of the increasing problem and initiated measures ranging from suggestion boxes to opening […]
Read More… from Three Strategies for Resolving Workplace Conflict
When it comes to setting and achieving goals, power makes a difference. Those with more power are quicker to establish goals, and to take action to achieve those goals, than people with less power. To some extent, this is understandable: the powerful are less dependent on others and have greater control over outcomes. They also […]
Sunk cost bias has been blamed for everything from disastrous military campaigns to over-budget public works and is widely acknowledged as a serious obstacle to effective decision-making. Defined as the “tendency to continue an endeavour once an investment in money, effort or time has been made”, it leads people to “throw good money after bad” […]
Formal risk management systems now provide the dominant logic for governing an uncertain world and are prevalent in public services as well as private firms. What happens when these systems interact with indigenous risk practices and ethics-based risk controls? Existing literature suggests that hybridization is likely — that rules-based and ethics-orientated models complement each other […]
Read More… from Managing Risks: Culture Matters More Than Rules
One way that organizations ensure that they accomplish certain objectives is through management control systems. These systems reward and promote employees according to certain criteria, in order to achieve goal congruence. According to the authors, very little research into the design of control systems that lead to goal congruence takes into account the role that […]
Read More… from Better and Fairer Management Control Systems
Rational and objective thinking is not the only influence on the decision-making process. Recognising this, the authors set out to research why good leaders often make flawed decisions, at times dragging their organizations down. According to them, finance managers play an important role, being “savvier” at managing rational thinking and the inevitable personal biases of […]
Read More… from Avoiding Flawed Decisions: A Finance Manager’s Role
