Tag: logic

3 Mechanisms That Bias Our Decision-Making: Representativeness Bias

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Every single person has a mental model.

When assessing the likelihood of an event, the individual bases the event’s probability upon its similarity to that model.

This is called representativeness bias.

Last week, we talked about availability bias, one of the three mechanisms that bias our decision-making.

Availability bias involves one’s perception of an event’s frequency based upon its vividness and frequency in the forefront of one’s mind.

Now, let’s take a look at how this second mechanism – representativeness bias – distorts judgment and decision-making.

Marriage & Divorce

One example of representativeness bias involves marriage.

Many people’s mental model of marriage is that of a lifelong partnership. Not often does a couple enter into a marriage with a view of divorce.

Due to their mental model of eternal love, only around 5 percent of couples in the U.S. sign a prenup, despite around 50 percent of marriages ending in divorce, according to research by Harvard Law.

Somehow, most don’t consider they’ll be part of the statistic and, so, don’t plan for it.

In this way, the power of representativeness bias is stronger than the logic of probability.

Representativeness Bias in Business Decisions

Culture, of course, influences our mental models, and so representativeness biases are grounded in culture.

Let’s look at another example of how a business decision revealed representativeness bias, likely to the detriment of the business.

The global insurance company, Allianz, had built business in eleven African countries. Although profitable, the business was small and, in March 2014, Allianz reviewed their strategy on the continent.

They narrowed their way forward down to two roads: 1) apply aggressive growth through acquisition, or 2) wholly sell off the business.

The board of Allianz was presented with a growth strategy. They rejected it.

Their view was that Africa’s corruption was too extensive and might put the insurance company at reputational risk.

However, Allianz continued to do business throughout Eastern Europe.

According to the Transparency International list – an index of worldwide national corruption – several countries in Eastern Europe, in which the insurance group remained, rated equally corrupt as their African counterparts.

The West’s mental model of Africa considers the entire continent as one monolith of extreme corruption, thereby biasing judgment in lieu of logical probability.

In dismissing growth based on representativeness bias, the company may have lost out on a successful business venture and the profitability that accompanied it.

Tune in next week for anchoring bias.

When East Meets West: Understanding the Rationale Behind Indian Norms in the Workplace

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You’re a Westerner working in a cross-cultural environment in India.

As a Westerner, you prefer communication that’s direct and clear.

You see ambiguity as a stumbling block in business, so you ask direct questions and expect direct answers in return.

Your Indian colleagues, on the other hand, demonstrate some indirect behaviors that you don’t understand.

The rationale behind this style of communication is a mystery to you, and the need for managerial approval in many cases rubs you the wrong way. You see it as unnecessary micromanagement.

This is a situation in which understanding the rationale behind your colleagues’ culture will forge a better business relationship.

Harmony & Many Truths

Mr. Waseem Hussain cleared up this mysterious rationale for me.

As a bicultural professional who has grown up in Switzerland with Indian parents, he knew both sides of the coin and could bridge that cross-cultural barrier between Indian and European mentalities.

In other words, he was the best zookeeper to explain the behavior of other animals in the zoo to me, the monkey.

When I posed a question about why I couldn’t receive a clear answer to a clear issue from Indian colleagues, he replied that, in some ways, it has to do with Hinduism.

As the majority of Indians believe in many gods, the cultural rationale would be that there are many truths.

Another explanation for the rationale has to do with the cultural concept of harmony.

Say, you ask an Indian colleague to meet a 5 o’clock deadline.

Whether or not it’s possible to complete the work by that point, the colleague will tell you, “Yes, no problem.”

In reality, he may have no intention of completing the work by this deadline, but by offering the positive “yes,” he is in harmony with his Western counterpart.

A “no” means disharmony and discomfort on his part.

Universal Truth & Accountability

From the Westerner’s point of view, this behavior appears as blatant dishonesty.

You expect your colleague to abide by his word, as accountability and time sensitivity are important to your culture.

Most Western cultures are largely shaped by Christianity – that is, the belief in one god. As such, the culture’s norms and values revolve around a single universal truth.

This is one obstacle for Westerners in cross-cultural business environments: universal truths do not exist there.

You must have a higher ambiguity tolerance and be willing to accept and even adapt to foreign norms and beliefs.

Your cultural rationale is not everyone’s rationale.

Reasoning and logic are shaped by culture and evolve accordingly with the history and tradition of the people.

Unless a person is counter-culture, he will likely follow the values, norms, and beliefs of his culture’s rationale.

No assumptions should be made about a culture’s behavior being silly or illogical. Refrain from judging something you don’t understand.

As an effective manager, it is your job to find the rationale behind the behavior and accept and adapt accordingly.

In this case, adopting, for a moment, the Indian culture’s worldview – its belief in many truths and emphasis on harmony – will enable you to see the reasoning behind your colleagues’ behaviors. 

“The World is Flat”: How Beliefs Direct Rationale

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Say, you grew up in an remote civilization far away from modern industry and technology. Far away from people and foreign thought.

Say, you were born in the middle of the African savannah. The land is flat. Very little in the way of mountains or hills.

You wake up in the morning to the sun rising in the east and setting in the west. It appears on one side of your village and disappears on the other.

Due to your observations, you assume the world is flat and a void exists at lands’ end. Not an illogical or irrational assumption, all things considered. There is no outside influence to suggest otherwise.

Your hypothesis is not unfounded, and it turns into a belief.

The Gods Must Be Crazy

This plays into the plot of the 1980 South African comedy, The Gods Must Be Crazy. 

In the film, a pilot flying over the plains of South Africa tosses an empty Coke bottle out the window.

When a bushman happens upon the shiny object, he believes the gods sent it to him. After all, it did fall right out of the sky.

Oblivious to modern civilization, the bushman’s tribe experiments with the Coke bottle, using it for a variety of daily tasks – in lieu of a grinding stone, for instance.

The traditional community sees the shiny discarded Coke bottle as a prized trophy, being that there’s only one on Earth (or so they think).

Due to the strife caused by the villagers fighting over this bottle, the tribal elders believe it best to return this gift to the gods in order to maintain peace.

A bushman is tasked with walking to the end of the Earth to toss the Coke bottle into the void.

Those of us who live in the modern world – who know that the world is round and Coke bottles are everywhere – likely find this whole idea laughable.

If someone from a Western culture carried a Coke bottle across an entire continent on foot in order to dispose of it over the edge, we’d consider him crazy, irrational, unreasonable.

But to say the same about these bushmen, we’d be wrong.

Walk in the Steps of the Bushmen

Take yourself out of your own cultural baobab for a moment and place yourself in that of these bushmen.

Were they unreasonable in their thinking or did their actions align with their beliefs?

Their actions were rational and justified within their ideology.

Bottles like this don’t exist in their world. A flat world must have edges, so thinking you can discard a bottle off the edge makes perfect sense.

The point is: a person acts logically within his cultural rationale if his actions/behavior is in accordance with his beliefs.

We’ll follow this logic next week.

Seeking the “Why”: How Curiosity Can Assist Cross-Cultural Integration

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When working across cultures, stress develops from inconsistencies in values, behaviors, and norms.

Anxiety accompanies culture shock and the changes in behavior required.

Do you handle stress and anxiety well? Then the transition of adapting to your new culture will happen faster and smoother than otherwise.

If you don’t, the next couple posts will show you how to ease the process.

Why Asking “Why?” is Important

A lack of understanding leads to a lack of acceptance.

Without understanding and acceptance, adapting to things you find random or illogical is next to impossible.

That’s why learning the “why” of behavior clears the way for adaption.

Consider you’re the monkey in the zoo. People are chucking peanuts at you, and you have no idea why.

Your handler feeds you often enough, and you’re not hungry. And yet, these humans are surrounding your home and lobbing peanuts at your feet.

“Seems irrational,” you think. “I have all the food I need. Why are these humans throwing more?”

Then again, you might try to see it from the human perspective by asking, “Why?”

Taking a seat to observe the humans, you – the monkey – try to work out the reasoning behind their behavior.

“Hmmm…” you think, “maybe they aren’t throwing peanuts to feed me; maybe they’re throwing them to observe me. I must be boring them by sleeping. They’re trying to encourage me to engage with them.”

As the monkey, through curiosity, you start to understand the rationale of the human; you understand that not all that is unfamiliar is irrational.

Survival Requires Rational Action

Humans are conditioned to act rationally within their environment and time period in order to survive.

Physicist D. Hillis writes in Cause and Effect:

“We like to organize events into chains of cause and effects that explain the consequences of our actions. […] This makes sense from an evolutionary standpoint. The ultimate job of our nervous system is to make actionable decisions, and predicting the consequences of those decisions is important to our survival.”

Since the dawn of time, human beings have been rationalizing.

Society, etiquette, war.

All of these things developed out of some form of rationale or logic.

They were learned.

The question we’ll be asking is how does cultural rationale develop?

And answering that question – and those that follow – starts with curiosity and observation. We’ll talk about that more next week.