3 Mechanisms That Bias Our Decision-Making: REVIEW

Why do we make the decisions that we do? How do we rationalize these decisions?

Research is constantly evaluating how and why business managers make the choices we make, which we’ve outlined over the last few weeks.

To sum up, the three main biases discussed:

  • Availability bias – involves making a decision not based on an outcome’s true frequency/probability, but rather on how frequent an event enters the forefront of one’s mind.
  • Representativeness bias – involves judging the likelihood of an event based on how closely it relates to another event – i.e., on a mental model that does not exist in reality.
  • Anchoring bias – involves reaching a decision from an initial set point, often grounded in your culturally-influenced values and norms.

However, these are only a few ways in which culture creeps in to bias our decision-making.

Even our confidence in our decision-making ability is often influenced by culture.

Confidence in the Veracity of Decision-Making Ability

Research shows that, compared to their U.S. counterparts, Mexican managers are exceedingly confident in the veracity of their decision-making.

In a study by Christine Uber Grosse, entitled, “Global Managers’ Perceptions of Cultural Competence,” one Mexican manager explained the differences between leaders in Mexico and America, saying:

“We in Mexico are more colloquial or informal and are not so inclined to statistics. The Americans are very ‘manual-oriented’ and organized and we are more relaxed and ingenious.”

So, while before committing to a decision, U.S. managers expect to hear a complete plan laid out, including costs, a schedule, and the target results, Mexican managers rely more heavily on their gut instinct.

Moreover, when Mexican managers commit and something fails, they are more likely to double-down on that commitment, throwing good money after bad (as U.S. managers might put it).

According to research conducted by J. Frank Yates and Stephanie de Oliveira (“Culture and Decision-making“):

“A high degree of overconfidence has been found among Mexicans relative to Americans (Lechuga & Wiebe, 2011)…Overconfidence was widespread but differed in degree according to region.”

This overconfidence was attributed by the authors not so much to a manager’s judgment in confidence, but rather to differences in ability, as the latter varied substantially across countries.

Simplified Mental Models

Tying this all together with cross-cultural business, knowledge of the biases that influence decision-making – and another’s confidence in their decision-making – will help you navigate another culture’s rationale while also redirecting yours accordingly.

With various worldviews and cultural backgrounds, subjective realities exist, resulting in different mental decision models.

But one thing is universal: managers use their simplified and biased mental models to make their decisions.

Although likely different than your own, their simplified mental model is not irrational; it is based upon their subjective cultural perception and reality, just as yours is.

Oftentimes, no matter how illogical a decision may seem to you, the other is acting rationally within their own cultural framework, their baobab.

So, before concluding that a foreign manager’s decision makes no logical sense, familiarize yourself with the culture, its perception, and its reality.

You may then understand how a manager’s availability, representativeness, and anchoring biases – or any other culturally-influenced bias – enter into their decision-making.

Conformity in Culture: The Colored Pens Study

Say, you’re given a bin of pens.

Most of them are black and a few are blue. Your favorite color to write with is blue.

Which pen would you choose?

This study was conducted by Japanese researcher Toshio Yamagishi and his research team with participants from Japan and the US.

The study involved a default scenario, an initial scenario, a final scenario, and a purchase scenario.

  • Default scenario – participants simply told to choose a pen
  • Initial scenario – participants told they were the first person to choose a pen
  • Final scenario – participants told they were the last person to choose a pen
  • Purchase scenario – participants told they were buying a pen

Considering previous research on the differences between individualist and collectivist cultures, one might think the Japanese would always choose the majority color, due to their preference for conformity, while the American would always choose the minority color, due to their preference to stand out.

The results, however, were a bit more complex.

Preference for Uniqueness

Although the Japanese did choose the majority color and the Americans the minority color in the default scenario, the results between the two cultures were similar in the other three scenarios: the Americans and the Japanese were just as likely to choose either the majority or minority color.

These last three results indicate that both cultures prefer uniqueness in equal measure.

The results also show that each culture, in being the first to choose, is cognizant of other peoples’ desire for uniqueness and, therefore, may be reluctant to offend those who have yet to choose their colored pen.

But when the social situation becomes ambiguous, as in the default scenario, why do the Japanese assume the majority pen, when the results show that they prefer the unique pen just as much as their American counterparts?

This is where the preference for harmony comes in.

Do Not Offend

The default scenario reveals that the Japanese don’t necessarily prefer to conform; after all, they were just as likely to choose unique over conformity in the other three scenarios.

Rather, the Japanese prefer harmony over disharmony.

Yamagishi and his team concluded that the disparity was in the ambiguity: the desire not to offend is stronger in the Japanese than in the Americans, particularly in ambiguous social situations.

And why not offend?

One theory posed by Yamagishi is centered around interpersonal relationships.

Japan is a “closed society” regarding groups and relationships. By this, we mean that it’s considerably more closed to outsiders; if you’re not part of the in-group, you’re not welcome. In this way, it’s harder to replace lost relationships when you’ve offended someone.

The US, on the other hand, is an “open society.” It’s much easier to replace a lost relationship if one has caused offense.

This is why the Japanese avoid offending in ambiguous situations, which may come at the cost of their preferences on occasion. Group loyalty over self-loyalty, as we talked about last week.

The ambiguity of whether your choice of a unique pen may or may not offend someone is balanced against the cost of social rejection.

The result is this strategic and nuanced adaptation under differing scenarios.

How does this apply to the type of management style a culture prefers?

We’ll talk more about that next week.