This course 'Unethical decision making in organizations : A seminar on the dark side of the force' will teach you how strong organizational contexts push good people towards unethical decisions. You will also learn how to protect yourself and your organization against such forces lurking in the dark. About the Course This course teaches how narrow frames and strong contexts can push good people towards unethical decisions and how they can protect themselves and their organization against ethical blindness. The goal of this course is to empower the participants to analyze the risks of unethical or illegal behavior that might be triggered by powerful contexts. It draws from various disciplines such as management, psychology, sociology, philosophy, and literature, in order to learn what these disciplines contribute to a better understanding of unethical behavior. The course also analyzes some of the most prominent organizational scandals of the recent decades through the lenses of these disciplines. Whenever we hear about ethical scandals, we tend to believe that unethical or illegal behaviour in organizations is driven by character deficiencies of individual actors. Put differently, we simply assume that bad things are done by bad people. However, numerous corporate scandals have demonstrated that even people with a high level of integrity can break the rules if they are put into a strong context. A better understanding of why and under what conditions good people make bad ethical decisions will enable us to better protect individuals as well as their respective organizations against the potentially overwhelming power of the context. It will also enable us to cure societies from problems like corruption. At the end of the course, you are able to: 1. Explain the impact of social context on individual decision making using various theories (from Management, Sociology, Psychology, and Philosophy) 2. Apply these theories to the analysis of some of the most eminent organizational scandals of the recent decades 3. Assess risks of ethical blindness in your own organizational context 4. Design interventions to reduce such risks for yourself and your organization Recommended Background No background expertise is required. The course is open for interested layperson as well as experts who work on related topics, be it as researchers or practitioners (e.g., compliance managers in corporations). Why is this course important for me? Currently, the understanding of why good people make unethical decisions is rather limited, related research is rather fragmented, and the management of such problems in organizations is overly simplistic, legalistic, and inadequate. Understanding contexts, including the dangers of routines, the mindlessness of our daily decisions, and the healing power of mindful decision-making routines is of increasing importance. In this course, you will learn the latest knowledge and the appropriate tool box for dealing with ethical challenges that you will face throughout your life! What do I need to follow this course? We build bridges between various scientific disciplines and will familiarize you with those disciplines smoothly. You need no expertise, just come and share your own real-world experiences about unethical decisions. After all, we are all experts in making decisions—some more ethically, some less ethically—aren’t we?
4.1 - Simple Heuristics
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Del curso dictado por University of Lausanne
Unethical Decision Making in Organizations
181 calificación
De la lección
Week 4- The power of routines
In this week, we will first look at how people and organizations (can) simplify information processing and decision making, namely by using heuristics and by establishing routines. Subsequently, we will examine key driving forces of ethical blindness in organizations and finally demonstrate the risk associated with powerful routines in a case study on innovations in a military context.
Conoce a los instructores
Guido PalazzoProfessor of Business Ethics
Faculty of Business and Economics (HEC-Lausanne)
Ulrich HoffrageProfessor of Decision Theory
Faculty of Business and Economics (HEC-Lausanne)
[MUSIC]
Welcome to the first video of week four of our course on unethical decision making.
In the last week, we have introduced you to the concept of framing and
looked at two cases that illustrated how people construct their reality.
In this video, we will focus on how people can make and
do make decisions by using simple heuristics.
In this session, you will learn what simple heuristics are and
you will see how effective and efficient these decision strategies are.
How do people make decisions and how should they make decisions?
Well, if you ask economists, most would say when making decisions,
people should strive to be rational.
Economists are, of course, framed.
When they look at someone making a decision, they see homo economicus.
Homo economicus cares about economic outcome,
cares about subjective expected utility.
Here we have John von Neumann and Oskar Morgenstern.
Who formulated the axioms of this theory and
who made operational a notion of rational behavior.
For them, being rational meant being consistent with logical schemes and
it meant choosing the alternative that maximizes subjective expected utility.
To compute which course of action maximizes subjective expected utility,
homo economicus takes all relevant and available information into account
to update probability estimates of various events.
And here we have Leo Savage, a proponent of this statistical, or
say number-crunching, approach to decision making.
This view has soon been challenged by Herbert Simon,
who basically said, calculating expected utilities in order to
optimize behavior may be possible in a small and stable world.
But it's not feasible in the real world, which is large.
That is, described on much more dimensions than one con handle computationally.
It is dynamic and it contains a lot of interdependencies and uncertainties.
So Herbert Simon questioned the psychological possibility of SEU theory.
In his Nobel Prize lecture, he said that the classical model calls for
knowledge of all the alternatives that are open to choice.
It calls for complete knowledge of the consequences that will follow on each of
the alternatives.
It calls for certainty in the decision-maker's present and
future evaluation of these consequences.
And it calls for the ability to compare consequences in term of
some consistent measure of utility.
We can contrast these two views here in this illustration.
We have two visions of cognition.
One is the unbounded rationality, then,
that includes optimization under constraints.
On the other hand,
we have Herbert Simon's view, who coined the term bounded rationality.
In Herbert Simon's view, people do not optimize, but they use simple heuristics.
And here we have an illustration of what we call the adaptive toolbox.
This adaptive toolbox consists of simple heuristics that people can use to
make decisions.
It is not optimization under constraint and
it doesn't mean that people are irrational when they use these heuristics.
To the contrary, as we would see, these heuristics do a fairly good job.
Let me now use one of these heuristics to illustrate the notion of
bounded rationality in more detail.
Imagine you're sitting on a field on some playground and your task is catch a ball.
It comes high in the air, so you want catch the ball.
How do you do this?
It's simple, you may say, you just go there, catch it, that's it.
But if you tried to figure out what's actually going on in the human brain,
you see it's not so simple.
Here we have a quote of Richard Dawkins.
When a man throws a ball high in the air and catches it again, he behaves as if he
had solved a set of differential equations in predicting the trajectory of the ball.
As some subconscious level,
something functionally equivalent to the mathematical calculation is going on.
Do people use mathematics?
Do they solve differential equations when catching balls?
Here's what Peter McLeod and Zoltan Dienes found out in their research.
Peter, fielders, players, they actually use a very simple heuristic.
They look at the ball,
the person throwing the ball up in the air, and they start running immediately.
They do not do any calculation and predict where the ball would land.
They start running before they even know where the ball would land.
And they address their running speed so
that they fixate the ball with a constant angle and, at some point,
they'll have it even though they do not know where it would land.
But that's not the goal.
The goal is not to predict where the ball would land, the ball, goal is to catch it.
There's a lot of empirical evidence that people and
animals actually use this gaze heuristic.
Let me give you another very powerful illustration of the gaze heuristic.
That's actually an event that made it to the front news of
all major newspapers worldwide.
It's an event that happened on January 15th, 2009.
It was US Airways flight 1549.
Two minutes after takeoff at LaGuardia Airport,
there were birds hitting the engines.
The engine burned and the airplane basically turned into a glider.
And the pilots had ten seconds, 15 seconds,
to make a decision where to bring down the airport, airplane.
They considered Titerboro Airport or at some point they then wondered,
should we go back to La Guardia.
How did they make this decision?
Here's what Jeffrey Skiles later said in a talk show.
It is not so
much a mathematical calculation as visual, in that when you're flying in an airplane,
a point that you can't reach will actually rise in your windshield.
A point that you're going to overfly will descend in your windshield.
So it's more of visual calculation.
To get understand this, let's look at the following animation.
This is the perspective of the pilot as the pilot have seen from the cockpit.
And here we see the airport.
Question, will they make it?
If they look at the scratch in their windshield,
they see the airport is rising.
So at that moment, they knew we will not be able to make it.
And they actually use the gaze heuristic].
Field players adjust the running speed so that they can always have the same angle.
The pilots, who are not in the position where they could manipulate the speed of
the airplane anymore, it was a glider, but they could look at the angle.
And they could figure out, was the angle stable?
Was it the same?
And they've seen no, the angle changed.
So they knew their speed was not fast enough and this is why they decided to go
down into the Hudson and this later became known as the miracle of the Hudson River.
The gaze heuristic is a very powerful illustration that the simple heuristic can
guide behavior so that an organism can reach his goal.
And note that most of the information out there and work knowledge can be ignored.
No complex calculation is needed.
No differential equations needs to be solved.
Similar thing can be said about other simple heuristics that people have or
may have in their adaptive toolbox.
When one has to make a choice between a recognized and an unrecognized object,
the recognition heuristic goes for the one that is recognized.
No information about the alternative is processed.
In a choice task, Take The Best considers one attribute after the other,
starting with the best one and stops once an attribute is found that discriminates
between the alternatives and makes the decision only based on this attribute.
All others are ignored.
Quickest is a simple heuristic to make numerical estimates.
Fast and frugal trees can be used to categorize objects or
to decide among courses of actions.
And often, one piece of information may be enough for this purpose.
All other information is ignored.
Tallying sums up the arguments, speaking for
each alternative, but does not weigh them.
Eliminaton-by-aspects simply eliminates alternatives based on
thresholds until only one is left.
Often, we satisfies, that is,
we are satisfied with something that is sufficiently good.
Most often, we do not make the effort to find the optimum.
And in most cases, it is not even clear what the optimum is.
Often, we do not make much effort to find out what is best.
We simply imitate others hoping that this is not too bad.
And often, we do not make decisions each time anew, but we follow routines and
go with what we did in the past in a similar situation.
Often, we do not decide at all, but adapt defaults set by others.
So let us conclude this session.
Economists tend to frame decision making in terms of unbounded rationality.
Homo economicus is an optimizer.
The classical approach has been challenged by the concept of boundedly rationality.
People have a repertoire of simple heuristics in their Adaptive Toolbox.
These heuristics allow them to make good decisions even though people have
limited knowledge, limited memory, and limited computational capacity.
These heuristics may also be applied in situations that can be
evaluated from an ethical point of view.
And here comes the danger.
These heuristics ignore information.
If ethical dimensions are ignored, outcomes may be unethical.
We will come to this in the next sessions.
Thanks for watching today.
[MUSIC]
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