Intuition, uncertainty, doubt, trust, confidence & happiness

Excerpts from today’s reading  (boldface mine):Minding the Markets book cover

Doubt, trust, and confidence are subjective mental states which intertwine with the stories we tell ourselves about what is going on. Economic life involves human relationships of exchange of longer or shorter duration. Such relationships are accompanied by the stories we tell ourselves about what is happening to them and the mental states that are stimulated. At their simplest, human relationships of exchange involve a story being told to create a belief that continued attachment to the relationship will be excitingly rewarding or a source of danger and disadvantage. The word ‘credit’ is actually based on the Latin verb ‘to believe’.

In summary my argument is that what happened in the recent financial crisis (like in many before) was the product of a shift in mental states.

organizational failures followed from the power phantastic objects exert on mental states and the way institutions have increasingly stimulated this power for advantage and then increasingly become ruled by it.

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Hsee, Christopher K., Luxi Shen, Shirley Zhang, Jingqiu Chen, and Li Zhang. “Fate or Fight: Exploring the Hedonic Costs of Competition.” Organizational Behavior and Human Decision Processes 119, no. 2 (November 2012): 177–186. doi:10.1016/j.obhdp.2012.07.005.

Contrary to lay intuitions, we found that individuals in an unequal assignment condition, including the disadvantaged individuals in that condition, were happier than individuals in an equal competition condition, but that this effect held only if the inequality was irreversible, the advantaged and the disadvantaged were segregated, and the disadvantaged were given some enjoyable alternative resource to consume.

current research advances the peace-of-mind notion that irreversible fate prompts one to make peace with it and feel happy. Furthermore, it breaks down the peace-of-mind idea into two different varieties: choice-free peace and opportunity-free peace. Although previous research has documented extensive evidence for choice-free peace, the present research offers initial evidence from a controlled laboratory experiment for opportunity-free peace.

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Dane, Erik, Kevin W. Rockmann, and Michael G. Pratt. “When Should I Trust My Gut? Linking Domain Expertise to Intuitive Decision-making Effectiveness.” Organizational Behavior and Human Decision Processes 119, no. 2 (November 2012): 187–194. doi:10.1016/j.obhdp.2012.07.009.

Research suggests that even for tasks well-suited to intuition, the effectiveness of intuitive decision making may relate to the level of expertise one has attained in the focal domain.

for certain tasks (and, perhaps more generally, for certain expertise domains), the effectiveness of intuition may begin to approach the effectiveness of analysis well before one achieves task (or domain) mastery.

It is conceivable that when individuals have at least a moderate level of domain expertise, analytical decision making disrupts or disengages the intuitive operations that typically serve experts well.

our studies suggest that, on non-decomposable tasks, intuition may indeed prove effective – to the extent one has accrued expertise within the focal domain

the greater one’s expertise within the focal domain, the more likely one’s intuitions will prove effective – particularly if the task at hand is non-decomposable. By extension, however, individuals should be cautious of ‘‘trusting their gut’’ when these conditions are not present. Likewise, organizational managers should be wary of prescribing intuitive decision making indiscriminately, even on non-decomposable tasks. Given that individuals differ in their tendency to favor intuition and analysis respectively …, domain novices who are naturally inclined to take stock in their intuitive judgments may do so with misplaced haste, particularly when intuitive decision making is widely accepted or advocated within their work context

our results suggest that as individuals attain what might be viewed as a moderate level of domain expertise, the effectiveness of intuitive decision making on non-decomposable tasks increases.

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Milkman, Katherine L. “Unsure What the Future Will Bring? You May Overindulge: Uncertainty Increases the Appeal of Wants over Shoulds.” Organizational Behavior and Human Decision Processes 119, no. 2 (November 2012): 163–176. doi:10.1016/j.obhdp.2012.07.003.

Abstract
This paper examines the effect of uncertainty about the future on whether individuals select want options (e.g., junk foods, lowbrow films) or instead exert self-control and select should options (e.g., healthy foods, highbrow films). Consistent with the ego-depletion literature, which suggests that self-control resembles an exhaustible muscle, coping with uncertainty about what the future may bring reduces self-control resources and increases individuals’ tendency to favor want options over should options. These results persist when real uncertainty is induced, when the salience of naturally-arising uncertainty is heightened and when individuals are able to make choices contingent upon the outcomes of uncertain events. Overall, this work suggests that reducing uncertainty in a decision maker’s environment may have important spillover effects, leading to less impulsive choices.

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