Psychology – Page 39 – artdiamondblog.com

Amazon’s User Reviews Increase Rationality of Consumer Choices

Source of book image: http://2.bp.blogspot.com/-dNUZ_u-GWSk/UpqE0zmFQQI/AAAAAAAAAko/Z8uisfEjgRc/s1600/Absolute+Value+cover.png

(p. 3) You are no longer the sucker you used to be.

So suggests continuing research from the Stanford Graduate School of Business into the challenges marketers face in reaching consumers in the digital age. As you might suspect, the research shows that a wealth of online product information and user reviews is causing a fundamental shift in how consumers make decisions.
As consumers rely more on one another, the power of marketers is being undermined, said Itamar Simonson, a Stanford marketing professor and the lead researcher.
. . .
To get the full impact of the findings, you first have to know the conclusions of a similar experiment decades ago by Dr. Simonson, . . . . . . .
The researchers found that when study subjects had only two choices, most chose the less expensive camera with fewer features. But when given three choices, most chose the middle one. Dr. Simonson called it “the compromise effect” — the idea that consumers will gravitate to the middle of the options presented to them.
. . .
Flash forward to the new experiment. It was similar to the first, except that consumers could have a glimpse at Amazon. That made a huge difference. When given three camera options, consumers didn’t gravitate en masse to the midprice version. Rather, the least expensive one kept its share and the middle one lost more to the most expensive one.
“The compromise effect was gone,” said Dr. Simonson, or, rather, he nearly exclaimed the absence of the effect, underscoring his surprise at the findings. They are to be published next month in “Absolute Value,” a book by Dr. Simonson and Emanuel Rosen.
Today, products are being evaluated more on their “absolute value, their quality,” Dr. Simonson said. Brand names mean less.

For the full story, see:
MATT RICHTEL. “APPLIED SCIENCE; There’s Power in All Those User Reviews.” The New York Times, SundayBusiness Section (Sun., December 8, 2013): 3.
(Note: ellipses added.)
(Note: the online version of the article has the date December 7, 2013.)

The new research is reported in:
Simonson, Itamar, and Emanuel Rosen. Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information. New York: HarperBusiness, 2014.

In Britain Right and Left Support “Libertarian Paternalism”

(p. 4) In 2010, Mr. Cameron set up the Behavioral Insights Team — or nudge unit, as it’s often called. Three years later, the team has doubled in size and is about to announce a joint venture with an external partner to expand the program.
The unit has been nudging people to pay taxes on time, insulate their attics, sign up for organ donation, stop smoking during pregnancy and give to charity — and has saved taxpayers tens of millions of pounds in the process, said David Halpern, its director.
. . .
Creating Commitment
One morning in late May 2008, 10 copies of a little red book arrived for Rohan Silva in Norman Shaw South, the Westminster wing where the leader of the political opposition — at the time, the Conservatives — is traditionally housed.
The book was “Nudge,” and Mr. Silva, then 27 and David Cameron’s youngest adviser, piled them up on his desk. He had read the book as soon as it came out, a few weeks before. In fact, he had read deeply on behavioral economics and social psychology and met many of the American academics who specialized in the field. He was eager to spread the message in his country. “We used to joke about Ro being on commission for Thaler and Sunstein,” said Steve Hilton, Mr. Cameron’s former director of strategy and now a visiting scholar at Stanford.
. . .
Libertarian Paternalism
. . .
. . . , the question in Britain no longer seems to be whether, but how, to nudge. In their book, Professor Thaler and Mr. Sunstein defined their approach as steering people toward decisions deemed superior by the government but leaving them free to choose. “Libertarian paternalism,” they called it, and while that term is not used much in Britain, there is broad agreement on the subject among the left and the right.
Mr. Halpern used to be policy chief for Tony Blair, the former Labour prime minister, and later wrote a report on behavioral policy-making commissioned by Mr. Blair’s Labour Party successor, Gordon Brown. In one small way, the 2010 election campaign was also a race to decide which party would carry out an idea that had been percolating in the intellectual ranks of both for some years.

Wider Horizons
One of Mr. Thaler’s favorite nudges is something that Schiphol Airport near Amsterdam adopted in public bathrooms: a small sticker of a fly in the center of a urinal has been shown to improve aim. It saves the airport cleaning costs.
During a recent visit to Downing Street, Mr. Thaler ran into Mr. Cameron in the men’s room. There were no fly stickers.
“What’s the deal?” he joked.

For the full story, see:
KATRIN BENNHOLD. “The Ministry of Nudges.” The New York Times, SundayBusiness Section (Sun., December 8, 2013): 1 & 4.
(Note: ellipses added; bold in original.)
(Note: the online version of the article has the date December 7, 2013, and has the title “Britain’s Ministry of Nudges.”)

The Nudge book is:
Thaler, Richard H., and Cass R. Sunstein. Nudge: Improving Decisions About Health, Wealth, and Happiness. Revised & Expanded (pb) ed: Penguin Books, 2009.

Functional Stupidity Management

(p. 1194) In this paper we question the one-sided thesis that contemporary organizations rely on the mobilization of cognitive capacities. We suggest that severe restrictions on these capacities in the form of what we call functional stupidity are an equally important if under-recognized part of organizational life. Functional stupidity refers to an absence of reflexivity, a refusal to use intellectual capacities in other than myopic ways, and avoidance of justifications. We argue that functional stupidity is prevalent in contexts dominated by economy in persuasion which emphasizes image and symbolic manipulation. This gives rise to forms of stupidity management that repress or marginalize doubt and block communicative action. In turn, this structures individuals’ internal conversations in ways that emphasize positive and coherent narratives and marginalize more negative or ambiguous ones. This can have productive outcomes such as providing a degree of certainty for individuals and organizations. But it can have corrosive consequences such as creating a sense of dissonance among individuals and the organization as a whole. The positive consequences can give rise to self-reinforcing stupidity. The negative consequences can spark dialogue, which may undermine functional stupidity.

Source of paper abstract:
Alvesson, Mats, and André Spicer. “A Stupidity-Based Theory of Organizations.” Journal of Management Studies 49, no. 7 (Nov. 2012): 1194-220.

Interruptions and Distractions Disrupt Worker Productivity

Someday we will look back at open office plans as another way-overdone management fad. See also my earlier entry on the effects of workers switching tasks and my earlier entry on open offices.

(p. D2) Research led by Bing C. Lin, a doctoral candidate in industrial and organizational psychology at Portland State University in Oregon, found intrusions, or unexpected interruptions, increased exhaustion, physical strain and anxiety by one-third to three-fourths as much as the size of employees’ actual workloads. Bottling up frustration when someone barges into your cubicle worsens the strain, according to the study of 252 employees, published earlier this year in the International Journal of Stress Management.

For the full story, see:
SUE SHELLENBARGER. “WORK & FAMILY MAILBOX; Sue Shellenbarger Answers Readers’ Questions.” The Wall Street Journal (Weds., Nov. 13, 2013): D2.
(Note: the online version of the review has the date Nov. 12, 2013, and has the title “WORK & FAMILY; The Toll of Office Disruptions; Latest Research on Distractions and Worker Efficiency.”)

The Lin study summarized above is:
Lin, Bing C., Jason M. Kain, and Charlotte Fritz. “Don’t Interrupt Me! An Examination of the Relationship between Intrusions at Work and Employee Strain.” International Journal of Stress Management 20, no. 2 (2013): 77-94.

Successful Entrepreneurs Focus Their Attention

(p. A31) Most successful people also have a phenomenal ability to consciously focus their attention. . . .
Control of attention is the ultimate individual power. People who can do that are not prisoners of the stimuli around them. They can choose from the patterns in the world and lengthen their time horizons. This individual power leads to others. It leads to self-control, the ability to formulate strategies in order to resist impulses. If forced to choose, we would all rather our children be poor with self-control than rich without it.
It leads to resilience, the ability to persevere with an idea even when all the influences in the world say it can’t be done. A common story among entrepreneurs is that people told them they were too stupid to do something, and they set out to prove the jerks wrong.
It leads to creativity. Individuals who can focus attention have the ability to hold a subject or problem in their mind long enough to see it anew.

For the full commentary, see:
DAVID BROOKS. “Lost in the Crowd.” The New York Times (Tues., December 16, 2008): A31.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date December 15, 2008.)

Greenspan’s Epiphany: As Entitlements Rise, Savings Fall

Source of book image: http://s.wsj.net/public/resources/images/BN-AB661_bkrvgr_GV_20131021130523.jpg

(p. C11) In his new book “The Map and the Territory,” to be released on Tuesday, Mr. Greenspan, 87, goes on a hunt for what has gone wrong in American politics and in the U.S. economy.
. . .
Mr. Greenspan’s biggest revelation came one day about a year ago when he was playing with gross domestic savings numbers. What he found, to his surprise and initial skepticism, was that an increase in entitlements has closely corresponded to a decline in the country’s savings. “We had this extraordinary increase in benefits, with each party trying to outbid the other,” he says. “That practice has been eroding the country’s flow of savings that’s so critical in financing our capital investment.” The decline in savings has been partly offset by borrowing from abroad, which brings us to our current foreign debt: “$5 trillion and counting,” he says.
. . .
Studying the minutiae of the events leading to the financial crisis brought to mind some lessons from his famous friendship, from the 1950s on, with the late Objectivist philosopher Ayn Rand.
. . .
Mr. Greenspan then believed in analysis based mainly on hard science and empirical facts. Rand told him that unless he considered human nature and its irrational side, he would “miss a very large part of how human beings behaved.” At the time they weren’t discussing economics, but today he realizes the full impact of emotions and instincts on markets. He also has come to admire psychologist and Princeton University professor emeritus Daniel Kahneman’s work applying psychological insights to economic theory, for which he won a Nobel Prize in 2002.
. . .
With his new book, Mr. Greenspan hopes to provide politicians and the public with a road map to avoid making the same mistakes again. His suggestions include reducing entitlements, embracing “creative destruction” by letting facilities with cutting-edge technology displace those with low productivity, and fixing the political system by encouraging bipartisanship.

For the full interview/review, see:
ALEXANDRA WOLFE, interviewer/reviewer. “WEEKEND CONFIDENTIAL; Alan Greenspan.” The Wall Street Journal (Sat., Oct. 19, 2013): C11.
(Note: ellipses added.)
(Note: the online version of the interview/review has the date Oct. 18, 2013, and has the title “WEEKEND CONFIDENTIAL; Alan Greenspan: What Went Wrong; The former Fed chairman on where the economy went wrong, where he went wrong–and Ayn Rand.”)

The book discussed is:
Greenspan, Alan. The Map and the Territory: Risk, Human Nature, and the Future of Forecasting. New York: Penguin Press, 2013.

Larry Page: “At His Core He Cares about Latency”

(p. 184) Speed had always been an obsession at Google, especially for Larry Page. It was almost instinctual for him. “He’s always measuring everything,” says early Googler Megan Smith. “At his core he cares about latency.” More accurately, he despises latency and is always trying to remove it, like Lady Macbeth washing guilt from her hands. Once Smith was walking down the street with him in Morocco and he suddenly dragged her into a random Internet café with maybe three machines. Immediately, he began timing how long it took web pages to load into a browser there.
Whether due to pathological impatience or a dead-on conviction that speed is chronically underestimated as a factor in successful products, Page had been insisting on faster delivery for everything Google from the beginning. The minimalism of Google’s home page, allowing for lightning-quick (p. 185) loading, was the classic example. But early Google also innovated by storing cached versions of web pages on its own servers, for redundancy and speed.
“Speed is a feature,” says Urs Hölzle. “Speed can drive usage as much as having bells and whistles on your product. People really underappreciate it. Larry is very much on that line.”

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

Rising Google Stock Prices Led Googlers to Be Wary of Innovation

(p. 156) . . . Googlers were affected by stock ownership. (They were, after all, human.) Bo Cowgill, a Google statistician, did a series of studies of his colleagues’ behavior, based on their participation in a “prediction market,” a setup that allowed them to make bets on the success of internal projects. He discovered that “daily stock price movements affect the mood, effort level and decision-making of employees.” As you’d expect, increases in stock performance made people happier and more optimistic– but they also led them to regard innovative ideas more warily, indicating that as Googlers became richer, they became more conservative. That was exactly the downside of the IPO that the founders had dreaded.

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.
(Note: ellipsis added; italics in original.)

Some Entrepreneurs Are Motivated by Desire for Personal Wealth

Source of book image: online version of the WSJ review quoted and cited below.

I have read many biographies of innovative entrepreneurs. Like the author of the review of the book discussed in the passages quoted below, I believe that they have a variety of motives. But I am more optimistic than the book author that many of the entrepreneurs, those I call “project entrepreneurs,” are motivated mainly by a desire to ‘make a ding in the universe.’ Among these I would count Walt Disney and Steve Jobs.

(p. A11) Successful entrepreneurs, in my experience, are tenacious, hardheaded and creative. They persist with their ideas long after others might have given up, and they are good at persuading clients, partners and investors to take a chance. Like successful people in any field, they are driven by a powerful inner need, sometimes positive, like the hunger to do something entirely original, but often less appealing: a large chip on the shoulder, a desire for revenge, a distaste for authority and in many cases flat-out greed.
. . .
In “Worthless, Impossible, and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value,” Daniel Isenberg, a professor of entrepreneurship at Babson College and before that at Harvard Business School, offers many useful stories of entrepreneurship, culled from his teaching experience. But it isn’t until two-thirds of the way through that he torturously concedes that every entrepreneur needs a streak of Gordon Gekko.
“I have gradually come to the difficult conclusion that the burning desire for extraordinary value capture is almost a sine qua non for the supreme effort required to convert the value from imagined into tangible value,” he writes. “Personal gain is the simplest and most powerful motivation. If a person does not feel deeply that ‘This must pay off for me,’ there will rarely be extraordinary value creation.”

For the full review, see:
PHILIP DELVES BROUGHTON. “BOOKSHELF; Who Moved My Fortune? Some entrepreneurs want to do good. Many more are driven by a chip on the shoulder, a desire for revenge, a distaste for authority.” The Wall Street Journal (Sat., July 31, 2013): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 30, 2013.)

Office Design that Forces Interaction, Causes Exhaustion, Stress, High Errors and Low Productivity

(p. D1) The big push in office design is forcing co-workers to interact more. Cubicle walls are lower, office doors are no more and communal cafes and snack bars abound.
Like most grand social experiments, though, open-plan offices bring an unintended downside: pesky, productivity-sapping interruptions.
The most common disruptions come from co-workers, as tempting as it is to blame email or instant messaging. Face-to-face interruptions account for one-third more intrusions than email or phone calls, which employees feel freer to defer or ignore, according to a 2011 study in the journal Organization Studies.
Other research published earlier this year links frequent interruptions to higher rates of exhaustion, stress-induced ailments and a doubling of error rates.

For the full story, see:
SUE SHELLENBARGER. “WORK & FAMILY; The Biggest Distraction in the Office Is Sitting Next to You.” The Wall Street Journal (Weds., September 11, 2013): D1 & D3.
(Note: the online version of the story has the date September 10, 2013, and has the title “WORK & FAMILY; The Biggest Office Interruptions Are… …not what most people think. And even a 2-second disruption can lead to a doubling of errors.”)

Among the academic papers referred to in the article are:
Wajcman, Judy, and Emily Rose. “Constant Connectivity: Rethinking Interruptions at Work.” Organization Studies 32, no. 7 (July 2011): 941-61.
Altmann, Erik M., J. Gregory Trafton, and David Z. Hambrick. “Momentary Interruptions Can Derail the Train of Thought.” Journal of Experimental Psychology: General (Jan. 7, 2013): 1-12.

Messy Offices Encourage Creativity

(p. 12) Forty-eight research subjects came individually to our laboratory, . . . assigned to messy or tidy rooms. . . . , we told subjects to imagine that a Ping-Pong ball factory needed to think of new uses for Ping-Pong balls, and to write down as many ideas as they could. We had independent judges rate the subjects’ answers for degree of creativity, which can be done reliably. . . .
When we analyzed the responses, we found that the subjects in both types of rooms came up with about the same number of ideas, which meant they put about the same effort into the task. Nonetheless, the messy room subjects were more creative, as we expected. Not only were their ideas 28 percent more creative on average, but when we analyzed the ideas that judges scored as “highly creative,” we found a remarkable boost from being in the messy room — these subjects came up with almost five times the number of highly creative responses as did their tidy-room counterparts.
. . .
Our findings have practical implications. There is, for instance, a minimalist design trend taking hold in contemporary office spaces: out of favor are private walled-in offices — and even private cubicles. Today’s office environments often involve desk sharing and have minimal “footprints” (smaller office space per worker), which means less room to make a mess.
At the same time, the working world is abuzz about cultivating innovation and creativity, endeavors that our findings suggest might be hampered by the minimalist movement. While cleaning up certainly has its benefits, clean spaces might be too conventional to let inspiration flow.

For the full commentary, see:
KATHLEEN D. VOHS. “GRAY MATTER; It’s Not ‘Mess.’ It’s Creativity.” The New York Times, SundayReview Section (Sun., September 15, 2013): 12.
(Note: ellipses added.)
(Note: the online version of the commentary has the date September 13, 2013.)

The main academic paper referred to in the commentary is:
Vohs, Kathleen D., Joseph P. Redden, and Ryan Rahinel. “Physical Order Produces Healthy Choices, Generosity, and Conventionality, Whereas Disorder Produces Creativity.” Psychological Science 24, no. 9 (Sept. 2013): 1860-67.