Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Does power cloud one's ability to make good decisions?

02.03.2012
Study highlights common pitfalls of leadership decision-making
Grave consequences can result from bad decisions made by people in leadership positions. Case in point: the 2009 Gulf of Mexico oil rig disaster. British Petroleum (BP) executives had downplayed potential risks associated with their oil well, claiming that it was virtually impossible that a major accident would ever occur.

That same oil rig exploded, killing 11 workers and causing a massive oil spill that's costing BP an estimated $100 billion.
For USC Marshall professor Nathanael Fast and his co-authors, the BP case represents only one example that illustrates a fundamental truth the world of business: unconstrained power can hinder decision-making.

Fast's recent study, "Power and Overconfident Decision-making" co-authored with Niro Sivanathan of London Business School, Nicole D. Mayer of the University of Illinois, Chicago, and Adam Galinsky of the Kellogg School of Management at Northwestern University, currently in press at Organizational Behavior and Human Decision Processes, helps explain how power can fuel overconfidence, which negatively impacts decision-making.

"The aim of this research was to help power holders become conscious of one of the pitfalls leaders often fall prey to," said Fast, an assistant professor of management and organization.

"The overall sense of control that comes with power tends to make people feel overconfident in their ability to make good decisions," Fast said.

To explore this tendency, Fast and his research team conducted multiple experiments. In one, they asked their subjects to bet money on the accuracy of their own knowledge. First, to get people in touch with feelings of either power or powerlessness, participants were asked to recall and write detailed accounts of an experience when they either held or lacked power over other individuals. They were then asked to answer a series of six factual questions and to set a "confidence boundary" on how well they performed.

"What we found across the studies is that power leads to over-precision, which is the tendency to overestimate the accuracy of personal knowledge," said Fast. In the study, those who were made to feel powerful actually lost money betting on their knowledge. In contrast, those who didn't feel powerful were less risky with their bets and didn't lose money.

"This was one piece of puzzle, the idea that a subjective feeling of power leads to over-precision," Fast said.

To mitigate this tendency, Fast and the research team hypothesized that blocking the subjective sense of power among high-power participants – by directing attention to the limits of their personal competence – would cause their overconfidence to go away.

To test this, the team manipulated power by assigning participants to high-power or low-power roles. However, they also manipulated the participants' feelings of competence by asking them a series of yes/no "leadership aptitude" questions. Once they had answered the questions, each was randomly assigned a false score—ranging from "poor" to "excellent" — via a computer. They were then told that their scores reflected their aptitude for leadership. Those with "low" scores were told that they "may not be as competent as others."

After receiving their results, participants were asked to bet money on how well they would answer six trivia questions.

Once again, powerful participants lost more money, with the notable effect that those who were led to doubt their own competence did not. In other words, it is when power holders feel subjectively powerful that they are most vulnerable to overconfident decision-making.

Top decision-makers find ways to avoid this problem. "The most effective leaders bring people around them who critique them," Fast said. "As a power holder, the smartest thing you might ever do is bring people together who will inspect your thinking and who aren't afraid to challenge your ideas."

The irony is that, according to the findings just described, the more powerful leaders become, the less of this help they will think they need.

"Power is an elixir, a self-esteem enhancing drug that surges through the brain telling you how great your ideas are," said Galinsky of the Kellogg School. "This leaves the powerful vulnerable to making overconfident decisions that lead them to dead-end alleys."

Amy Blumenthal | EurekAlert!
Further information:
http://www.marshall.usc.edu

More articles from Studies and Analyses:

nachricht Multi-year study finds 'hotspots' of ammonia over world's major agricultural areas
17.03.2017 | University of Maryland

nachricht Diabetes Drug May Improve Bone Fat-induced Defects of Fracture Healing
17.03.2017 | Deutsches Institut für Ernährungsforschung Potsdam-Rehbrücke

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: A Challenging European Research Project to Develop New Tiny Microscopes

The Institute of Semiconductor Technology and the Institute of Physical and Theoretical Chemistry, both members of the Laboratory for Emerging Nanometrology (LENA), at Technische Universität Braunschweig are partners in a new European research project entitled ChipScope, which aims to develop a completely new and extremely small optical microscope capable of observing the interior of living cells in real time. A consortium of 7 partners from 5 countries will tackle this issue with very ambitious objectives during a four-year research program.

To demonstrate the usefulness of this new scientific tool, at the end of the project the developed chip-sized microscope will be used to observe in real-time...

Im Focus: Giant Magnetic Fields in the Universe

Astronomers from Bonn and Tautenburg in Thuringia (Germany) used the 100-m radio telescope at Effelsberg to observe several galaxy clusters. At the edges of these large accumulations of dark matter, stellar systems (galaxies), hot gas, and charged particles, they found magnetic fields that are exceptionally ordered over distances of many million light years. This makes them the most extended magnetic fields in the universe known so far.

The results will be published on March 22 in the journal „Astronomy & Astrophysics“.

Galaxy clusters are the largest gravitationally bound structures in the universe. With a typical extent of about 10 million light years, i.e. 100 times the...

Im Focus: Tracing down linear ubiquitination

Researchers at the Goethe University Frankfurt, together with partners from the University of Tübingen in Germany and Queen Mary University as well as Francis Crick Institute from London (UK) have developed a novel technology to decipher the secret ubiquitin code.

Ubiquitin is a small protein that can be linked to other cellular proteins, thereby controlling and modulating their functions. The attachment occurs in many...

Im Focus: Perovskite edges can be tuned for optoelectronic performance

Layered 2D material improves efficiency for solar cells and LEDs

In the eternal search for next generation high-efficiency solar cells and LEDs, scientists at Los Alamos National Laboratory and their partners are creating...

Im Focus: Polymer-coated silicon nanosheets as alternative to graphene: A perfect team for nanoelectronics

Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are less stable. Now researchers at the Technical University of Munich (TUM) have, for the first time ever, produced a composite material combining silicon nanosheets and a polymer that is both UV-resistant and easy to process. This brings the scientists a significant step closer to industrial applications like flexible displays and photosensors.

Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

International Land Use Symposium ILUS 2017: Call for Abstracts and Registration open

20.03.2017 | Event News

CONNECT 2017: International congress on connective tissue

14.03.2017 | Event News

ICTM Conference: Turbine Construction between Big Data and Additive Manufacturing

07.03.2017 | Event News

 
Latest News

Researchers shoot for success with simulations of laser pulse-material interactions

29.03.2017 | Materials Sciences

Igniting a solar flare in the corona with lower-atmosphere kindling

29.03.2017 | Physics and Astronomy

As sea level rises, much of Honolulu and Waikiki vulnerable to groundwater inundation

29.03.2017 | Earth Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>