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 Innovative genetic tests for children with developmental disorders and epilepsy
11.07.2018 | Christian-Albrechts-Universität zu Kiel

nachricht Oxygen loss in the coastal Baltic Sea is “unprecedentedly severe”
05.07.2018 | European Geosciences Union

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: First evidence on the source of extragalactic particles

For the first time ever, scientists have determined the cosmic origin of highest-energy neutrinos. A research group led by IceCube scientist Elisa Resconi, spokesperson of the Collaborative Research Center SFB1258 at the Technical University of Munich (TUM), provides an important piece of evidence that the particles detected by the IceCube neutrino telescope at the South Pole originate from a galaxy four billion light-years away from Earth.

To rule out other origins with certainty, the team led by neutrino physicist Elisa Resconi from the Technical University of Munich and multi-wavelength...

Im Focus: Magnetic vortices: Two independent magnetic skyrmion phases discovered in a single material

For the first time a team of researchers have discovered two different phases of magnetic skyrmions in a single material. Physicists of the Technical Universities of Munich and Dresden and the University of Cologne can now better study and understand the properties of these magnetic structures, which are important for both basic research and applications.

Whirlpools are an everyday experience in a bath tub: When the water is drained a circular vortex is formed. Typically, such whirls are rather stable. Similar...

Im Focus: Breaking the bond: To take part or not?

Physicists working with Roland Wester at the University of Innsbruck have investigated if and how chemical reactions can be influenced by targeted vibrational excitation of the reactants. They were able to demonstrate that excitation with a laser beam does not affect the efficiency of a chemical exchange reaction and that the excited molecular group acts only as a spectator in the reaction.

A frequently used reaction in organic chemistry is nucleophilic substitution. It plays, for example, an important role in in the synthesis of new chemical...

Im Focus: New 2D Spectroscopy Methods

Optical spectroscopy allows investigating the energy structure and dynamic properties of complex quantum systems. Researchers from the University of Würzburg present two new approaches of coherent two-dimensional spectroscopy.

"Put an excitation into the system and observe how it evolves." According to physicist Professor Tobias Brixner, this is the credo of optical spectroscopy....

Im Focus: Chemical reactions in the light of ultrashort X-ray pulses from free-electron lasers

Ultra-short, high-intensity X-ray flashes open the door to the foundations of chemical reactions. Free-electron lasers generate these kinds of pulses, but there is a catch: the pulses vary in duration and energy. An international research team has now presented a solution: Using a ring of 16 detectors and a circularly polarized laser beam, they can determine both factors with attosecond accuracy.

Free-electron lasers (FELs) generate extremely short and intense X-ray flashes. Researchers can use these flashes to resolve structures with diameters on the...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

Leading experts in Diabetes, Metabolism and Biomedical Engineering discuss Precision Medicine

13.07.2018 | Event News

Conference on Laser Polishing – LaP: Fine Tuning for Surfaces

12.07.2018 | Event News

11th European Wood-based Panel Symposium 2018: Meeting point for the wood-based materials industry

03.07.2018 | Event News

 
Latest News

Leading experts in Diabetes, Metabolism and Biomedical Engineering discuss Precision Medicine

13.07.2018 | Event News

Research finds new molecular structures in boron-based nanoclusters

13.07.2018 | Materials Sciences

Algae Have Land Genes

13.07.2018 | Life Sciences

VideoLinks
Science & Research
Overview of more VideoLinks >>>