South-Western - Management  
I'm O.K., You're Biased
Topic Decision Making
Key Words Bias, decision making, objectivity
News Story 

In 2005, Verizon's earnings fell more than 5% and its stock fell by more than a quarter, yet its chief executive received a 48% increase in salary and compensation. The consulting firm that recommended the payout relies on Verizon for much of its revenue. Yet, when asked about a conflict of interest, the consulting firm said it had strict policies in place to ensure the objectivity of all of its consultants. As strange as it may seem, the consultants probably believe they could make an unbiased decision about the companies that employ them, in the same way that legislators believe that campaign contributions don't affect their votes.

Doctors also claim that gifts from pharmaceutical companies don't influence their decisions to prescribe drugs. Yet, common sense tells us that the consultant, the legislator, and the doctor will all be influenced in some way. So, who's right? Research suggests that when it comes to decision making, the human brain knows many tricks that allow it to consider evidence, weigh facts, and still reach the conclusion that it favors.

Think of the bathroom scale example. When we stand on the scale in the morning and get a reading we don't like, we get off and try again, just to make sure something isn't wrong with the display. But, if the scale reading pleases us, we just accept it and move on. The brain plays a lot of tricks to help rationalize accepting conclusions that are most amenable to us. Most people realize that humans deceive themselves; they just don't seem to realize that they too are human, and thus, just as susceptible to deception.

A Princeton University research team asked people to estimate how susceptible they and the "average person" were to a long list of biases. The majority of people claimed to be less biased than they thought others would be. A 2001 study of medical residents found that 84% thought that their colleagues were influenced by gifts from pharmaceutical companies, but only 16% thought they themselves were similarly influenced.

Yet, research shows that if people are more biased than they realize, they are less biased than the rest of us suspect. For instance, when subjects are given a sum of money and told they can split it with an unseen stranger any way they like, most typically give the stranger a third or more, even though they could have given nothing.

In short, doctors, judges, consultants, and vice presidents strive for more truth than we realize but also miss the mark more often than we realize because of the workings of the human brain. The only reliable method for avoiding bias is to avoid the situations that produce it.

Questions
1.

What conclusion does the article reach about decision making and bias?

2.

Research bias in your textbook. What are three types of bias that can occur when it comes to decision making? Give one example of each type.

3.

What is a conflict of interest? Was the consulting firm that advised on Verizon's CEO's pay raise guilty of a conflict of interest?

Source I'm O.K., You're Biased The New York Times, April 16, 2006, pNA.
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