Something for the weekend

The psychology behind decision making and the effectiveness of the presidential system are topics for this week’s round-up

What is the psychology behind decision making? Why are some people delighted with their choice, while others are dissatisfied and uncommitted to their decision?

ln trying to understand what affects decision making a group of academics have looked at how individuals make a choice. The answer they say depends on having as wide a selection as possible. When presented with a choice most people it would seem prefer to make their decision from as big a choice as possible. The greater the choice, the more chance that the individual will be happy with his or her decision.

Baba Shiv, a professor of marketing at Stanford Graduate School of Business, Sheena Iyengar, a professor of management at Columbia Business School and Cassie Mogilner, a professor of marketing at the Wharton School at the University of Pennsylvania, used wine, chocolate and nail polish colours as the starting point for their research into decision making.

One group of participants were presented with a detailed description of fine chocolates and then asked to choose one to taste. Once they had selected a chocolate no further descriptions of chocolates were given. A second group however were shown the entire list of chocolates simultaneously and then asked to pick whichever one they would like to taste. When questioned over their choices the sequential choosers – those who had had to make their decision from a limited selection were less satisfied with their choice than those individuals who had seen the entire list of chocolates.

Furthermore the sequential choosers, when offered the option of choosing another chocolate, were more inclined to do so, even though they were still unaware of the total range of chocolates available.

For retailers and those who are able to offer a choice, the results of the research indicate that it is preferable to present all the options simultaneously says Prof Shiv. When this is not possible he adds “We need to understand that we fall prey to the bias for the eternal quest for the best.” Recognising this bias he adds may well be the first step to correcting it.

The paper will be published in the Journal of Consumer Research.

With the US elections fresh in everyone’s minds an academic from the Kellogg School of Management at Northwestern University has looked at the question of why US presidents are less effective than prime ministers.

Daniel Diermeier, professor of managerial economics and decision sciences at Kellogg and co-author Razvan Vlaicu, an assistant professor in the department of economics at the University of Maryland have examined the two systems of government and say in their paper that the US presidential system of government may be “institutionally ill-equipped to get things done” when compared with a parliament.

Described as the effectiveness gap, conventional wisdom suggests that the difference between the two types of government is due to the fact that prime ministers can introduce favourable proposals to the legislature. However, Prof Diermeier points out that if this were truly the case any US presidential majority administration should be able to enjoy the same effectiveness.

Prof Diermeier believes the reason may be because in parliamentary systems such as in the UK, the legislature elects its executive, whereas in the US the president and the legislature are elected separately.

In parliamentary systems says Prof Diermeier, “They can remove the executive at any point through a vote of no confidence”. At the same time everyone in the legislature is part of the government he says and does not want to be kicked out of the government. Since the prime minister is aware of this the fate of any bill can be linked to the fate of the ruling party.

”Since there’s more at stake, you’re more likely to vote yes,” he adds.

With colleague Pohan Fong from the department of economics and finance at the City University of Hong Kong, Prof Diermeier has applied this game theory model to other political systems. Prof Diermeier says the model can be used to explain the French and Spanish monarchies of the eighteenth century, as well as the governments of China and Russia today.

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