How We Justify Foolish Acts and Bad Decisions
All of us would like to make less errors, learn from the past, and reduce mistakes. But, we have a built in problem - when things go wrong, we blame ourselves only as a last resort.
Patri Friedman makes the point:
Errors are valuable training instances, and our bias against accepting blame reduces the number available.
Fortunately, we have an excellent book, written by Carol Travis and Elliot Aronson, Mistakes Were Made (But Not by Me): Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts
From the introduction,
"The brain is wired for self-justification.
When we make mistakes, we must calm the cognitive dissonance that jars our feelings of self-worth.
And so we create fictions that absolve us of responsibility, restoring our belief that we are smart, moral, and right --a belief that often keeps us on a course that is dumb, immoral, and wrong."
In a sense, after a dumb mistake we are both the mark and the cooler, we need to be given an explanation, from ourselves, which preserves our illusions of competence in the face of evidence that we are not competent.
Here are some of their observations, which are relevant to both prospective franchisees and independent franchisee associations.
1. On the value of franchisee testimonials.
"The more costly a decision, in terms of time, money, and inconvenience, and the more irrevocable its consequences, the greater the dissonance and the greater need to reduce it by overemphasizing the good things about the choice made."
If you are looking to purchase a franchise, then don't look to the existing franchisees for information - if they are doing poorly, their brains will engage in self-deception trying to convince you of how good their choice was.
You should get in touch with other individuals making the same pre-purchase decision - individuals who have not been to discovery day or who have been in contact with the franchisor.
2. On being confident:
"The weakness of the relationship between accuracy and confidence is one of the best-documented phenomena is the 100-year history of eyewitness memory research."
I would remove the qualifier "eyewitness memory research."
When reasoning about decisions, we have to make room for the possibility that even once we have chosen, we may be wrong.
For some major decisions, buying a house or car, if we are wrong we can sometimes sell and recover a large part of our investment.
But for franchises, selling a money losing pit is not a realistic option. Therefore, you have to plan for when your decision turns out wrong. What is that plan, now?
3. On learning from your mistakes.
"One lamentable consequence of the belief that mistakes equal stupidity is that when people make a mistake, they don't learn from it. The throw good money after bad, and the con artists are right there to catch it."
If you and I cannot admit to our mistakes, and constantly engage in self-justification to preserve our sense of how clever we are, then we can never learn anything.
We will simple repeat our mistakes in a new way.
While most franchise systems don't have a proven business method, franchisors typically berate the money losing franchisee as "not following the business model".
They are made to feel stupid.
Some then act stupid.
Others, instead of owning up to the mistake of the initial investment, mindlessly but energetically throw themselves into "following the business model".
The better approach is to question the facts upon which the business model rested.
Perhaps you have found a counter-example to the business model.
Change the model.
But whatever you do, read Mistakes Were Made (But Not by Me): Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts
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Read More From BizOp News
May 9, 2009
How You Can Get Smarter
Image via Wikipedia
Steven Pearlstein, writing in the Washington Post, has an interesting story about Aplia and textbooks.
When I was teaching, it annoyed me that a) I required the entire class to buy a text book that 80% only want to rent, and b) the other 20% overpaid for information that was never updated.
Pearlstein thinks that Aplia may solve this problem.
"Aplia also paves the way for the textbook industry to ditch a lousy business model in which it has to charge ridiculously high prices for new books because it cannot collect anything from the students who buy them on the used-book market.
Instead, publishers could move to a more sustainable model in which the textbook is priced close to the cost of printing and shipping (say, $20), while all students are charged a reasonable fee (say, $60) for what really matters, which is the content of the textbook, the labs and homework exercises.
Other industries already use this model -- think hardware and software, or razors and razor blades.
The real revolution, of course, will come when Aplia or some other software company comes up with standardized tests that can measure student achievement at the end of the term in a way that not only helps the professor determine student grades, but also allows the university to compare the effectiveness of teachers and allows students, parents and taxpayers to see the relative effectiveness of entire universities.
Under the current system, teachers are assessed by how popular they are with students, while universities are assessed by how well students perform on tests and what kind of research faculty produce.
"What we have right now is a reputational model for universities rather than an outcome model," Romer says. "The presidents at the elite institutions know that if the competition were to be based on some credible measure of output or value added, they would lose."
Paul Romer is probably right, I have been largely convinced of this point by Robin Hanson.
But, our real problem is with our reliance on rankings as measures. Most of us in measure theory know that ordinal rankings, from first to last, demand a great deal from the individual in terms of forethought.
The idea that there is a single best is just a terrible idea, and we would do well to jettison not only the idea but all the winner take all market philosophy that is attached with it.
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