A16 THESTRAITSTIMES MONDAY,NOVEMBER27,2017...

1
Krishna Savani and Shankha Basu For The Straits Times Imagine you are looking for a medical insurance plan. You can visit the webpage of NTUC Income, Prudential, Great Eastern and Aviva, and pick the plan that seems the best overall. Or you can go to the Ministry of Health website which provides a comparison table of each major company’s insurance policies all on one page. Both types of decision-making architecture are common in everyday life. Human resource managers interview applicants one by one; a traveller checks Trivago for the best hotel deal. Which brings about a better decision? For marketeers, the decision whether to present options sequentially or simultaneously affects consumer’s choice. We conducted seven experiments in which people had to choose one of multiple options that were presented in one of two different ways: sequentially (options were presented one at a time), or simultaneously (all the options were presented at the same time). In each experiment, we ensured that one option was the dominant option, that is, all its attributes were superior to all other options’ attributes. In our first experiment, we asked people to choose among six electronic products (for example, a laptop) with five attributes (for example, processor speed, RAM, hard disk capacity). Results showed that people were more likely to choose the dominating option when they viewed all the options simultaneously than when they saw the options one at a time. In another experiment involving buying supplies for a restaurant, people were more likely to pick the supplier offering the lowest price per unit quantity when the options were presented simultaneously. In another more complex experiment in which people had to choose among five lotteries with different winning amounts and risks, people shown simultaneous options were also more likely to pick the best lottery. Our results show that for both simple and complex decisions, people shown all options simultaneously acquired a better understanding of the relative advantages and disadvantages of each option. This more comprehensive and in-depth understanding helped them to identify the optimal option. By contrast, when options were presented sequentially, the decision maker was not able to as readily identify the salient differences, reducing her ability to identify the optimal option. This result was backed by up a cognitive processing test – those who viewed the options simultaneously were more likely to use words that indicated deep thinking, such as “considering that”, “I think”, and “because”. Early research found similar results in a real corporate boardroom setting. Gemünden and Hauschildt (1985) obtained detailed minutes of 83 decisions that the executive board of a mid-size German company made over an 18-month period. Eight years later, when asked to evaluate the quality of each of those decisions, strikingly, executives rated the initial decision as being ‘‘very good” 43 per cent of the time when it involved two options, but only 6 per cent of the time when it involved a single option. Our research has implications beyond the boardroom. Marketers need to take heed. The decision whether to present options sequentially or simultaneously is a key element of choice architecture for today’s consumers. Websites like Zuji (for flights) and Moneysmart (for money matters) have clued in on this need. Indeed, previous research by Cassie Mogilner and colleagues has found that consumers who chose one of multiple options presented simultaneously were happier with their choice, compared to those who were presented with the options one at a time. They were also less likely to question or change their choice. This is because consumers who make decisions based on sequential options worry that they might become dissatisfied with their initial decision if they encounter a better option later. However, when the options are presented simultaneously, the question of hoping for a better option does not even arise. This is very important in today’s age of trigger-happy consumers. To ensure the consumer is truly satisfied with her choice, marketers can present all options at the same time whenever possible. Before making a purchase or walking into a restaurant or applying for a job, tech-savvy people often go online to compare prices or check for reviews. Companies who are not afraid to compare their products or services with their competitors might be more likely to attract such people. In the absence of comparison features on the websites of individual companies, it is no surprise that third party comparison websites like GSMArena (for phones) and GadgetsNow (for electronics) are becoming more common and popular. Our research also has numerous managerial implications. Recruiters might reconsider the conventional approach of interviewing candidates one at a time. Would not assessing multiple candidates simultaneously offer a real-time comparison of their capabilities and possible contribution to the company? Likewise, journal editors might make better decisions looking at several research papers simultaneously rather than reading them one at a time. Additionally, our findings suggest that for decisions in which there is a ‘‘right answer” from a policy perspective, policy makers should present all the options simultaneously rather than sequentially. For example, consumers choosing an energy-efficient washing machine in a store typically looks at one model at a time. Retail policy could require that energy labels also include the rating of comparative models, to increase the consumer ability to pick the best model for their needs. The data from one of our studies found that in nearly half of their everyday choices, people consider options sequentially. Thus, if considering options simultaneously helps people make better decisions, then switching from viewing options one at a time to viewing all options together can increase the quality of nearly half of the decisions that people make. [email protected] Krishna Savani is Co-Director of the Cultural Science Institute, and an Associate Professor of Strategy, Management, and Organisation at Nanyang Business School, Nanyang Technological University. Shankha Basu is an Assistant Professor of Marketing at Leeds University Business School in the United Kingdom. Previous research by Cassie Mogilner and colleagues has found that consumers who chose one of multiple options presented simultaneously were happier with their choice, compared to those who were presented with the options one at a time. They were also less likely to question or change their choice. Decisions, decisions … the more (options) the merrier A16 OPINION | THE STRAITS TIMES | MONDAY, NOVEMBER 27, 2017 |

Transcript of A16 THESTRAITSTIMES MONDAY,NOVEMBER27,2017...

Page 1: A16 THESTRAITSTIMES MONDAY,NOVEMBER27,2017 …news.ntu.edu.sg/NBS/Documents/ST_Decisions_KSavani_271117.pdfSenator Bernie Sanders has been touted as a front-runner for the Democratic

David Von Drehle

George Washington was 43 when the Continental Congress placed him in command of the fledgling army that would eventually drive the British out of their American colonies. At 55, the general presided over the fractious convention that produced the most durable Constitution the world has ever seen. He then served two terms as the nation’s first president, leaving office for the last time at 65.

Abraham Lincoln moved into the White House shortly after his 52nd birthday and guided the nation through a terrible civil war. Along the way, he ended slavery, started the Transcontinental Railroad, expanded higher education and delivered two of the most eloquent speeches in human history. When he was assassinated on April 14, 1865, he was 56.

Theodore Roosevelt, governor of New York at 40, was persuaded to run for vice-president after just a year in office. When an assassin cut down William McKinley, Roosevelt became president at 42. His vigorous and effective leadership was the sun at the dawn of the American Century. He left office at 50. A distant cousin, Franklin D. Roosevelt, was 51 when he became president after crippling polio delayed his career.

FDR led the United States through two of its darkest crises, the Great Depression and World War II. He died in office at 63.

Presidential historians typically rank those four as the greatest to occupy the White House. Runners-up often include Harry S. Truman, who took office at 60; Dwight D. Eisenhower, 62; Thomas Jefferson, 57; and John F. Kennedy, 43.

If the United States’ four best presidents entered office at an average age of 50, why am I reading about potential candidates for 2020 who will be in their 70s? Former vice-president Joe Biden says he is thinking about making a run. If he wins, he would take office at 78. Senator Bernie Sanders has been touted as a front-runner for the Democratic nomination. He would be 79. Senator Elizabeth Warren beams as throngs of Democrats chant her name. If she runs and wins, she would take the oath at 71.

Until Donald Trump came along, the US had never sent a septuagenarian to occupy the Oval Office. (We did keep one there in 1984, when Ronald Reagan was re-elected at 73.) We’ve sworn in more than twice as many presidents under the age of 50 as over the age of 65. That serious people are discussing candidates

who would be pushing 80 is unprecedented – and sclerotic for our political system.

My point is not to disparage the elderly, for I am rapidly becoming one myself. But no thriving society finds its fresh thinking among its oldest leaders. The wisdom of years is a check, not an engine.

Though age takes its toll in different ways on different people, in the aggregate, the science is clear: Mental agility, executive function and creativity all tend to decline as we pass through middle age.

A nice summary of the research, published by the distinguished Dana Foundation, noted: “Older adults tend to be slower in conceptualising and less ready to change strategies when circumstances shift.” Studies have found that the brain reaches its peak processing power by age 20. (Other mental peaks come as late as 40 or beyond.)

This youthful period of high performance is associated with creative lightning bolts: the physics of Einstein, the poetry of Keats, the music of Lennon and McCartney.

Admittedly, leadership is not a simple matter of speedy thinking. It also requires enough knowledge and experience to make wise decisions, as well as the savvy to read people and situations.

For the gifted leader, though, a little experience goes a long way. The Reverend Martin Luther King Jr was only 39 when he was murdered, younger than any US president. Yet few could match his ability to inspire, to frame the debate, to match strategy with tactics, to seize the moment and to hold coalitions together.

Indeed, a point arrives for most of us when additional experience no longer produces better decisions. Our brains seem to filter out information that doesn’t fit neatly into our existing world views.

In problem solving, University of Arizona brain researcher Elizabeth Glisky has written, older humans “tend to rely more on prior knowledge about the problem domain and less on new information”. Which might explain how a president in the 21st century could think that coal mining is a key to America’s future.

Rapidly changing modes of living and working call for leaders at the peak of their creative and conceptual powers. And decisions that will shape lives long after the baby boomers are gone should not be made by boomers and their older siblings. We’re passing a lot of red ink and unsolved problems to the next generation. We should pass the torch, too. WASHINGTON POST

David I. Steinberg

For The Straits Times

The Rohingya crisis in Myanmar has stirred international outrage and stoked calls for sanctions.

Last Wednesday, the US declared the violence against Myanmar’s Muslim minority in Rakhine an act of “ethnic cleansing”. US Secretary of State Rex Tillerson also issued a warning at the same time that those responsible for the murders, rapes and other “horrendous atrocities” will not go unpunished. “The United States will also pursue accountability through US law, including possible targeted sanctions,” he said.

There is growing sentiment in the US for action that will punish elements of the military as well as local vigilantes for the atrocities that have led to hundreds of thousands of people fleeing across the border to Bangladesh.

Earlier this month, senators Ben Cardin and John McCain, in a bipartisan effort, introduced S. 2060 –The Burma Human Rights and Freedom Act of 2017. This calls for targeted sanctions and travel restrictions on military individuals involved in or responsible for the tragic events in Rakhine.

Imposition of sanctions is a relatively easy and emotional response to tragic or dangerous situations. And as emotions run very high, international indignation is certainly understandable. But will they have the desired effect or simply intensify issues?

From the outset, the myths on both sides of the divide have posed a major stumbling block to any easy solution. The Burmese state believes the Rakhine Muslims are all Bengalis who do not belong in Myanmar and should go to Bangladesh, while the Rohingya say they have been in Burma/Myanmar for centuries. Both are partly right, but the Burmese state refuses to recognise them as an indigenous ethnic group, which under the 1982 citizenship law would allow them citizenship. They have virtually no rights in Myanmar.

There is also an inconsistency in most approaches to the refugee problem. Although ethnic cleansing is not a legal issue under international law, ethnic peoples so expelled should have the right to return. But right and reality are in conflict.

Myanmar does not want them back — that is what prompted ethnic cleansing in the first place. From past official positions and widespread Burmese popular

sentiment, including powerful Buddhist voices and institutions, there seems little interest in having them return.

But Bangladesh does not want them either. Such is the antipathy that some officials are said to have wanted to isolate them on islands in the Bay of Bengal where they would be tragically subject to the annual typhoons that cause massive destruction in that region.

Both the Myanmar and Bangladesh governments under pressure have signed some formal agreement to cooperate in the return of the refugees, but even if foreign powers and humanitarian organisations assist in that process, many will still not want to return to conditions of deprivation.

Furthermore, will any form of sanctions, however carefully targeted, have the positive effect of improving the lives of the Rohingya?

The dismay and disapproval under which the Myanmar government, both the military and civilian leadership, are already under will likely negatively affect Western investment in that state, although it probably will do nothing to influence both Chinese and Japanese businesses. Sanctions will add little to economic pressure and may instead increase resentment and hostility.

What will it take to eliminate sanctions once imposed? And are those requirements credible? These are questions that should be asked before action is taken. Supposing some Rohingya return and are treated as they were before the recent violence (in other words, extremely deprived– bad economically and socially but without violence), and some military officials punished, will sanctions be lifted? This seems unlikely without improvement in the rights of the Rohingya, which also seem very distant.

As we have seen in previous cases, the introduction of sanctions is easy; rescinding them is very complex.

Certainly, increased economic humanitarian assistance should be forthcoming, and the US is to be applauded for major increases in that effort.

Hard private talks are also needed with both military and civilian leadership. But will sanctions increase already significant tensions between the Burmese military and the civilian leadership, with perhaps the military claiming that, given historical precedent, this may be at Ms Aung San Suu Kyi’s instigation? I don’t believe it is, but the military may well think so.

The military has committed extreme violence and has acted without the basic considerations of humanity. Yet we must recognise that Burmese sentiment – popular and leadership, military and civilian, are inordinately opposed to providing any semblance of humanity towards the Rohingya. But we should not cut off contact with the military, and we need more training for them, not in lethal aspects of warfare, but in the obligations and roles of the military in open societies.

The tragedy that has already caused so much horror and degradation may not be alleviated by sanctions. Change has to come internally from the civilian, military, and religious leaders of that state.

While there is little sign thatthis is happening, external efforts should be focused on helping shift that internal Burmese debate.

[email protected]

• The writer is Distinguished Professor of Asian Studies Emeritus at Georgetown University.

Krishna Savani and Shankha Basu

For The Straits Times

Imagine you are looking for a medical insurance plan. You can visit the webpage of NTUC Income, Prudential, Great Eastern and Aviva, and pick the plan that seems the best overall. Or you can go to the Ministry of Health website which provides a comparison table of each major company’s insurance policies all on one page.

Both types of decision-making architecture are common in everyday life. Human resource managers interview applicants one by one; a traveller checks Trivago for the best hotel deal. Which brings about a better decision?

For marketeers, the decision whether to present options sequentially or simultaneously affects consumer’s choice.

We conducted seven experiments in which people had to choose one of multiple options that were presented in one of two different ways: sequentially (options were presented one at a time), or simultaneously (all the

options were presented at the same time). In each experiment, we ensured that one option was the dominant option, that is, all its attributes were superior to all other options’ attributes.

In our first experiment, we asked people to choose among six electronic products (for example, a laptop) with five attributes (for example, processor speed, RAM, hard disk capacity). Results showed that people were more likely to choose the dominating option when they viewed all the options simultaneously than when they saw the options one at a time.

In another experiment involving buying supplies for a restaurant, people were more likely to pick the supplier offering the lowest price per unit quantity when the options were presented simultaneously.

In another more complex experiment in which people had to choose among five lotteries with different winning amounts and risks, people shown simultaneous options were also more likely to pick the best lottery.

Our results show that for both simple and complex decisions, people shown all options simultaneously acquired a better understanding of the relative advantages and disadvantages of

each option. This more comprehensive and in-depth understanding helped them to identify the optimal option. By contrast, when options were presented sequentially, the decision maker was not able to as readily identify the salient differences, reducing her ability to identify the optimal option.

This result was backed by up a cognitive processing test – those who viewed the options simultaneously were more likely to use words that indicated deep thinking, such as “considering that”, “I think”, and “because”.

Early research found similar results in a real corporate boardroom setting. Gemünden and Hauschildt (1985) obtained detailed minutes of 83 decisions that the executive board of a mid-size German company made over an 18-month period. Eight years later, when asked to evaluate the quality of each of those decisions, strikingly, executives rated the initial decision as being ‘‘very good” 43 per cent of the time when it involved two options, but only 6 per cent of the time when it involved a single option.

Our research has implications beyond the boardroom.

Marketers need to take heed. The

decision whether to present options sequentially or simultaneously is a key element of choice architecture for today’s consumers. Websites like Zuji (for flights) and Moneysmart (for money matters) have clued in on this need.

Indeed, previous research by Cassie Mogilner and colleagues has found that consumers who chose one of multiple options presented simultaneously were happier with their choice, compared to those who were presented with the options one at a time. They were also less likely to question or change their choice.

This is because consumers who make decisions based on sequential options worry that they might become dissatisfied with their initial decision if they encounter a better option later. However, when the options are presented simultaneously, the question of hoping for a better option does not even arise. This is very important in today’s age of trigger-happy consumers. To ensure the consumer is truly satisfied with her choice, marketers can present all options at the same time whenever possible.

Before making a purchase or walking into a restaurant or applying for a job, tech-savvy people often go online to compare prices or check for reviews. Companies who are not afraid to compare their products or services with their competitors might be more likely to attract such people.

In the absence of comparison features on the websites of individual companies, it is no surprise that third party comparison websites like GSMArena (for phones) and GadgetsNow (for electronics) are becoming more common and popular.

Our research also has numerous managerial implications. Recruiters might reconsider the conventional approach of interviewing candidates one at a time. Would not assessing multiple

candidates simultaneously offer a real-time comparison of their capabilities and possible contribution to the company?

Likewise, journal editors might make better decisions looking at several research papers simultaneously rather than reading them one at a time.

Additionally, our findings suggest that for decisions in which there is a ‘‘right answer” from a policy perspective, policy makers should present all the options simultaneously rather than sequentially.

For example, consumers choosing an energy-efficient washing machine in a store typically looks at one model at a time.

Retail policy could require that energy labels also include the rating of comparative models, to increase the consumer ability to pick the best model for their needs.

The data from one of our studies found that in nearly half of their everyday choices, people consider options sequentially. Thus, if considering options simultaneously helps people make better decisions, then switching from viewing options one at a time to viewing all options together can increase the quality of nearly half of the decisions that people make.

[email protected]

• Krishna Savani is Co-Director of the Cultural Science Institute, and an Associate Professor of Strategy, Management, and Organisation at Nanyang Business School, Nanyang Technological University. Shankha Basu is an Assistant Professor of Marketing at Leeds University Business School in the United Kingdom.

Rohingya refugees in a makeshift camp in Cox’s Bazar, Bangladesh, on Wednesday. The US has declared the violence against Myanmar’s Muslim minority in Rakhine an act of “ethnic cleansing” and Mr Rex Tillerson said it will pursue accountability through US law, including possible targeted sanctions”. PHOTO: NYT

Time to pass the torch, baby boomers

US sanctions not the solution to Rohingya crisis

Previous research by Cassie Mogilner and colleagues has found that consumers who chose one of multiple options presented simultaneously were happier with their choice, compared to those who were presented with the options one at a time. They were also less likely to question or change their choice.

Decisions, decisions … the more (options) the merrier

A16 OPINION | THE STRAITS TIMES | MONDAY, NOVEMBER 27, 2017 |