Modern office culture seems as normal as a frog in a pond. But to twist an old adage, that amphibian may have no idea his habitat is actually a stove pot nearing a boil. Work is broken, and our mindset on work is warped.
Inspired by Alina Vrabie’s blog post on cognitive biases that can hurt your work, we’re putting together a series of pieces on findings from social psychology, economics, and other areas of science that prove what we think is normal is absolutely crazy.
This isn’t a new concept for The Methodology Blog, but it’s a new twist on telling the story. In an old post on the problems with group work, we discussed the psychological term social loafing. We reviewed a paper on the psychology of waiting in lines. Or the classic Alfie Kohn piece which explains why incentive pay doesn’t work.
This blog post series will cover a set of cognitive biases. Those are all ways of thinking which are bad for us, but that we tend to do automatically without realizing it. Here’s the list of topics we’ll be covering:
- Illusory Superiority: Why we all think we’re above average
- Dunning-Krueger Effect: Novices overestimate their expertise (plus the reverse)
- Fundamental Attribution Error: Other people are flubs, but we are victims
- Framing and Priming: How we describe situations and order data changes everything
- Functional fixedness: Once we know something’s purpose, it’s hard to imagine it doing anything else
- Decoy Effect: Why worthless options wreck our decision-making skills
To start us off let’s use an example of cognitive bias. This one is called the denomination effect. Here’s how it works: People are less likely to spend money if they have larger bills than the same amount in smaller bills.
That means if you have $100 all in one dollar bills, you’re more likely to spend it. But if just have a single Ben Franklin, you’re more likely to hold on to it. A few years ago, NPR covered this on the show Planet Money. Here’s one way they tested it:
Researcher Priya Raghubir stood outside a gas station in Omaha. She would have people fill in a survey about gas usage and then thanked them with either a $5 bill, five $1 bills or five $1 coins. People went into the store, and when they came out Raghubir asked them for their receipts. The ones with coins spent the most, people with dollar bills a little less. And people with one $5 bill kept that one in their pockets.
This little example is a great way to understand what it means to have a cognitive bias. It’s exactly the same amount of money in every case, but we tend to think of it differently based on the type of denomination. Likewise, every cognitive bias we’ll investigate in this series is similarly interesting. Our brains trick us into doing what isn’t best, and we usually don’t even notice.
Applications at Work
The denomination bias can be put to use at your company. Say you’re passing out gift cards to show employees you appreciate them. If you want them to be spent, hand out multiples of smaller amounts rather than a large one. Likewise, if you want people to better plan their time, ask for estimates using days instead of weeks, or hours instead of days.
And just like scientists studying a cognitive bias, you can run your own experiments. Curious if people tend to hoard vacation days and take them all at once? Try resetting the clock every quarter rather than every year. Want to see if you can reduce waste during the production process? Consider using smaller bins of raw materials.
These kind of changes may leverage the denomination bias and help your business to run better. But more importantly, your company is full of people, and those people have brains. You’re one of them. Understanding how it works can make an incredible difference.