Category Archives: human brain, explained

When governments lead us astray

Lotteries are also known as “stupidity tax”; a nod to their improbable odds. In India, lotteries are often run by state governments – its an easy way to cover for their budget deficits. What these governments don’t realize is that they are fueling an addiction.

But what are the reasons behind this addiction? In the article, I talk about the behavioral science of lotteries.

Lotteries generate many ‘near misses’ thus making people believe that she is a winner even when she has lost, thus inducing a a dopamine fueled craving. I also talk about the incorrect application of ‘regression to the mean’ mental model, and how governments make it easy for someone to rationalize their lottery addiction.

Read more on livemint site here.

New article in ‘Behavior By Brain’ series the Mint

The latest article in my series ‘Behavior By Brain’ in the Mint talks about the implication of the adolescent brain and its peculiarities.

The adolescent age is typically considered the most challenging phase for parents. They are also a tumultuous time for the youth. New researches show how the brain development shapes their behavior – from skewed reward perception, to heightened need for social rewards. And importantly, these researches show that its not the case that adolescents have a faulty brain that does not recognize risks – their risk perceptions are on equal footing as adults’.

Read more about why we should re-look at the policies for adolescents here.

Mint newspaper articles – ‘Behavior By Brain’

Wanted to update Blog readers on the series of articles in ‘The Mint‘ which I’ve been authoring. The articles, called ‘Behavior by Brain’, take a deep look at news and trends through the lens of ‘behavior’. Articles penned so far are linked below:

Hope you enjoy them. Do let me know your comments.

Dealing with Fraud

blog-dealing-with-fraud-wells-fargo-scandal

The incentive structure of Wells Fargo has been rightly criticized for the fake account scandal. The roasting of Wells Fargo CEO at the Senate panel hearing has also brought to question the responsibility of the senior executives. However, the overall narrative may be missing an important component – Perception of Risk.

We can safely assume that the front end employees, who carried out the transactions, were largely aware of the illicit nature of their actions. Most likely they also knew the potential consequences such as losing their job, facing charges or even serving prison time. How did the employee’s perceive these risks? What factors moderated their risk perceptions?

These are difficult questions. Unlike the incentive system that is tangible and easier to measure, risk perception is not. Risk is a feeling and feelings are hard to quantify. Our feelings may be moderated by our goals, our ability to deal with outcomes, our past experiences etc. They are also influenced by our social context. The social norms prevalent can easily override the written rules and policies. If people around us are performing deviant behaviors such as the one we are dealing with in this case, we are more likely to follow them. With over 5000 employees implicated, we can expect this issue to be present.

Alternatively, employees may be managing a very different kind of risk. For example, fear of losing their job in the immediate future. The temporal aspect of this risk may amplify it even further and employees might rate it significantly higher than the risk of getting caught in the far future.

So while we are discussing changes to structural aspects such as incentives and punishments, we also need to give adequate attention to the softer side of the issue. We need to design strategies to moderate the risk perceptions. Conventional tools such as awareness / education based trainings have limited impact. This is especially true when the behavior in question is fairly obvious. After all, there is nothing gray about opening a fraudulent bank account. Interventions that provide continuous feedback closer to the work context might be more effective.

This still leaves us with the question of measurement. One way to do that may be identifying lead behaviors. For example, are employees more forthcoming in discussing or informing potential issues? Are managers rewarding such positive behaviors? Are we seeing an increase in minor deviances? Measuring these behaviors can provide organizations the relevant prediction capabilities and also the time to activate preventative strategies. 

Managing organization risks requires focusing on both top-down and bottom-up issues. While we hold the executives responsible to develop the right kind of organization structures, we also need to design tools that ensure alignment of behaviors across the system.

Image Source: The Intercept