Category Archives: human brain, explained

Dealing with Fraud

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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

Irrationality in the face of imminent death

Emirates crash

The video on how the passengers of the Emirates plane that met with an accident at Dubai airport behaved, holds major lessons on how humans behave at times of high risk.

The foremost reaction to any risk by most humans is denial, unless the risk is very salient. Even with the best of information humans are not capable of evaluating the risk levels of most situations. This optimism bias in times of risk can lead to a ‘business as usual’ attitude and resultant behaviours that are inadequate and inappropriate for an emergency situation.

From the video it is clear that many passengers, instead of rushing to the nearest exit and heading for the escape chute, are more focused on opening the overhead lockers and carrying cabin luggage and laptops with them. In that process, they are causing the biggest hurdle for an evacuation process – blocking of the main aisles.  One can hear passengers reassuring each other that nothing critical has happened, and there is no need to worry. The feeling of danger is low in the voices and faces of passengers and there is no sense of urgency in their movements (so much so, that someone has taken his mobile to capture all this!). Then in the 55th second of the video, one hears the voice that is presumably of the flight attendant. In a raised tone, they repeatedly ask passengers to leave their bags and jump out of the plane. Immediately (and finally!) the passengers sense the emergency of the situation that we can hear fellow passengers rushing others to leave the bags behind and get out of the plane as fast as possible. Some are even seeking God’s help. Evacuation now happens at the right pace, in the right manner.

One can be complacent that all the passengers of this Emirates flight got out of the plane in time and that all are safe. But this was clearly a near-miss incident. One cannot be oblivious of some critical mistakes that happened, which could have led to a major disaster. The right behaviour expected of the passengers is – as soon as an emergency evacuation is signalled, all should realise that a dire mishap has occurred, and respond by immediately rushing to the nearest exit, leaving behind their belongings locked in the overhead storage. Instead, in this incident, it is only in the 55th second of the video that people stopped bothering about their bags and laptops and did what was required to do in order to save their lives and the lives of other passengers. The trigger for this change in behaviour of the passengers came from the flight attendant’s tone of voice and the content of the instructions. Which then makes one curiously ponder – why couldn’t have this intervention from the flight attendants happened 55 seconds earlier?

Human beings by nature are overconfident and tend to ignore most risks unless otherwise the proof of risk is very salient. In several situations, more so in emergency situations, the overconfidence of humans should be deflated to generate the right action in them. Merely communicating the information about a risk will not achieve this. Instead, communication about risk should be embedded with right levels of emotions. Humans are driven to immediate action only when there is a FEELING of risk. The first 55 seconds of the video clearly shows that the feeling of risk prevalent inside the airline was inadequate for an emergency situation of this kind.

During emergencies, every second counts. And humans will continue to behave as irrationally as seen here. Therefore, the critical inquiry required from this occurrence is: What can the airline industry learn about human behaviour from this incident? What in the inflight attendants’ training need to be altered, so that they generate the adequate feeling of risk in these emergency situations, which will refrain the passengers behaving either complacent or too panicky? What is the right script and tone of voice should flight attendants use, to initiate the right action among passengers, in emergencies like this? Finally, what is the ideal communication strategy to convey risk  that will motivate humans to take appropriate action even a second earlier?

Status Quo on Brexit

The world is eagerly waiting with bated breath for the Brexit referendum results. Battle lines are drawn, last campaigns have ended, politicians have made their pitch (David Cameron, Jeremy Corbyn on the “Remain” faction versus Boris Johnson on the “Leave” faction), world leaders have weighed in on the subject (Obama saying “I hope you will stay”) but the contest is still too close to call. This is proving more nail-biting than Euro 2016 football matches.

Brexit PollsThe poll of polls on the issue from ‘What UK Thinks’ show a 50-50 split between the “Remain” and “Leave” factions. The Economist puts it at 44% for the “Remain” and at 43% for the “Leave” factions with 11% undecided – it was 14% yesterday.

Which way the referendum will swing will depend a lot on these 11-14% undecided voters. What would the undecided voter do? One of the key factors will be a well studied bias – the status quo bias, the preference for the current state of affairs. Prospect Theory explains status quo bias as a result of people’s tendency to overweight losses from a change in the status quo when compared to the gains thus leading them not to prefer a change at all. To complicate matters for people already uncertain about the vote, the issue at hand is mightily complex; it has economic, political, and even racial impact. Uncertainty breeds status quo.

The easiest option for undecided voters is the one that allows them to go on with their lives with the least amount of disruption – not having to make the decision at all. On the other hand, if the undecideds do vote, these votes are likely to be for the “Remain” faction – the status quo option. So all that the “Remain” campaigners should do is to encourage the undecideds to vote and they should have it!

One thing is sure, framing of the Brexit question will not play a part in the decision because of wise moves by the Electoral Commission. We have already covered that aspect in our earlier blog – To B or not to B, that is the question.

Who is likely to win? Depends on How you ask

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The race is heating up. And so are the experts that are conducting, interpreting and concluding opinion polls. As the focus of US presidential election is moving away from on primaries to the final competition, we should expect results from hundreds of opinion polls predicting the winner.

A recent NY times article suggested that Clinton leads Trump by around 10 percentage points. If you believe these polls, then you may be hopeful or concerned depending on which side you are on. But there is a small issue. The result may not be accurate.

This article indicates that there is a significant difference in the results of polls conducted online vs over the phone. The lead comes down four percent when surveys are conducted online. One the reasons cited is the social desirability bias – a desire to project a positive image when one is worried of being judged based on their response. People may go at any lengths to avoid the discomfort and embarrassment of stating an unfavorable response even if that is their honest response. But in a situation of anonymity, I may go back to my preference.

The problem is not new and its not limited to presidential polls. The issue has been discussed extensively in market research. And it becomes much more pronounced in sensitive areas of financial and health care related decision making. Imagine talking to a individual undergoing financial hardships and being delinquent on their debts. Or a conversation around understanding why someone is not adhering to their antibiotics regimen.

Clearly, we need more sophisticated research methodologies to deal with such sensitive matters. In our work in the social sector, we have regularly innovated our research processes to mange these issues. For example, in one of our projects in Africa we used a gamification based research tool wherein the format incentivized true responses over socially desirable response. The research methodology was recognized by The Esomar Congress 2015 where Final Mile won the Best Case History award.

Innovative tools for learning voter’s preference also exist. The Iowa Electronics Market established back in 1988 is one of the early pioneers. Even changing the way the question is framed can have a significant impact. For example, instead of framing the survey question as which candidate are you likely to vote, a better question would be which candidate is likely to win. So while we monitor the election outcomes, it will also be interesting to study the prediction accuracies of the different research tools.

Image Credit: Indian Panorama

Paris attack and the problem of categorization

Blog - Paris Attack

The Paris attacks have been a major shock and we are understandably upset. Most of us have been reminded of some of the earlier acts of terror such as the 26/11 attack in Mumbai or even 09/11 in New York. It also reminded us of the mixed emotions (fear, anger and despair) that we felt during the attacks.

 Since the earlier attacks were also targeted at civilians, we consider this act in the same vein. However, this Atlantic Article – What ISIS really wants suggests that, maybe, this attack is different. The article refers to the origin of the Islamic State from al-Qaeda, the formation of its leader al-Baghdadi, its strong belief of being a key agent of the apocalypse and many other qualities. But the most important point that it tries to make is that ISIS is not like al-Qaeda or any other organization that we tend to categorize as terrorists. The author suggests that we seem to have misunderstood jihadism as monolithic or of a single kind which it is not.

We can probably call this a problem of categorization or essentially mis-categorization.

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