Boss Hog
Emily Zitek & Larissa Tiedens
Journal of Personality and Social Psychology, forthcoming
Abstract:
We tested the hypothesis that social hierarchies are fluent social stimuli; that is, they are processed more easily and therefore liked better than less hierarchical stimuli. In Study 1, pairs of people in a hierarchy based on facial dominance were identified faster than pairs of people equal in their facial dominance. In Study 2, a diagram representing hierarchy was memorized more quickly than a diagram representing equality or a comparison diagram. This faster processing led the hierarchy diagram to be liked more than the equality diagram. In Study 3, participants were best able to learn a set of relationships that represented hierarchy (asymmetry of power) - compared to relationships in which there was asymmetry of friendliness, or compared to relationships in which there was symmetry - and this processing ease led them to like the hierarchy the most. In Study 4, participants found it easier to make decisions about a company that was more hierarchical and thus thought the hierarchical organization had more positive qualities. In Study 5, familiarity as a basis for the fluency of hierarchy was demonstrated by showing greater fluency for male than female hierarchies. This study also showed that when social relationships are difficult to learn, people's preference for hierarchy increases. Taken together, these results suggest one reason people might like hierarchies - hierarchies are easy to process. This fluency for social hierarchies might contribute to the construction and maintenance of hierarchies.
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A Mouth-Watering Prospect: Salivation to Material Reward
David Gal
Journal of Consumer Research, forthcoming
Abstract:
The term "hunger" and terms referring to its physiological correlates, notably "salivation," are used to refer to desire for material rewards across languages and cultures. Is such usage is "merely metaphorical," or can exposure to material reward cues evoke a salivary response? Results of an experiment show that individuals salivate to money when induced to experience a low power state but not when induced to experience a high power state. A second experiment shows that men salivate to sports cars when primed with a mating goal but not in a control condition. These findings suggest that salivary secretion is stimulated by material rewards in the presence of a highly active goal to obtain the rewards and that the motivation to acquire material rewards might more closely resemble physiological hunger than previously assumed. Implications for material addictions and decision making and directions for future research are discussed.
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The detrimental effects of power on confidence, advice taking, and accuracy
Kelly See et al.
Organizational Behavior and Human Decision Processes, forthcoming
Abstract:
Incorporating input from others can enhance decision quality, yet often people do not effectively utilize advice. We propose that greater power increases the propensity to discount advice, and that a key mechanism explaining this effect is elevated confidence in one's judgment. We investigate the relationships across four studies: a field survey where working professionals rated their own power and confidence and were rated by coworkers on their level of advice taking; an advice taking task where power and confidence were self-reported; and two advice taking experiments where power was manipulated. Results consistently showed a negative relationship between power and advice taking, and evidence of mediation through confidence. The fourth study also revealed that higher power participants were less accurate in their final judgments. Power can thus exacerbate the tendency for people to overweight their own initial judgment, such that the most powerful decision makers can also be the least accurate.
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The evolution of overconfidence
Dominic Johnson & James Fowler
Nature, 15 September 2011, Pages 317-320
Abstract:
Confidence is an essential ingredient of success in a wide range of domains ranging from job performance and mental health to sports, business and combat. Some authors have suggested that not just confidence but overconfidence - believing you are better than you are in reality - is advantageous because it serves to increase ambition, morale, resolve, persistence or the credibility of bluffing, generating a self-fulfilling prophecy in which exaggerated confidence actually increases the probability of success. However, overconfidence also leads to faulty assessments, unrealistic expectations and hazardous decisions, so it remains a puzzle how such a false belief could evolve or remain stable in a population of competing strategies that include accurate, unbiased beliefs. Here we present an evolutionary model showing that, counterintuitively, overconfidence maximizes individual fitness and populations tend to become overconfident, as long as benefits from contested resources are sufficiently large compared with the cost of competition. In contrast, unbiased strategies are only stable under limited conditions. The fact that overconfident populations are evolutionarily stable in a wide range of environments may help to explain why overconfidence remains prevalent today, even if it contributes to hubris, market bubbles, financial collapses, policy failures, disasters and costly wars.
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The pursuit of happiness can be lonely
Iris Mauss et al.
Emotion, forthcoming
Abstract:
Few things seem more natural and functional than wanting to be happy. We suggest that, counter to this intuition, valuing happiness may have some surprising negative consequences. Specifically, because striving for personal gains can damage connections with others and because happiness is usually defined in terms of personal positive feelings (a personal gain) in western contexts, striving for happiness might damage people's connections with others and make them lonely. In 2 studies, we provide support for this hypothesis. Study 1 suggests that the more people value happiness, the lonelier they feel on a daily basis (assessed over 2 weeks with diaries). Study 2 provides an experimental manipulation of valuing happiness and demonstrates that inducing people to value happiness leads to relatively greater loneliness, as measured by self-reports and a hormonal index (progesterone). In each study, key potential confounds, such as positive and negative affect, were ruled out. These findings suggest that wanting to be happy can make people lonely.
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Managers and (Secret) Social Networks: The Influence of the Freemasonry on Firm Performance
Fabio Braggion
Journal of the European Economic Association, forthcoming
Abstract:
In this paper, I study the impact of managers' affiliations with the Freemasonry on the performances of companies. Using a unique data set of 412 companies quoted on the London Stock Exchange between 1895 and 1902, I find that young and small firms run by Masonic managers exhibited larger leverage ratios. These companies earned higher profits, although the effect is not statistically significant. Large publicly quoted corporations managed by Freemasons instead had lower profits and lower Tobin's Q. I discuss the issue of the endogeneity of Freemasonry membership, and I use four different approaches to partially address this.
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Living Large: The Powerful Overestimate Their Own Height
Michelle Duguid & Jack Goncalo
Psychological Science, forthcoming
Abstract:
Three experiments tested the prediction that individuals' experience of power influences perceptions of their own height. Power decreased judgments of an object's height relative to the self (Study 1), made participants overestimate their own height (Study 2) and caused participants to choose a taller avatar to represent them in a second-life game (Study 3). These results emerged regardless of whether power was experientially primed (Study 1 and 3) or manipulated through roles (Study 2). Although a great deal of research has shown that physically imposing individuals are more likely to acquire power, this work is the first to show that the powerful may actually feel taller than they are. The discussion considers implications for existing and future research on the physical experience of power.
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Leaders: Privilege, Sacrifice, Opportunity and Personnel Economics in the American Civil War
Dora Costa
NBER Working Paper, September 2011
Abstract:
The US Civil War provides researchers a unique opportunity to identify wartime leaders and thus to test theories of leadership. By observing both leaders and followers during the war and forty years after it, I establish that the most able became wartime leaders, that leading by example from the front was an effective strategy in reducing desertion rates, and that leaders later migrated to the larger cities because this is where their superior skills would have had the highest pay-offs. I find that US cities were magnets for the most able and provided training opportunities for both leaders and followers: men might start in a low social status occupation in a city but then move to a higher status occupation.
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Power comes with responsibility - or does it?
Friedel Bolle & Claudia Vogel
Public Choice, September 2011, Pages 459-470
Abstract:
In a Public Good (PG) experiment, after playing it the standard way, one of the players (the allocator) is given power over the endowments of her co-players. Will the allocator show responsibility i.e., contribute most or all of her own as well as her co-players' endowments? Can we thus improve the suboptimal level of voluntary provisions of public goods? The result is that, on average, all players are better off than in the standard PG game. In repetitions of the procedure, however, selfish behavior (contributing mainly the others' endowments) becomes more and more frequent.
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It hurts both ways: How social comparisons harm affective and cognitive trust
Jennifer Dunn, Nicole Ruedy & Maurice Schweitzer
Organizational Behavior and Human Decision Processes, forthcoming
Abstract:
Organizations often expect employees to collaborate with and trust the same coworkers with whom they compete for promotions and raises. This paper explores how social comparisons in self-relevant achievement domains influence affective and cognitive trust. We find that both upward and downward social comparisons harm trust. Upward comparisons harm affective trust and downward comparisons harm cognitive trust. We find no benefits of upward comparisons on cognitive trust, and we find no benefits of downward comparisons on affective trust.
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Expertise and the Ideological Consequences of the Authoritarian Predisposition
Christopher Federico, Emily Fisher & Grace Deason
Public Opinion Quarterly, forthcoming
Abstract:
Research on the basis of political ideology indicates that psychological variables influence ideological positions. In particular, the role of authoritarianism is of long-standing interest to political scholars. This article looks at how political expertise conditions the ideological implications of the authoritarian predisposition. Although theories of authoritarianism imply that it is a constraint mechanism for the uninformed, research on the role of expertise in the formation of ideology suggests otherwise. In line with this, examination of the 2000 and 2004 American National Election Studies revealed that the relation between the authoritarian predisposition and conservatism was stronger among experts; that relations between the authoritarian predisposition and two components of conservatism - opposition to equality and support for traditionalism - were also stronger among experts; and that the tendency for the authoritarian predisposition to be more strongly related to traditionalism than opposition to equality was stronger among experts as well. These findings suggest that the linkage between authoritarianism and ideology is contingent on one's understanding of politics and indicate the need for a more nuanced understanding of what expertise contributes to democratic citizenship.
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Justin Fox & Richard Van Weelden
Journal of Public Economics, forthcoming
Abstract:
We consider whether a career-minded expert would make better decisions if the principal could observe the consequences of the expert's action. The previous literature has found that this "transparency of consequence" can only improve the efficacy of the expert's decision making. We show, however, that this conclusion is very sensitive to the specified cost structure: if learning the consequences of the expert's action makes the expert more likely to choose the action most likely to correspond to the true state of the world, when costs are asymmetric, this can be associated with a decrease in the principal's expected welfare. In addition, we show that, when the prior on the state of the world is sufficiently strong, if the principal benefits from learning the consequences of the expert's action, her utility is higher if she observes only the consequences and not the action taken. As such, the optimal transparency regime will involve either the principal observing only the expert's action or only the consequences of the expert's action; it will never be optimal to observe both. We illustrate these results with examples from finance and public policymaking.
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The Economics of Super Managers
Nina Baranchuk, Glenn MacDonald & Jun Yang
Review of Financial Studies, forthcoming
Abstract:
We study a competitive model in which managers differ in ability and choose unobservable effort. Each firm chooses its size, how able a manager is to hire, and managerial compensation. The model can be considered an amalgam of agency and Superstars, where optimizing incentives enhances the firm's ability to provide a talented manager with greater resources. The model delivers many testable implications. Preliminary results show that the model is useful for understanding interesting compensation trends, for example, why CEO pay has recently become more closely associated with firm size. Allowing for firm productivity differences generally strengthens our results.
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Centrality and charisma: Comparing how leader networks and attributions affect team performance
Prasad Balkundi, Martin Kilduff & David Harrison
Journal of Applied Psychology, forthcoming
Abstract:
When leaders interact in teams with their subordinates, they build social capital that can have positive effects on team performance. Does this social capital affect team performance because subordinates come to see the leader as charismatic? We answered this question by examining 2 models. First, we tested the charisma-to-centrality model according to which the leader's charisma facilitates the occupation of a central position in the informal advice network. From this central position, the leader positively influences team performance. Second, we examined the centrality-to-charisma model according to which charisma is attributed to those leaders who are socially active in terms of giving and receiving advice. Attributed charisma facilitates increased team performance. We tested these 2 models in 2 different studies. In the first study, based on time-separated, multisource data emanating from members of 56 work teams, we found support for the centrality-to-charisma model. Formal leaders who were central within team advice networks were seen as charismatic by subordinates, and this charisma was associated with high team performance. To clarify how leader network centrality affected the emergence of charismatic leadership, we designed Study 2 in which, for 79 student teams, we measured leader networking activity and leader charisma at 2 different points in time and related these variables to team performance measured at a third point in time. On the basis of this temporally separated data set, we again found support for the centrality-to-charisma model.
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Empathic emotion and leadership performance: An empirical analysis across 38 countries
Golnaz Sadri, Todd Weber & William Gentry
Leadership Quarterly, forthcoming
Abstract:
The purpose of our research is to examine the relationship between subordinate ratings of a target-leader's empathic emotion and boss ratings of performance of that target-leader. Furthermore, using hierarchical linear modeling, we assess whether the cultural background of the target-leader moderates this relationship. Our results show that leaders who are rated by their subordinates as engaging in behaviors that signal empathic emotion are perceived as better performers by their bosses. In addition, we found that the GLOBE societal culture dimension of power distance was a significant cross-level moderator of the relationship between empathic emotion and performance. Implications for leading in cross-cultural and multicultural contexts are discussed.
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Nadège Bault et al.
Proceedings of the National Academy of Sciences, forthcoming
Abstract:
We compared private and social decision making to investigate the neural underpinnings of the effect of social comparison on risky choices. We measured brain activity using functional MRI while participants chose between two lotteries: in the private condition, they observed the outcome of the unchosen lottery, and in the social condition, the outcome of the lottery chosen by another person. The striatum, a reward-related brain structure, showed higher activity when participants won more than their counterpart (social gains) compared with winning in isolation and lower activity when they won less than their counterpart (social loss) compared with private loss. The medial prefrontal cortex, implicated in social reasoning, was more activated by social gains than all other events. Sensitivity to social gains influenced both brain activity and behavior during subsequent choices. Specifically, striatal activity associated with social gains predicted medial prefrontal cortex activity during social choices, and experienced social gains induced more risky and competitive behavior in later trials. These results show that interplay between reward and social reasoning networks mediates the influence of social comparison on the decision process.
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Managerial Attributes and Executive Compensation
John Graham, Si Li & Jiaping Qiu
Review of Financial Studies, forthcoming
Abstract:
We study the role of firm- and manager-specific heterogeneities in executive compensation. We decompose the variation in executive compensation and find that time-invariant firm and, especially, manager fixed effects explain a majority of the variation in executive pay. We then show that in many settings, it is important to include fixed effects to mitigate potential omitted variable bias. Furthermore, we find that compensation fixed effects are significantly correlated with management styles (i.e., manager fixed effects in corporate policies). Finally, the method used in the article has a number of potential applications in financial economics.