Bounded Awareness ( Ограничения при осъзнаването на важни обстоятелства)

2. Bounded Awareness (Ограничения при осъзнаването на важни обстоятелства)

3. Bounded awareness in negotiations • Two types of information are critical for any effective negotiator, but often fall out of the negotiator’s focus: • The decisions of others • The rules of the game Minor changes in the decisions of others and the rules of the game can create huge differences in the optimal strategy for a negotiator. Due to bounded awareness, however, many people ignore this information.

4. Problem 1. Six people, A, B, C, D, E, and F play a game. Ms./Mr. A is given $60 to allot among all six persons and this figure is known to all of them. The amounts given to B, C, D, E, and F must be equal, but this amount may be different from the amount A allocates to herself/himself. B, C, D, E, and F will be asked to specify the minimum amount that they would accept. If the offer from A is equal to or greater than the largest amount specified by B, C, D, E, or F, the $60 will be divided as specified by A. If, however, any of the amounts specified by B, C, D, E, and F are larger than the amount offered by A, all six parties will receive $0. Please specify (in whole numbers) the allocation from A that would maximize your payoff (if you are A), or be the minimum acceptable to you (if you are B, C, D, E, or F): A: $___; B: $___; C: $___; D: $___; E: $___; F: $___

5. Problem 2. Six people, A, B, C, D, E, and F play a game. Ms./Mr. A is given $60 to allot among all six persons and this figure is known to all of them. The amounts given to B, C, D, E, and F must be equal, but this amount may be different from the amount A allocates to herself/himself. B, C, D, E, and F will be asked to specify the minimum amount that they would accept. If the offer from A is equal to or greater than the smallest amount specified by B, C, D, E, or F, the $60 will be divided as specified by A. If, however, any of the amounts specified by B, C, D, E, and F are larger than the amount offered by A, all six parties will receive $0. Please specify (in whole numbers) the allocation from A that would maximize your payoff (if you are A), or be the minimum acceptable to you (if you are B, C, D, E, or F): A: $___; B: $___; C: $___; D: $___; E: $___; F: $___

6. In the ultimatum game, concerns for fairness often lead Player 1 to be more generous than economic models suggest. For the same reason, Player 2 demands more than narrow rationality (i.e. economic models) would dictate. • Multiparty ultimatum game: Problems 1 and 2 differ only in the decision rule of the game. • Problem 1: “dividing the pie – largest”. The largest amount requested by B, C, D, E, or F determines the outcome; • Problem 2: “dividing the pie – smallest”. –,,–

7. Observed behaviour: B-F players • Bimodal response: • Many B-F players will take $1, since $1 is better than $0 (turning the offer down) • Another large group of players B-F demand $10, their “fair” share. • Conjecture about player A thinking… • With regard to disjunctive and conjunctive events…

8. Disjunctive events: those that can occur independently; • Conjunctive events: those that must occur in conjunction with one another; ********* • Individuals underestimate [the probability of occurring of] disjunctive events • Individuals overestimate [the probability of occurring of] conjunctive events ********* • Implication 1: Player A will underestimate the likelihood of how easy it is to get at least one out of five people to accept $1 in Problem 2. • Implication 2: Player A will overestimate the likelihood of all five individuals accepting anything less than $10 in Problem 1.

9. The profit-maximizing strategy for Player A in Problem 1 • Offer them and yourself 10-10-10-10-10-10. • If you offer them $11, you get __? • If your offer is 15-9-9-9-9-9, you are in very big danger of ending up with $0.

10. The profit-maximizing strategy for Player A in Problem 2 • Offer yourself and them 55-1-1-1-1-1 • If you offer more than $1-2, you simply want to be “fair”, or you underestimate your chances and are making a bad decision. • The expected payoff by player As falls dramatically as they increase their offers to B-F. *** That was the Harvard advice. Some lecturers (e.g. G.M.) consistently make this “error” in their interactions with other people.

11. Bounded awareness… • Problems 1 & 2 look very similar. Negotiators often fail to attend to the nuances of the rules. Thus they fail to differentiate the problems. • Negotiators often generalize from one situation to another, even when generalization is inappropriate. What worked in one context would not necessarily work in a very similar one! • A good negotiator is attuned to the important differences, particularly regarding the rules of the game and the likely decisions of other parties.

12. Change blindness, or below the Just Noticeable Difference • You are an accountant in charge of the audit of a large and respected corporation. The client pays your firm tens of millons of dollars in fees each year. For 3 years you view and approve their high-quality, highly ethical financial statements. • All of a sudden the client begins stretching, and even breaking, the law in many areas. • Do you notice? • Do you refuse to sign the statement that the client complies with government regulations? • Bazerman’s guess: virtually all auditors would notice, and most would refuse to sign.

13. A slightly different story… • You have approved the high-quality, highly ethical financial statements of the client for one year. Then the corporation begins stretching the law in a few places, but commits no clearly unethical behaviours. The third year the client stretches the ethicality of its returns a bit further; some accounting decisions violate the regulations. By the fourth year the stretching continues, in some areas there is breaking of the law. • Do you ever notice the unethical behaviour? • If so, at what point, if any, do you refuse to sign the statement of compliance with government regulations?

14. A Guess… • In year four of both stories the unethical behaviour is the same. • Yet, one is much more likely to notice and refuse to sign the statements in the first version of the story than in the second. • We (or anyone else) is far more likely to become unethical one step at a time. That is more difficult to notice, and at the same time, easier to justify. • JND

15. Focalism(прекомерно фокусиране) and the focusing illusion • Focalism is the tendency to focus too much on a particular event (focal event) and too little on other events that are likely to occur concurrently. • Consequence: people tend to overestimate (1) the degree to which their future thoughts will be occupied by the focal event; (2) the duration of their emotional response to the event.

16. Focalism II • People tend to overestimate the impact of positive and negative events, such as wins and losses of our preferred political candidate, or sports team, on our overall happiness. • People dramatically overestimate the effects on their happiness by major medical issues.

17. Focusing illusion • Focusing illusionis the tendency to make judgments based on only a subset of available information, to overweight that information, and to underweight unattended relevant information. • E.g. the Challenger disaster. In a pre-launch meeting, the decision makers examined the data on booster O-ring problems on seven prior launches. No clear pattern emerged, so a decision was taken to go ahead with the launch. However, 17 prior launches were more informative – a logistic regression with that data showed 99% chance of malfunction.

18. Bazerman: Many decision makers and groups err by limiting their analysis to the data “in the room”. • Instead, they (i.e., we) should ask: “What data would best answer the question being asked?”