Thinking about Fact Gathering

In older article, we advised you to ‘‘get the facts’’ as an important first step in good ethical decision making. Be aware, though, that your thinking about the facts is likely to be biased. Research evidence suggests that you may look for the wrong ones or stop looking too soon because you think you already have all the facts you need.

We know that most people, including business students and business executives, are overconfident about their knowledge of the facts. For example, in research studies, people were asked factual questions. Then they were asked to judge the probable truth of their answers. For example, in response to the question, ‘‘Is Rome or New York farther north?’’ most people chose New York, and they believed that the probability was about 90 percent that they were right. Actually, they were wrong. Rome is slightly north of New York. Being overconfident can make you fail to search for additional facts or for support for the facts you have.

Even if you gather additional facts or support, another cognitive bias termed the confirmation trap may influence your choice of which facts to gather and where to look. All of us have the tendency to look for information that will confirm our preferred answer or choice and to neglect to search for evidence that might prove us wrong. If you were an investment banker who wanted to believe that mortgage backed securities were safe (because they were so profitable at the time), you were more likely to look for supportive information and ask a question like, ‘‘Historically, what percentage of mortgages have defaulted?’’ Given that question, the banker will probably underestimate the risk involved. Because of no-doc loans and other new and riskier sub prime mortgages, relying on historical default patterns no longer made sense. The meeting might take a very different turn if the banker were to ask, ‘‘What future problems are possible with this type of new product? What has changed? What haven’t we thought of?’’

In an attempt to overcome the confirmation trap, it’s important that you consciously try to think of ways you could be wrong. Incorporate questions in your individual and group decision-making processes such as, ‘‘How could I/we be wrong?’’ ‘‘What facts are still missing?’’ and ‘‘What facts exist that might prove me/us to be wrong?’’ You may still miss some important facts, but you’ll miss less of them than if you didn’t ask these questions at all.

We also advised you to think about all the potential consequences of your decision for a wide variety of stakeholders. Who can argue with such sage advice? But psychologists have found a number of problems with how people think about consequences.

One way people simplify their decisions and make them more manageable is to reduce the number of consequences they consider. They’re especially likely to ignore consequences that are thought to affect only a few people. But consequences that affect only a few people can be serious. For example, a highly beneficial drug may have positive consequences for many and adverse consequences for only a few people. But what if those few people could die from side effects of the drug? Obviously, you wouldn’t want to ignore such serious consequences no matter how few people are affected. In attempting to consciously deal with this situation, it helps to consult a broad range of people who have a stake in the decision you’re making. Invite input from all interested parties, especially those who disagree with you and those with the most to lose. Ask them what