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Business Officer Magazine

Test Every Assumption

You may be right, but you could be wrong—which is why individuals and institutions should not immediately trust their own intuition, said Dan Ariely, James B. Duke Professor of Behavioral Economics at Duke University, Durham, North Carolina, during his closing general session address. Ariely, author of Predictably Irrational: The Hidden Forces That Shape Our Decisions (HarperCollins, 2008), tested the audience's assumptions with some visual mind-benders to show that what we think we see doesn't always match reality. What we don't see can likewise lead us toward “decision illusions,” noted Ariely.

Consider rates of participation in organ donation within developed nations. As Ariely illustrated, among Western European nations, countries generally had either very high or very low participation rates. What could explain this? Is it goodwill on the part of the citizens of certain countries? Legislation mandating participation? Were some countries paying their citizens to participate?

According to Ariely, it turns out the primary difference between countries with very high and very low participation rates centered on the enrollment form-specifically, whether the form was written with opt-in or with opt-out language.

“We feel we make decisions every day for which we are in control, but very often, our decisions are largely influenced by whom or what exerts control over our environment,” said Ariely. This is not to say that people do not care about something as important as organ donation or enrollment in their employer's retirement savings plan, noted Ariely. Yet, when decisions are mentally or morally complex and we aren't certain what we should do, we tend to take the decision presented to us.

The overarching theme of Ariely's message was threefold: As institution leaders who are daily shaping the environment for students, faculty, and staff, we must start from the assumption that (1) we have many irrationalities; (2) we are largely blind to them; and (3) we therefore always need to test our own assumptions and those of others.

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