7. Behavioral aspects & cultural change Flashcards
Mention 3 digital transformation models and the authors
Running the first mile - Garret & Ritchie
Digital transformation, an inductive framework - Vial
Building blocks - Ross et al.
HOW DO WE BEHAVE?
- Individualism: Individuals only think, decide,
and act according to their own interests. - Optimizing behavior: Human beings would be
instantaneous calculators of pleasures and
pains, costs and benefits, and seek always to
obtain the best result given the means at their
disposal. - Full rationality: Individuals would have full
capacity to properly process the information
available. - Universality: The universal validity of the
postulate of homo economicus as a model of
behavior is maintained. - Exogenous preferences: Agents are consistent
when they are ordering their preferences.
ANTECEDENTS OF BEHAVIOUR
- Uncertainty: What is the probability of anticipated consequences wih
regard to different behavioral alternatives? - Limitations of perfect rational behavior: “Uncertainty about the
consequences that would follow from each alternative, incomplete
information about the set of alternatives, and complexity preventing the
necessary computations from being carried out” (Simon 1972)
What is uncertaincy?
- We face uncertainty in all
situations with imperfect or
incomplete knowledge - Uncertainty can be a major
obstacle to effective decisionmaking - We can try to understand, but not
eliminate uncertainty with the
tools of probability theory.
BOUNDED RATIONALITY
The term bounded rationality is used to
designate rational choice that takes into
account the cognitive limitations of the
decision-maker – limitations of both
knowledge and computational capacity
(Simon 1990)
PROSPECT THEORY
Kahneman & Tverysky 1979
- Reference Dependence: Gains
and losses depend on a
reference point - Loss Aversion: Losses (in
dependence of a reference
point) are perceived stronger
compared to gains - Risk Propensity: Individuals
behave risk averse with regard
to gains and risk seeking with
regard to losses
CERTAINTY EFFECT
- People overweight potential gains that
are obtained with certainty (or appear to)
relative to outcomes which are merely
probable. - Probabilities are often not perceived
linearly - In situations where gains are possible but
not probable, most people decide for the
option with the higher possible gain.
STATUS QUO BIAS
- Individuals have a strong tendency to remain at the
status quo, because the disadvantages of leaving it
loom larger than advantages. (Kahneman et al.
1991)
Effect can be found across a range of decisions:
* the stronger an individual’s preference for a
selected alternative, the weaker was the bias.
* The more options that were included in the
choice set, the stronger was the relative bias for
the status quo.
- Minimizes the risk associated with a change, but can
also let to unused opportunities
Kahneman et al. 1991
COGNITIVE BIASES - Selfperception
What is self-efficacy?
- = the belief in one’s
capabilities to organize and
execute the courses of action
required to manage
prospective situations
(Bandura, 1995). - Essential part of self-esteem,
plays a crucial role of how to
approach tasks, challenges,
and change
COGNITIVE BIASES - Selfperception
What is overconfidence effect?
- Overconfidence of one’s own
capabilities, performance or knowledge - Can also occur in relation to others
(better than average effect) - Difficult tasks tend to yield
overconfidence more often than
relatively easy tasks - High levels of confidence are usually
associated with high levels of
overconfidence - 80% of drivers believe they drive better
than the average driver. - 90% of American college professors think
they teach better than the average
professor - 82% of French men believe they are
better lovers than the average French
lover
COGNITIVE BIASES
Situation and Timing
What is framing?
Human choices are remarkably
susceptible to the manner in which
options are presented. This socalled
‘‘framing effect’’ represents
a striking violation of standard
economic accounts of human
rationality (De Martino et al., 2006)
