Friday, April 18, 2014

The Impact of Defaults on Decision Making

You probably consider that defaults (that is, what happens if nothing is done) have a marginal impact on people's decisions. And you probably consider that the more important the decision is the less impact defaults have. Right?
Actually, no. Things don't work this way. And in some cases, defaults can determine the results, even when the results are of the utmost importance.
Do you find this hard to believe? Please keep on reading then!

What are defaults?

The default is what happens if you do nothing about something. For instance, in some countries such as Austria, if you do nothing you are an organ donor. So if you don't want do donate your organs when you die, there's this form you must fill in. You do nothing: you're an organ donor. You sign a form and you're not an organ donor.
In other countries like Germany, if you do nothing, no one benefits from your organs once you're dead. So if you're in Germany and if you want to be an organ donor there's this form you need to fill in. You do nothing: you're not an organ donor. You sign a form and you're an organ donor.

The impact

One would think that people think carefully about their most important decisions, right? Big decisions like the university they attend to, the house they choose to live in, their husband/wife or the future of their organs can't be made just because it's too much work to fill in a form, can they? Well consider the graph bellow about organ donation rates in a few European countries.
Organ donors adoption rates

You guessed it: amazingly, the one thing that explains why Austria has a 99.98% of organ donors and Germany just has 12% is their default! Yes, that's an 88% difference!
Austria and Germany are culturally alike, they're physically almost in the same place - so same climate and all. The one thing that is different is the organ donation default. In Austria you're automatically an organ donor (unless you sign a form) but in Germany you have to sign a form if you want to be a donor. And just that explains an 88% difference of rate adoption. Amazing, isn't it?
Even more amazing is the fact that if you ask people to explain why they chose to be (or not to be) an organ donor, people always give a rational explanation for their decision. No one says that they choose to donate (or not to donate) their organs because they didn't bother to fill in this form. Actually, people don't think that the trouble of filling in a form had any real impact on their decision.

Defaults and Project Management

Like anything in this world, you can use defaults wisely and for the best - or not. It doesn't sound like a bad thing to be an automatic organ donor if you don't take a stand, does it?
But there are some people who use defaults to obtain the results they want in the first place - only disguising it as if it's other people's choice and decision. Just take a close read and the next survey you reply to under this perspective... But his is not what we want in Project Management - in fact this is what we generally want to prevent.
For instance, it's a common practice to send meeting minutes by email saying something like this "if you don't reply in the next 24 hours it is considered that you agree with the contents of the meeting minutes attached". This has the obvious advantage of having a decision even if no one replies, but looking at this under this new perspective of the default bias you'd expect to have more people not questioning the meeting minutes when you do things this way, right? More than what you'd have if you had to have some reply from each of the people involved - longer process but more accurate, agree?
Maybe the Project Management scenario where the impact of the default bias is greater is when selecting which projects are to go ahead. The most common process is to support the go ahead decision with some kind of argumentation. But you don't have to do anything if the project is not to be started. Shouldn't we give some kind of arguments for a project *not* to go ahead?
I mean, being the default not starting projects, one would expected that some good projects never see the light of day. Just because of the default, someone just keeps the project file on a pile only to find it on some later on spring cleaning and say: why is this old thing still here? And then trow it in the trash... It makes you wonder, doesn't it?


This is just one more bias of ours to add to the lot (more on the topic here), and one with a potentially huge impact: just keep in mind the donor adoption rates differences from country to country. By itself, defaults can account for differences in behavior as great as 90%! While some of these biases account for a slight tendency towards a particular behavior, defaults can make a big, big difference.
Like most biases, we have to be alert if we want to notice them in order to deal with them. And once we're alert, we'll find them in the Project Management context almost everywhere, and sometimes where we least expect them. Like in the project selection process - that was unexpected for me. If we don't have some portfolio management processes in place to deal with project selection or if we're not alert to this default issue, we're bound to make the wrong decisions about starting projects just because we don't decide about some of the projects. And this is critical. Even more because of the sense of urgency that most activities have around Project Management, and these activities take away our attention from important stuff: such as project selection: it's more stressful having our boss calling every 10 minutes to know if some service (that his boss uses) is back on than to decide weather or not we should start this project!
These are just a couple of examples but these examples do stress both the importance and the impact that this default bias can play in the Project Management profession. So keep an eye for defaults. And when you find them, deal with them: force a decision, that's the way to deal with defaults!

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1 comment:

mba project management said...

Lovely share truly a educational blog learned a lot thanks a lot