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Cognitive biases without borders: Assessing and reviewing the
effect of culture on cognition.
by
José L. Arizaga
Supervise...
Cognitive biases without borders: Assessing and
reviewing the effect of culture on cognition.
José L. Arizaga
MSc in Manag...
! The human brain, just as any other supercomputer, is limited in its abilities to process,
store, and access information,...
! Over the past few decades, research on cross-cultural psychology has acquired great
importance and relevance to business...
biases differ across cultures, and if so, how and why? More specifically, we consider biases
that show some interdependence...
" The second phase aimed at identifying meaningful dimensions of cultural variability,
as one of the limitations of the fir...
National Cultural Dimensions
" Since the 1980s, and as a result of the increased complexity and challenges around the
worl...
et al., 2002). Americans view themselves at large as better than others (Heine et al., 1999).
On the other hand, collectiv...
Masculinity/Femininity
! The masculinity (MAS) end of this spectrum represents a preference in society for
competition, as...
preserve and even enhance their self-esteem, which can ultimately result in self-serving biases.
For example, if sitting a...
maintain a positive self-image, collectivists desire a maintenance of harmony. Studies have
in fact shown that Japanese ar...
Overconfidence
! A classic example is that of the bat-and-ball puzzle used at the very beginning of this
study. An overconfi...
1974). Anchoring biases are robust and have been shown to be present in many
judgmental domains, such as estimates of self...
! Proposition 3: Members from cultures high on PDI will generally exhibit stronger external
! anchoring biases when knowin...
Fundamental Attribution Error (FAE)
" The FAE, also known as the correspondence bias, refers to the tendency to overestima...
studies, participants were asked to judge whether an argumentative essay reflected the true
opinion of its writer. The essa...
" The degree to which one exhibits hindsight bias is related to how surprised one is after
finding out the outcome; the mor...
Concluding remarks
" The cognitive biases reviewed in this study have not been selected at random. There
exists considerab...
References
BARNES, J. H. 1984. Cognitive biases and their impact n strategic planning. Strategic
Management Journal, 5, 12...
EPLEY, N. 2004. A tale of tuned decks? Anchoring as adjustment and anchoring as activation.
In: KOEHLER, D. J. & HARVEY, N...
HEACOX, N. J., GWYNE, J. W., KELLY, R. T. & SANDER, S. I. 2000. Cognitive aspects of
decision-making San Diego: SPAWAR Sys...
KRULL, D. S., HUI-MIN LOY, M., LIN, J., WANG, C., CHEN, S. & ZHAO, X. 1999. The
fundamental fundamental attribution error:...
NORENZAYAN, A. & NISBETT, R. E. 2000. Culture and causal cognition. Current Directions
in Psychological Science, 9, 132-13...
TAFARODI, R. W. & SWANN, W. B., JR. 1995. Self-liking and self-competence as
dimensions of global self-esteem: Initial val...
Appendix
A. Individualism2
Country IDV Country IDV Country IDV
United States 91 Slovakia 52 Kuwait 25
Australia 90 Spain 5...
B. Power distance3
Country PDI Country PDI Country PDI
Slovakia 104 Slovenia 71 Czech Republic 57
Malaysia 104 Bulgaria 70...
C. Masculinity4
Country MAS Country MAS Country MAS
Slovakia 110 Greece 57 Romania 42
Japan 95 HK 57 Peru 42
Austria 79 In...
D. Vertical individualism5
Country PDI IDV
Slovakia 104 52
Belgium 65 75
France 68 71
Poland 68 60
Italy 50 76
Czech Repub...
F. Vertical collectivism7
Country PDI IDV
Guatemala 95 6
Malaysia 104 26
Saudi Arabia 95 25
Venezuela 81 12
Italy 50 76
In...
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Cognitive biases without borders (Me)

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Cognitive biases without borders (Me)

  1. 1. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. by José L. Arizaga Supervised by Dr. David J. Henderson August 21st 2012 Total word count: 5,988 MG420 MSc in Management London School of Economics and Political Science
  2. 2. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. José L. Arizaga MSc in Management London School of Economics and Political Science A bat and ball cost $1.10. The bat costs $1 more than the ball. How much does the ball cost? ! " Algebraically, it is a very simple problem. A twelve year old could arguably solve it on paper, yet many of us arrive to the wrong solution when attempting to solve it mentally. If you answered $0.10 and kept reading, you were indeed subjected to a bias of overconfidence as you placed too much faith on your intuition (Kahneman, 2011). This overconfidence in one’s mental mathematical abilities is what prevented those mistaken from carrying out a simple check; if the ball were indeed to cost $0.10, it would imply $1.10 for the bat, which together would total an incorrect sum of $1.20. The correct answer is $0.05. This paper reviews cognitive biases in light of a cultural perspective and provides testable propositions. It is motivated by the search for evidence that cognitive biases grounded on self-views are not universal but in fact more predominant in certain cultures. The five biases considered (self-serving, fundamental attribution error, anchoring and adjustment, hindsight, overconfidence) can be accounted for using three of Hofstede’s cultural dimensions (individualism, power distance, masculinity). The conclusion is that these cognitive biases depend to some extent on our self- views which are themselves shaped by our culture. The main recommendation is to incorporate a cultural outlook in future studies related to cognitive biases, as well as to extend associations of the self beyond individualism and collectivism. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 1
  3. 3. ! The human brain, just as any other supercomputer, is limited in its abilities to process, store, and access information, specially given the finite amount of time at its disposal. As a result of this cognitive overload and limitation, we tend to seek solutions that are satisficing (i.e. good enough) rather than optimal. Altogether, this characterises mankind as cognitive misers (Fiske and Taylor, 1984) having a bounded rationality (Simon, 1955). In seeking such satisficing solutions, we unconsciously make use of mental shortcuts, known as heuristics. Although these shortcuts can be useful during times of overwhelming cognitive demands, they can also lead to severe and systematic errors or biases which tend to go unnoticed and can have undesirable effects (Gelfand and Brett, 2004). Our cognitive judgments are therefore often biased because of our lack of mental effort and abilities. Metaphorically speaking, our minds can be tricked by cognitive biases in the same way optical illusions can deceive our brains. The fundamental problem is that most of the times biases go unnoticed and can have harmful effects. Moreover, the error remains convincing even when one is completely aware of its nature. Awareness of the error does not produce a more accurate perception, which is what makes cognitive biases even harder to overcome. ! As a practical example, when meeting a person for the first time, we subconsciously create a first impression in a matter of seconds as memories and associations are retrieved which help us categorise the individual. Almost always, stereotyping occurs to some degree as it is an energy-saving mechanism which allows us to ignore irrelevant details. A person smiling with positive body language can be classified as friendly and open, whereas a person with crossed arms and legs and a quiet voice may be categorised as shy, introverted, or simply uninterested in what we have to say. Many argue however that strong and prejudicial stereotyping has become an aid to misunderstanding rather than understanding, resulting in unwanted biases (e.g. not all Mediterraneans are lazy or careless spenders, nor are all Chinese masters in kung-fu or table-tennis) (McGarty et al., 2002). But would people from certain cultures be more prone to stereotyping, as well as other biases? One could consider our brains as the hardware, and culture as the software or operating system. Logically then, analogous to different computer software (e.g. Mac OS X, Microsoft Windows, Android) using different shortcuts to navigate and save time, we would expect different heuristics, and thus biases, to predominate in different cultures. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 2
  4. 4. ! Over the past few decades, research on cross-cultural psychology has acquired great importance and relevance to businesses as globalisation has become a dominating force in social dynamics. Although research in this field developed and flourished in parallel to that of cognitive psychology, both fields were initially viewed as separate and independent; biases were widely considered universal. However, recent evidence has illustrated that cognitive biases are not etic (universal) but rather emic (culture specific). In fact, since the late 1990s, academics have been increasingly supportive of the notion that judgment biases should be reevaluated in light of a cultural perspective (Gelfand and Christakopolou, 1999, Gelfand et al., 2002, Heacox et al., 2000, Choi and Nisbett, 1998, Norenzayan and Nisbett, 2000). For example, to boost self-esteem, North Americans have the tendency to enhance their self-views, whereas East Asians resort to self-criticism and modesty which will help them fit better in their group (Kitayama et al., 1997). Different cultures therefore employ different mechanisms to boost self-esteem, and so the type and nature of cognitive biases may differ. ! Globalisation, and the increased interdependence and homogeneity it has generated in society has indeed called for a growing need to understand how culture impacts many aspects of organisational behaviour and psychology. Over the past few decades, the world has witnessed an increase of cross-cultural business interactions, both inside and outside organisation, among all levels of employees, and between more industry rivals (Triandis et al., 1994). Proof of this importance is the recent advances in differences in perception, attribution, and cognition between Americans and East Asians (Masuda and Kitayama, 2004, Masuda and Nisbett, 2001, Matsumoto and Yoo, 2006). Indeed culture is now widely recognised as a crucial variable to be included in research related to human behaviour. " The principal contributions of this paper are therefore to review and integrate contributions from cultural and cognitive psychology, and provide testable propositions alongside. There already exist a few empirical studies which have shown a cognitive dependence on cultural factors, although most have focused on reasons related to individualism and collectivism. In order to contribute towards the advancement of cross- cultural cognitive psychology, we require reading cross-cultural literature with cognitive lenses, and vice versa. The central question that guided this research was: Do cognitive Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 3
  5. 5. biases differ across cultures, and if so, how and why? More specifically, we consider biases that show some interdependence and are to some extent grounded on the self: self-serving, overconfidence, anchoring and adjustment, fundamental attribution error, and hindsight bias. We begin first by reviewing relevant cross-cultural literature as well as the evolution of the field over the past century. This is followed by a review of cognitive psychology and its formal integration with cross-cultural research. The present article aims to contribute towards the continued debate regarding the effects of culture on our mental distortions, in hope that employees and managers, as well as as people in general, can identify and avoid these, thus benefiting interpersonally from today’s increased multi-cultural business environment and society. It is a step towards understanding social cognition and behavioural decision making across cultures. The main conclusion is that the cognitive biases reviewed are a function of culture which both affects and is affected by our self- views. Cross-cultural literature " Culture is defined as the collective programming of the mind which distinguishes the members of one group or category of people from another (Hofstede, 1980). It is learned through membership in a group or community. Culture symbolises a fundamental part of an individual’s physical and social environment, affecting thoughts, feelings, and behaviours (Fiske, 2000). Culture does not only provide a model of self, it is a model for self; it defines what the self is, yet prescribes how people should manage their self in everyday life (Lehman et al., 2004). " The evolution of cross-cultural psychology has undergone significant changes since it was first documented over 100 years ago. Matsumoto and Yoo (2006) provide an exhaustive review of how this area and its research methodologies have evolved over time. For example, one of the first studies in the field of cross-cultural psychology is that of Rivers’s (1905) in which he observed individuals from New Guinea and India being more susceptible to optical illusions than individuals from England. This is an example of the first phase out of the four identified by Matsumoto and Yoo, during which, studies were limited to cross-cultural differences. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 4
  6. 6. " The second phase aimed at identifying meaningful dimensions of cultural variability, as one of the limitations of the first phase was that researchers claimed that inter-group differences had a culture source despite there being intra-group variability. This error was described as the cultural attribution fallacy, in which differences between groups being compared were inferred as “cultural” when there was no empirical justification. The most notable work that tackled this issue was that of Hofstede’s (1980) with his eminent cultural dimension theory. Following the necessity for psychologists to identify meaningful dimensions of cultural variability that describe subjective elements of culture, Hofstede initially identified four cultural dimensions: power distance, uncertainty avoidance, individualism/ collectivism, and masculinity/femininity. There are several other frameworks which also attempt to identify dimensions across cultures such as that of Trompenaars, Hall, and GLOBE, and one that seeks to consolidate all aforementioned frameworks into one (Steers et al., 2010). However, this study will use Hofstede’s model as a lot of the research in cross- cultural cognitive psychology is grounded on his dimensions, thus allowing for a more comprehensive review. " The third phase in cross-cultural psychology further contributed in addressing issues regarding cultural attribution fallacy, as Hofstede’s dimensions were still based on generalising assumptions (e.g. not all Americans are individualistic despite the US scoring amongst the highest on individualism). An eminent work in this third phase identified self- construals as an important mediator of cultural differences (Kitayama and Markus, 1991). More specifically, they theorised that the cultural context of an individual shapes their construal of the self (e.g. autonomy and independence in the West, interdependence and harmony in the East), which ultimately affects cognitive performance, social interactions, and other mental processes and behaviours. ! However, Matsumoto and Yoo (2006) have since argued that a fourth phase is required. They claim that, despite all the advances in the field, it is necessary, via linkage studies, to empirically link the observed differences between groups with the specific cultural sources that are hypothesised to explain these differences. The present study is grounded on literature from the aforementioned second and third phases, creating linkages and propositions that will hopefully lead future studies towards the fourth evolutionary phase of cross-cultural research. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 5
  7. 7. National Cultural Dimensions " Since the 1980s, and as a result of the increased complexity and challenges around the world, many researchers have strived to design a tool with which to measure differences and similarities across cultures. Several attempts have been made to capture this essence. Four currently favoured models are those of Hofstede, Hall, Trompenaars, and the GLOBE project, although this article will only make use of three dimensions of Hofstede’s framework: power distance, masculinity, and individualism. These models seek to accomplish two main things: to provide a well-justified set of cultural dimensions across which cultures can be compared and contrasted, and to offer a quantitative assessment (numeric score) for rating cultures (see Appendix for comprehensive list)(Steers et al., 2010). In a way, these models serve us as a heuristic to better understand cultures. Individualism/Collectivism " Many authors argue this dimension is the most important and probably the most researched. It refers to the relative importance of individual versus collective interests within society; whether the peoples’ self-image is defined in terms of “I” or “we”. Members of collectivistic cultures prioritise group goals and interests over their own. An emphasis is placed in developing an interdependent self (Kitayama and Markus, 1991). The opposite is true for members of individualistic cultures, where the self generally takes precedence over the group, and society encourages developing an independent self- construal. Most studies on cognitive psychology have focused on individualism and collectivism, linking these to several psychological differences across cultures (Triandis, 2001, Matsumoto and Yoo, 2006). " Extensive comparisons have truly been made between Western and non-Western cultures, generally describing the former as individualistic (IDV) and the latter as collectivistic (COL). Despite it being a generalisation at large, countries scoring highest on COL include Venezuela, Indonesia, Taiwan, and China whereas those highest on IDV include the United States, United Kingdom, New Zealand, and Sweden (see Appendix A for full list). Individualists tend to develop a separate, detached and independent self, focusing on one’s own attributes, abilities and traits (Kitayama and Markus, 1991) (Gelfand Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 6
  8. 8. et al., 2002). Americans view themselves at large as better than others (Heine et al., 1999). On the other hand, collectivistic people generally construe the self as fundamentally connected to others, defining one self in term of one’s roles, status and obligations (Kitayama and Markus, 1991). Power distance " This dimension refers to the degree to which members of a society accept an unequal distribution of power. Cultures high on power distance (PDI) are considered hierarchical, paternalistic, and centralised in power and decision-making. Moreover, assertiveness is discouraged and self-regulation is encouraged when interacting with people of higher status (Matsumoto et al., 2008). Countries ranking highest on this dimension include Malaysia, Panama, Russia, and China (see Appendix B). Subordinates in these countries expect to be told what to do and generally do not challenge leadership or people in higher ranks. On the other hand, cultures that endorse low PDI are more egalitarian, consultative, and democratic. People view each other more as equals regardless of formal positions. Examples of countries scoring low on PDI include Austria, Sweden, Israel, and the United Kingdom (see Appendix B). Control is disliked in these countries, and attitudes towards people in higher ranks are informal and on a first name basis. What is more, underlings may indeed challenge their superiors’ views and decisions. ! In addition, PDI has been shown to be highly correlated (0.67) with individualism and collectivism (Hofstede, 1980) in the sense that typically, the higher the PDI the greater the degree of collectivism. This is specially common in Asian cultures guided by Confucian values which emphasise loyalty towards the group, respect towards the elder, and a set of hierarchical relationships between members of society. Other studies (Triandis, 1995) have combined the four types of self related to PDI and IDV dimensions (same, different, interdependent, dependent) and categorised cultures as vertical individualism (high PDI, IDV), horizontal individualism (low PDI, IDV), vertical collectivism (high PDI, COL), and horizontal collectivism (low PDI, COL). These will be referred to later in the study. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 7
  9. 9. Masculinity/Femininity ! The masculinity (MAS) end of this spectrum represents a preference in society for competition, assertiveness, confidence, achievement, and material reward for success. Femininity on the other hand depicts a society which values cooperation, modesty, relationships, and consensus building. Examples of masculine cultures include Japan, Venezuela, and Italy, whereas those feminine (scoring low on MAS) include Sweden, Denmark, and Thailand (see Appendix C). Children in Italy are taught from a young age that competition is good and that it is important to be a winner in life. Status is acquired through material possessions such as luxury cars, a big house, a yacht etc. (Hofstede, 2003a). Sweden on the other hand, a very feminine culture, focuses on keeping a healthy work/life balance. Their culture is based on lagom, which means not too much, not too little, not too noticeable, everything in moderation (Hofstede, 2003b). Cognitive biases ! Over the past few decades, the study of cognitive biases has been fuelled by two events in the field of social sciences (Matsumoto and Yoo, 2006): the emergence of behavioural decision theory from the affluential work of Amos Tversky and Daniel Kahneman (1974), and the social cognition movement in social psychology which focused on the mental limitations of the individual (Gelfand and Brett, 2004). Academics define cognitive bias as a replicable pattern in perceptual distortion, an inaccurate judgment, or an illogical and irrational interpretation of reality (Kahneman and Tversky, 1974). Simply put, cognitive biases are mental errors caused by our simplified information processing techniques within our subconscious (CIA, 2007); distortions in the human mind. These cognitive biases have been shown to affect important business processes such as decision making and strategic planning (Barnes, 1984), negotiations (Bazerman and Caroll, 1987, Gelfand et al., 2002) and self identities (Swann and Bosson, 2010). In this article, we review five cognitive biases that affect and are affected by the self. Self-serving " This bias refers to the individual need to maintain relatively high levels of self-esteem. Many people like to feel good about themselves. People use different mechanisms to Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 8
  10. 10. preserve and even enhance their self-esteem, which can ultimately result in self-serving biases. For example, if sitting an exam and obtaining a high score, an individual will tend to associate this to their intelligence and their hard work. If, on the other hand, the result is poor, one will tend to blame the exam difficulty or the professor’s inability to teach. ! Cultural differences in self-esteem and self-enhancement have long been a subject of great debate and research (Kitayama and Markus, 1999, Kitayama and Markus, 1991, Swann and Bosson, 2010). An eminent review on the topic is that of Heine and colleagues (1999) which claimed that self-esteem was pursued more vigorously in Western cultures. The debate is split however; some are in agreement with higher self-esteem being more predominant in the West (Kitayama et al., 1997, Chiu, 1993, Cai et al., 2007, Tafarodi et al., 2010, Radford et al., 1993) (Tafarodi et al., 2010), others claim it is equally present in the East (Kobayashi and Brown, 2003, Schmidt and Allik, 2005). " In Western cultures there is indeed a tendency for people to see themselves as better than others. The aim is to enhance one’s positive attributes to stand out and be that rising star in the classroom, at work, and life in general (Gelfand et al., 2002). However, studies have shown that Japanese do not exhibit these type of self-serving biases (Kurman and Sriram, 2002) although at the same time, these studies have been criticized for measuring a Western-defined self-esteem, using methodologies developed in the West. The truth is that self-esteem has a different foundation in the East than it does in the West. Although in the latter, as mentioned above, self-serving biases are used to enhance one’s own position, in the former, individuals enhance their self-esteem by fitting in with the group through a subordination to the group’s interests and norms, displaying humility, and focusing on individual areas of weakness to improve (Gelfand et al., 2002, Kitayama et al., 1997). This difference in foundation of the self-esteem between individualists and collectivists is what Tafarodi and Swann (2001) refer to as self-competence and self-liking, respectively, in their two- dimensional self-esteem model. ! During negotiations for example, North Americans have been consistently found to experience self-serving biases through which they view their own behavior and attitudes as superior (e.g. more fair, constructive, effective) whereas this feeling is attenuated by collectivistic values (Gelfand and Christakopolou, 1999). Whereas individualists seek to Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 9
  11. 11. maintain a positive self-image, collectivists desire a maintenance of harmony. Studies have in fact shown that Japanese are more likely to exhibit a modesty bias rather than a self- serving one (Tafarodi and Swann, 1995, Tafarodi et al., 1999). " Based on the work of Triandis (1995), vertical individualism (high on PDI and IDV) such as Slovakians, French, and Polish, (see Appendix D) tend to have the need, as an individual, to be above average and excel above the rest. Horizontal collectivism however, lie on the other end of the spectrum in this regard (see Appendix G). Even cultures of horizontal individualism (low on PDI and high in IDV) such as Sweden (see Appendix E) do not encourage this concept of “being the best” or “unique” but instead seek an egalitarian approach. We would therefore expect self-serving biases aimed at enhancing one’s self attributes and views to be strongest in vertical individualistic cultures and lowest in horizontal collectivistic ones. " Proposition 1: Self-serving biases aimed at maintaining one’s own positive self-concept and " characteristics will generally be more present in vertical individualistic cultures, and least " present in cultures of horizontal collectivism. ! In the West, situations of success have a greater impact on self-esteem than an equivalent failure, whereas the opposite is true in the East (Kitayama et al., 1997). Similarly, successful and positive feedback is considered more motivating in the West (Heine et al., 2001, Lehman et al., 2004). North Americans are more accepting of feedback that makes them above average and affirms their positive qualities (Gelfand et al., 2002) (Kurman and Sriram, 2002). Japanese on the other hand are more accepting of negative feedback as it enables them to identify their weaknesses, and improve these in order to better fit in their group. Moreover, group performance feedback has significant impact on self-evaluations in the East, yet very little in the West (Earley et al., 1999). There is in fact evidence that Asians have unrealistic positive views of the self when asked to evaluate themselves on dimensions that are central to their cultural definition of the self (e.g. communal traits, collectivistic, harmonising etc.) (Kurman, 2001, Kobayashi and Brown, 2003). Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 10
  12. 12. Overconfidence ! A classic example is that of the bat-and-ball puzzle used at the very beginning of this study. An overconfidence in our mental processing is what probably lead most of us to a wrong answer, blindly accepting it to be correct until proven wrong. A well documented better-than-average finding is that of Svenson (1981) in which he found that 93% of American drivers rated themselves as better than the median. People exhibit overconfidence if they make average probability judgments that exceed the proportion of items answered correctly (Li et al., 2009). " Overconfidence has been linked to efforts in maintaining self-esteem. People like to think they are right. The most common technique involves asking participants to answer a number of general knowledge questions and assign a probability of answering them correctly; if their mean confidence scores are higher than their mean accuracy scores, overconfidence was indeed present (Fischhoff, 1982). The reason why many of us fail to avoid the overconfident bias can be explained by the argument recruitment model (Li et al., 2009). When people are confronted with a general knowledge question, they try to seek or recruit arguments for and against our intuition. Arguments are then weighed, and a final decision is made which will serve as our answer to the questions. Overconfident people will be biased towards first arguments and not pursue further retrieval or recruitment of arguments that may help improve our judgment accuracy. It has been referred to as a self- serving mechanism, which helps preserve one’s self-esteem, specially in Western cultures. ! Proposition 2: Related to Proposition 1, and in viewing overconfidence as a self-serving bias, ! vertical ! individualists will tend to exhibit stronger overconfidence biases, whereas these will be ! weakest !for horizontal collectivists. Anchoring and adjustment ! In many situations, people tend to make estimates by starting from an initial value which is then adjusted progressively until it lies within a region of acceptance (Mussweiler et al., 2004). These adjustments are normally insufficient because it requires mental effort. In other words, different starting points result in different estimates, which are biased towards the initial values. This is known as the anchoring bias (Kahneman and Tversky, Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 11
  13. 13. 1974). Anchoring biases are robust and have been shown to be present in many judgmental domains, such as estimates of self-efficacy (Cervone and Peake, 1986), price estimates (Mussweiler et al., 2000), hindsight and egocentricity bias (Chapman and Johnson, 2002, Epley, 2004), and negotiation outcomes (Galinsky and Mussweiler, 2001). In fact, during a negotiation, the first offer typically serves as an anchor as studies have revealed it is highly correlated (0.8) with the final outcome. Hence the importance of preparation prior to a negotiation in order to make the first offer and anchor the other party high, if selling, or low, if buying. " Anchors can originate externally or internally to the individual. In one study, participants gave a lower estimate (8,000 feet) of the height of Mount Everest when asked by researchers whether it was higher or shorter than 2,000 ft., but provided a higher estimate (42,500 ft.) when asked whether it was higher or lower than 45,500 ft (Jacowitz and Kahneman, 1995). The actual height of Mt. Everest is about 29,000 ft. Similarly, anchoring can occur when asked a comparative judgment, followed by an absolute one: “Is the river Nile longer or shorter than 9,500 km? How long is the river Nile?”. Assuming we don’t know the answer, studies have repeatedly shown that our final estimate will be relatively close to the numeric anchor, even if it has been generated randomly, as our thinking has been biased by it (Kahneman and Tversky, 1974). These are both examples of external anchoring. ! As covered in the previous section, cultures high in power distance accept unequal distribution of power and it is discouraged to challenge members of higher social or professional status. Members from hierarchical cultures (high in PDI) are therefore expected to exhibit greater anchoring biases when interacting with people of higher status, so long as this status difference is made known of course. Moreover, we would expect the anchoring bias to be stronger if status differences are large and the other person is also from a culture high on PDI. This has practical implications on how we view ourselves and evaluate our self-efficacy, as these can be anchored to views and feedback from superiors. Similarly, during negotiations with a person of higher rank, an underling will be more anchored to the offers proposed by the superior. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 12
  14. 14. ! Proposition 3: Members from cultures high on PDI will generally exhibit stronger external ! anchoring biases when knowingly interacting with people of higher rank status. ! Proposition 4: The greater the status differences between interacting people from cultures high ! in PDI, the greater the tendency to experience an external anchoring bias by the member of ! lower status. " In terms of internal anchors, these are self-generated and take place inside our minds. For example, when trying to estimate ourselves the freezing point of vodka, we will probably generate an initial internal anchor of 0°C (the freezing point of water), and adjust downwards (since it is generally known that the freezing point of alcohol is lower than that of water) until a plausible value is reached. The difference with respect to external anchors is that we know from the beginning that the initial value is wrong and know that appropriate adjustment is required (Epley and Gilovich, 2005). ! Epley and Golivich (2006) showed that being motivated to engage in effortful thinking improves adjustment, thus reducing the effects of self-generated (internal) anchors. Adjustment is effortful, so increasing the motivation to seek more accurate estimates generally does improves accuracy, though evidence suggests this is only applicable to internal anchors and not external (Epley and Gilovich, 2005). People who are overconfident in the accuracy of their judgments think too little about ways in which they could be wrong (Koriat et al., 1980). Adjustment initiates from the initial anchor and progresses towards a reasonable value as information is retrieved. For each piece of information retrieved we decide whether to stop at the current value, or continue adjusting. Overconfidence may hamper the retrieval of such information, thus adjusting less and ending nearer to the initial point estimate or anchor. Studies have revealed that the individualistic West generally shows higher levels of overconfidence, whereas modesty and humility is valued in the East. The West promotes a self as a super-hero and above- average member of society which typically results in high levels of overconfidence. ! Proposition 5: Following Proposition 2, internal anchoring biases are more likely to be strongest in ! vertical individualist cultures, where overconfidence is proposed to be highest, and weakest ! in horizontal collectivistic cultures, where overconfidence is expect to be lowest. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 13
  15. 15. Fundamental Attribution Error (FAE) " The FAE, also known as the correspondence bias, refers to the tendency to overestimate the effect of dispositional (internal) qualities and underestimate situational (external) factors, when attributing another person’s behaviour (Ross, 1977). It is probably one of the most documented and researched bias in social perception. For example, when we observe someone arriving late to a meeting, we tend to think it is because he or she is an unorganised or lazy person, instead of thinking it could be because of severe delays on the train they normally take. ! There is evidence that the FAE is learned since young children do not make dispositional attributions until reaching a late stage of their childhood (Langdridge and Butt, 2004). Moreover, the FAE is arguably not universal as differences have been accounted for across cultures, predominating in the individualistic West and not as much in the collectivistic East (Norenzayan and Nisbett, 2000). However, this is arguable as there is also evidence supporting that FAE is prevalent in both Western and non-Western cultures (e.g. China, India, and Taiwan) (Krull et al., 1999, Choi and Nisbett, 1998, Miyamoto and Kitayama, 2002). ! The FAE increases when the observer is cognitively busy engaged in a competing task (Gilbert and Krull, 1988, Gilbert et al., 1988). As reviewed in the earlier section, members from masculine cultures champion competitive, proactive, and achievement-oriented behaviour. Feminine cultures are more engaged in achieving harmony with nature and its environment, and emphasise a passive are reactive approach to life. In comparison to feminine cultures, we would therefore expect people from masculine cultures to be more cognitively engaged in competing tasks, thus exhibiting a stronger FAE. ! Proposition 4: Members from masculine cultures are expected to engage in more competing ! tasks, which ultimately results in stronger FAE. " Attitude diagnosticity refers to the property of socially constrained behaviour that suggests a true attitude of the individual. It has been found to be a critical factor in moderating cross-cultural differences in FAE (Miyamoto and Kitayama, 2002). In their Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 14
  16. 16. studies, participants were asked to judge whether an argumentative essay reflected the true opinion of its writer. The essay content was considered highly diagnostic of the writer’s attitude if it suggested a desire to defend the essay position i.e. long, persuasive, well composed, and enthusiastic. Individualistic Americans showed strong FAE regardless of attitude diagnosticity of the essays, whereas collectivistic Japanese only showed strong FAE when the essays were diagnostic. For essays which were low on diagnosticity Japanese showed very weak and nonsignificant FAE. Therefore: " Proposition 7: When there is evidence that an individual’s behaviour does not represent their " real self, collectivists will show significantly weaker FAE than individualists. Otherwise, the " strength of the FAE is expected to be fairly similar for both. Hindsight " Imagine you have been out on a date. A few days later, the person you went out with calls asking to meet again. At that point, you might believe you knew all along they would call. However, the reality may be that previous to the call, you were in fact rather uncertain and were starting to doubt their interest. Misremembering the degree to which one accurately forecasted an outcome is known as the hindsight bias. We have heard many times the “I knew it all along”. ! Hindsight biases can be explained via anchoring (Fischhoff, 1975) as we deliberate choose the outcome information as an anchor to our previous estimates. Indeed hindsight bias seems to be very robust (Christensen-Slazanski and Willham, 1991). Although this bias has been assumed to be universal, there is also evidence that it is not. Koreans and Easterners in general have showed greater hindsight bias than Americans and Westerns (Yama et al., 2010, Choi and Nisbett, 2000 for reviews). A study has however revealed that Japanese exhibit marginally less hindsight bias than Canadians (Heine and Lehman, 1996). Others have even claimed that there is no difference across Eastern and Western cultures and that hindsight bias is in fact a universal phenomenon (Pohl et al., 2002). These are the few studies that have investigated cultural differences regarding hindsight bias and there is still no overall agreement. It is clearly an understudied area which requires greater efforts. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 15
  17. 17. " The degree to which one exhibits hindsight bias is related to how surprised one is after finding out the outcome; the more surprised one is, the less likely one will suffer the bias (Brighman and Wasserman, 1999, Ofir and Mazursky, 1997). Estimating that Mt. Everest is 30,000 ft. will not cause much surprise when being later told that it’s in fact 29,000 ft. Estimating the total length of the Great Wall of China (including that built by all dynasties) to be 6,000 km will generally cause greater surprise when finding out it’s actually more than 50,000 km1. Greater hindsight bias would be expected in the second example. The question is, are different cultures more prone to being surprised, and therefore biased in hindsight? " Self-serving motives may be able to account for different levels of surprise across cultures. The more one is surprised after finding out the outcome, the greater the feeling that they were unable to predict a relatively accurate outcome, thus undermining their intellectual and cognitive abilities. This dissonance between their inaccurate estimate (expressed through surprise) and the actual value might create a feeling of discomfort which is relieved by a hindsight bias (i.e. believing one estimated a value closer to the real one) in order to preserve one’s self-esteem. By this logic, self-serving attitudes are likely to moderate the likelihood of exhibiting hindsight bias. As covered previously, Western cultures normally display greater self-serving biases that enhance and distinguish the self. We therefore expect people high in IDV to show greater hindsight bias, in agreement with the work of Heine and Lehman. " Proposition 8: Individualism generally leads to a greater need for enhancing the self. Hindsight " biases will predominate more in cultures high in IDV as a mechanism to protect one’s self- " esteem. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 16 1 http://www.thegreatwall.com.cn/en/goc/goc-2.htm
  18. 18. Concluding remarks " The cognitive biases reviewed in this study have not been selected at random. There exists considerable interdependence between them since, to a certain degree, they are grounded on our self-concepts. How we view ourselves affects how we think, how we process information, and how our minds trick us in the process. Culture has a clear impact on the self, which, considered to be our mental software, affects the type of mental shortcuts our brain — as mental hardware — uses to cope with the colossal amount of information we are exposed to. These shortcuts typically lead to a distortion of reality. When closing business deals, negotiating terms of a contract, evaluating a possible merger or acquisition, or reviewing performances and actions of others, the last thing we want is for reality to be distorted. As globalisation has led to a substantial increase in multi-cultural interactions between people and organisations, it is necessary to study these distortions in a light of a cultural viewpoint, though beyond the overstudied individualistic and collectivistic nature of the self. Moreover, the practical implications of testing the above propositions are extensive, as it not only applies within a business context but also a personal one. The individual, like an atom, is the basic unit of matter within corporations, institutions, societies, and the world in general. Understanding how and why this atom is limited in its abilities is of monumental importance in order for it to succeed in the increasingly complex world that we live in. Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 17
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  25. 25. Appendix A. Individualism2 Country IDV Country IDV Country IDV United States 91 Slovakia 52 Kuwait 25 Australia 90 Spain 51 Arab Emirates 25 United Kingdom 89 India 48 Serbia 25 Hungary 80 Japan 46 Tanzania 25 Canada 80 Argentina 46 Morocco 25 Netherlands 80 Iran 41 Egypt 25 New Zealand 79 Russia 39 HK 25 Italy 76 Brazil 38 Chile 23 Belgium 75 Turkey 37 China 20 Denmark 74 Uruguay 36 Bangladesh 20 France 71 Zambia 35 Singapore 20 Sweden 71 Greece 35 Vietnam 20 Norway 69 Croatia 33 Ethiopia 20 Switzerland 68 Philippines 32 Thailand 20 Germany 67 Iraq 30 South Korea 18 South Africa 65 Romania 30 Taiwan 17 Finland 63 Mexico 30 Peru 16 Poland 60 Nigeria 80 Trinidad 16 Luxembourg 60 Bulgaria 30 Ghana 15 Estonia 60 Ireland 30 Costa Rica 15 Malta 59 Slovenia 27 Indonesia 14 Czech Republic 58 Portugal 27 Pakistan 14 Austria 55 Malaysia 26 Venezuela 12 Israel 54 Saudi Arabia 25 Guatemala 6 Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 24 2 Source: http://geert-hofstede.com/countries.html
  26. 26. B. Power distance3 Country PDI Country PDI Country PDI Slovakia 104 Slovenia 71 Czech Republic 57 Malaysia 104 Bulgaria 70 Spain 57 Iraq 95 Tanzania 70 Malta 56 Saudi Arabia 95 Morocco 70 Pakistan 55 Panama 95 Egypt 70 Japan 54 Guatemala 95 Vietnam 70 Italy 50 Philippines 94 Sierra Leone 70 South Africa 49 Russia 93 Brazil 69 Argentina 49 Romania 90 France 68 United States 40 Kuwait 90 Poland 68 Luxembourg 40 Arab Emirates 90 HK 68 Canada 39 Serbia 86 Colombia 67 Netherlands 38 Mexico 81 Turkey 66 Australia 36 Venezuela 81 El Salvador 66 United Kingdom 35 Nigeria 80 Belgium 65 Germany 35 China 80 Thailand 64 Sweden 31 Bangladesh 80 Peru 64 Norway 31 Ghana 80 Portugal 63 Ireland 28 Indonesia 78 Uruguay 61 New Zealand 22 India 77 Zambia 60 Denmark 18 Singapore 74 Greece 60 Israel 13 Croatia 73 South Korea 60 Austria 11 Ecuador 73 Taiwan 58 Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 25 3 Source: http://geert-hofstede.com/countries.html
  27. 27. C. Masculinity4 Country MAS Country MAS Country MAS Slovakia 110 Greece 57 Romania 42 Japan 95 HK 57 Peru 42 Austria 79 India 56 Croatia 40 Venezuela 73 Argentina 56 Bulgaria 40 Italy 70 Bangladesh 55 Tanzania 40 Switzerland 70 Belgium 54 Vietnam 40 Iraq 70 Morocco 53 El Salvador 40 Ireland 70 Canada 52 Ghana 40 Mexico 69 Luxembourg 50 South Korea 39 United Kingdom 66 Malaysia 50 Uruguay 38 Germany 66 Arab Emirates 50 Surinam 37 China 66 Pakistan 50 Guatemala 37 Lebanon 65 Brazil 49 Russia 36 Poland 64 Singapore 48 Thailand 34 Philippines 64 Malta 47 Portugal 31 Colombia 64 Israel 47 Estonia 30 South Africa 63 Indonesia 46 Chile 28 Ecuador 63 Turkey 45 Finland 26 United States 62 Egypt 45 Costa Rica 21 Australia 61 Taiwan 45 Slovenia 19 Nigeria 60 France 43 Denmark 16 Saudi Arabia 60 Iran 43 Netherlands 14 New Zealand 58 Serbia 43 Norway 8 Czech Republic 57 Spain 42 Sweden 5 Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 26 4 Source: http://geert-hofstede.com/countries.html
  28. 28. D. Vertical individualism5 Country PDI IDV Slovakia 104 52 Belgium 65 75 France 68 71 Poland 68 60 Italy 50 76 Czech Republic 57 58 Malta 56 59 Spain 57 51 E. Horizontal individualism6 Country PDI IDV New Zealand 22 79 Denmark 18 74 Australia 36 90 United Kingdom 35 89 United States 40 91 Austria 11 55 Canada 39 80 Israel 13 54 Sweden 31 71 Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 27 5 Ranking based on sum of PDI and IDV, in decreasing order 6 Ranking based on differences between IDV and PDI, in decreasing order
  29. 29. F. Vertical collectivism7 Country PDI IDV Guatemala 95 6 Malaysia 104 26 Saudi Arabia 95 25 Venezuela 81 12 Italy 50 76 Indonesia 78 14 Philippines 94 32 China 80 20 Singapore 74 20 Russia 93 39 Vietnam 70 20 HK 68 25 South Korea 60 18 G. Horizontal collectivism8 Country PDI IDV Costa Rica 35 15 Ireland 28 30 Trinidad 47 16 Jamaica 45 39 Argentina 49 46 Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition. 28 7 Ranking based on differences between PDI and IDV, in decreasing order 8 Ranking based on sums of PDI and IDV, in increasing order

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