Organizational Behavior Zmf 1 PDF

Organizational Behavior Zmf 1 Introduc on Why do we have organiza ons? Risk considera ons Historically there are a few reasons why we have organizations: - We think it is useful to have them -> because they reduce risk. - Earlier in history they send ships to acquire goods. This was quite risky, because of Pirates -> so to minimize the risk of ending without any goods we prefer getting 100 goods from 100 different ships. - This phenomenon also appears today. For example, we have the possibilities to buy just part of a firm, and not the whole -> we reduce risks. Eﬃciency considera ons Because we have Organizations, we can produce a lot more. We produce even a bit more than we should, because of sustainability reasons. Advantages of division of labor and specializa on Not every worker has the same abilitys, so with work division, we gain efficency, because everyone can do the one thing in the organization he is best in Exchange and coordina on as the consequence of division of labor - Division of labor makes exchange and coordination paramount among the members of the organization: o Within an organization: Employees from the production department forward parts to the next employees in the supply chain; employees from product development and marketing need to exchange ideas and information. o Between organizations: A company sources parts and tools from a supplier and delivers her own products to the next company. - Exchange and coordination requires times, effort, and money. - Parts of the gains of division of labor is lost in the process -> transaction costs Organiza on can address two diﬀerent meanings: Instrumental: - The organization is a means to an end with regards to the solution of an organizational problem. - A company has an organization. Institutional: -> We are having an institutional sight of organizations - The organization is a social construct that involves several distinctive individuals with individual and common interests. - A company is an organization. 1 Classical thoughts about the organiza on Metaphors involving the organiza on prominently featured the machine during the age of classical theorizing - "In the middle between the unfathomable and the self-evident, the metaphor creates the most knowledge” (Aristotle in Rhetoric, quoted in Morgan, 2018). -> how we talk affects the way we‘re thinking - Metaphors are a paraphrase for a general process using an image, where A is considered B. - The influence of the metaphor on language and communication has been subjected to a detailed analysis by Lakoff and Johnson (1980) -> worth reading! The world as a machine - Elements of a mechanistic theory first appear in the ideas of the Greek "atomists" between the 5th and 3rd centuries BC. - Mechanistic thinking influenced humanity well into the 20th century. o Within his physics, Isaac Newton developed the theory of the universe as a celestial machine. o Many scientists used machines as a means of understanding nature. o Aristotle used mechanistic principles to understand the movement of animals. o Archimedes and Galilei used mechanical devices to understand mathematics and physics. o Galileo strove for a science in which all explanations of reality were based on physical principles. o Einstein: "God does not play dice with the universe". o Laplace's demon: An intelligence, knowing the initial state and the laws of nature, could predict everything perfectly Humans as machines in the philosophy of René Descartes - Strong influence of mechanistic ideas on theories about the human mind as well as the nature of knowledge and reality. - Descartes separated mind and body, and his theories were also based on the atomism of the ancient Greeks. - Descartes believed that the material world could be explained by the mechanical interaction and movement of corpuscles, created and set in motion by God. - Plants and animals as superior machines in Descartes' philosophy. - Man was also regarded as machine-like, but differed from animals by his ability for complex language and logical deduction. - Descartes' ideas were developed to the extreme by the materialist Julien de LaMettrie (L'Homme Machine, 1748, Man is a machine). - Human behavior can be understood mechanistically. - LaMettrie was often sent into exile but was kindly received at the court of Frederick the Great (will be relevant later...). Humans as machines within behavioris c psychology and economics - Psychological behaviorism of the 1950s revisited human ideas as a predictable machine. - Human beings are the product of their environment (stimulus-reaction psychology). o B. F. Skinner showed his operand conditioning in animal experiments. o Pavlov showed classical conditioning (dog studies). o Pareto transferred mechanistic ideas to theories related to economy, state and society. Mechanis c thinking also inﬂuenced many organiza on theories - Classical management theory (Fayol, 1949; Mooney & Reiley, 1931; Gulick & Urwick, 1937) - Scientific Management (Taylor, 1911) - Bureaucratic organizations (Weber, 1921).  Criticism comes from many thinkers of the 20th century (perhaps most prominently Marx). The origin of mechanis c models of the organiza on - Organization as an instrument for achieving goals, has its origin in „Organon“ (Greek) meaning tool or instrument - The earliest formal organizations were instruments for achieving objectives (pyramid building societies, churches, armies). 2 - With the industrial revolution, the number of operational organizations grew. - Machine metaphor was central. - Economic theories such as those of Adam Smith (1776) were developed just at this time. - The decision-making ability of the workers was constantly reduced in favor of control by machines and foremen. - Central role model: Military organization (Frederick the Great, see above) - Reduction of the human being to an input factor (labor: human, capital: machine). - Industrial production adopted strategies from the military (e.g. staff functions). - Organization was thought "from the machine". - In 1801, the first demonstration of mass production by Eli Whitney (Winchester rifles) took place. Bureaucracy theory of Max Weber (1864-1920) - Main concern: Being able to systematically describe, explain and understand the spread and consolidation of state administrative structures. - Core statement: Rules are more efficient than case-by-case analysis. -> it is declared very clearly, but that does not mean it is fair - Features of bureaucracy: Acting according to rules; keeping records; job holders are experts - Proposition: Bureaucracy is superior to other organizations because it is reliable. - Organizations are command and obedience associations - Bureaucracy is the place of legal rule (conditioned by rules); belief in the legitimacy of rules is based on the legitimacy of a "set order" and leads to obedience.  Bureaucracy works best when we think of humans as mechanical objects -> So it has its problems, because the world is in fact not a machine! We have to reconsider individual situations because having a fix system, can be unfair for some. Classical management theory (Fayol, 1949) - Main concern: Coordination of the entire company, department formation - Means and methods: o Structuring the management activities into the five core tasks of planning, organization, management, coordination and control and their precise description. o Promotion of administrative training through the postulation of 14 "general administrative principles", in particular: o the principle of the unity of management and the unity of the assignment of tasks (single line system) o the principle of congruence of tasks, competences and responsibilities o Communication runs via hierarchy; in exceptional cases horizontal communication o the principle of the necessity of staff specialists Taylor‘s Scien ﬁc Management (Taylorism) - Founded by Frederick Taylor (1856-1915) - Analysis of individual work processes in order to determine the optimal type of implementation - Basic assumption: Man thinks and acts rationally and tries to maximize his economic advantages. - Taylor replaces diffuse empirical knowledge with a scientific method: the experiment. - one-best way principle - Core principles: - o Separation of manual and mental work with precise planning; Goal: unskilled workers should be able to carry out most of the work. o Function master system (multi-line system): Division of the master tasks into different function masters for work preparation, execution and supervision. o Money as a motivating factor o Organizational: Scientific Management is the starting point for the development of flow production at Ford's plants in 1918 for the production of the model The term "Taylorism" has a rather negative connotation: alienation of work and neglect of the social dimension. 3 Some ground rules of classical management theories (from Morgan, 2018) - uniformity in the placing of orders - single-line principle - span of control - Staff and line - Initiative - division of labor - authority and responsibility - centralization of authority - discipline - subordination of the individual interest to the general interest - constant personnel - community Similari es among classical management theories - Management as a process of planning, organization, instruction, coordination and control. - Basis for many management practices o MBO (Management-by-objectives) o PPBS (planning, programming, budgeting systems) - Rational planning and control - Theorists combined knowledge from the military field and engineering. - Hierarchically Structured Organizations - Precisely defined official channels - Orientation to machines  Key question of this lecture: In how far does this make sense psychologically? What is the perfect organization from an employee perspective? Typical organiza onal structure of a manufacturing ﬁrm Checklist when evalua ng service personnell in a fast-food chain 4 Strength and Weaknesses of the mechanis c views of the organiza on Strength Weaknesses - Organization as a framework for clearly defined actions - Underestimation of the human aspect - Coordination and control interconnected - - Clear structuring of operations Underestimation of the complexity of organizational tasks - Clearly defined roles for employees - Mechanization only possible for simple, deterministic tasks - Safety from arbitrary behavior - Difficulties in adapting to new environmental conditions - High precision and coherence of organizational behavior - No focus on innovation - High efficiency - Little flexibility - Institutionalized passivity - "Alienation" of the human being (Critique by Karl Marx) - Mechanistic organization does not do justice to the calibrated need structure of humans. Cri cism also comes from the arts: Charlie Chaplins „Modern Times“  Short movie how Chaplin makes fun of the modern times „If we do not respect the human aspects of working, employees get crazy“ 5 (Work) Motivation 2 The Hawthorne experiments marked a paradigm shi in organiza onal research. - - - Star ng points: Various experiments in the Hawthorne plants of the Western Electric Company under the direction of Elton Mayo Experiment 1: Verification of the relationship between illuminance and work output o Result: Every change in lighting leads to constant or higher productivity. Experiment 2: Review of the influence of work breaks and cooperative leadership style on work performance o Result: Every change leads to constant or higher productivity. Interpreta on: Psychological factors have a strong influence on work performance Study of social needs in the workplace established by the Hawthorne studies The studies made it clear that operational productivity is influenced by both human nature and machines. The Hawthorne studies put the issue of work mo va on on the organizational research agenda. The relationship between the individual and the group was also increasingly addressed. This created a viable framework for “HR research". Organizational research is from now on "organizational and HR research"  Paradigm shift in organizational research gave greater importance to the individual -> Human Relations Movement o „The value of my Company walks out of the door every evening“ (Bill Gates) Introduc on Fundamentals of (work) mo va on research - Basic (biological) assumption that humans are biological beings who have an "inner life". Individual preferences, inclinations, feelings, moods, desires, goals are variables that influence the functioning of the organization. Mo va on was and s ll is a central aspect of organiza onal and personnel research and prac ce. - What is motivation? What are sources of motivation? Can people be motivated? If so, how can a person be motivated? How can an organization control its output via the path "motivation"? Mo va on: A basic deﬁni on - We call motivation the en ty of all mo ves that lead to willingness to act, and the human striving for goals or desirable target objects based on emotional and neuronal activity. The conversion of motives into actions is called voli on or behavioral regulation. Motivation shows itself through goal-oriented behavior (consciously or unconsciously). First theories were based on the paradigm of homeostasis, the physiological need of every organism to be in equilibrium (more about this in the lecture "Stress"). -> be at Peace with myself Emo on (feeling) is closely linked to motivation. Feelings typically indicate how strongly a motive is satisfied. 1 6 - Psychology: Usually there is a joint lecture "Motivation and Emotion". Motivation and emotion are constructs that are difficult to separate. The Beginnings of Mo va on Research: In Search of Eudaimony - - Some Greek philosophers (e.g. Epicurus) saw hedonism (= the belief that pleasure, or the abscence of pain ist the most important principle in determinig the mortaility of a potential course of action) as the main driving force in human behavior. People were described as beings who used their efforts to seek joy and avoid pain. 17th and 18th century philosophers such as Jeremy Bentham and John Stuart Mill (utilitarianism) developed these thoughts further. Psychology as an empirical science was founded by the appointment of Wilhelm Wundts to the University of Leipzig. Motivation research was soon "psychologized" Basic factors inﬂuencing human behavior Early models of mo va on - Which historical assumptions about the motivations and control of human action shape motivational research to this day? Frequently cited answers: o Sigmund Freud's psychoanalytic motivation theory o Clark. L. Hull's drive theory o Henry A. Murray's Theory of psychogenic needs Sigmund Freud's psychoanaly c mo va on theory - Freud revolutionized scientific-psychological thinking at his time by accepting unconscious reasons for action. Development and constant revision of psychoanalysis during his 40-year career: o Developmental psychology, personality psychology, clinical and cultural-theoretical partial theories The core concept of the psychoanalytic motivation model is drive reduc on. According to Freud, drives are psychological representa ons of stimuli coming from within the body that signal an imbalance. Targeted action results from the effort to restore inner balance (homeostasis). The overriding goal of human action is to avoid pain and gain pleasure (hedonism), the desirable state is low stimulus (lack of need). Drive motivates behavior in the direction of relevant objects that are suitable for satisfying needs and thus reducing drive. The main focus was on the intrapsychic dynamics of suppressed sexual and aggressive impulses. o Visible through: Neuroses, compulsions, dreams, jokes, mistakes Introduction of personality instances (ego, id, super ego) and the concept of the unconscious Ego: cognitive processes involved in the control of action o Planned thinking, attention, memory 2 7 - - o In the service of the other two personality instances Super-Ego: Socially Mediated Values and Norm Orientations o What we call conscience. Id: seat of all driving impulses o Unconscious o Desire for immediate satisfaction Reduction of the drive stimulus by dreams, fantasies, delay of gratification Pioneers of motivational research explicitly refer to Freud Clark L. Hull's Drive Theory (1943) - A empt at a General Theory of Behavior - - Hull was one of the most influential representatives of behaviorism founded by John B. Watson at the beginning of the 20th century. Commitment to the analysis of exclusively objec vely measurable phenomena (that excludes dreams, fantasies, etc.). Explanation of behavior as the interplay of needs and environmental states. Behavior-triggering states of need extended the previously valid learning theories, which only very implicitly took them into account. o Experiments were always carried out on starving animals, but this fact was not explicitly integrated into the theories. Definition of the drive as an important variable influencing behavior. Hulls' law of habit formation was strictly mathematically formulated and linked to the law of effect (Law of effect, Thorndike, 1913). Hull's theory in short: behavioral tendency = habit x drive Habit: A behavioral tendency acquired through reinforcement learning. Drive strength can be determined objectively. The concept of the incen ve - Hull's idea, which is still relevant today for organizational and personnel research, was the concept of incentives (= A thing thst motivates or encourages someone to do something). Hull found that, despite constant habit and drive strengths, experimental animals diﬀered greatly in their behavior, namely with regard to the reward resulting from their behavior Hull integrated this observation into his formula: o Behavioral Tendency = Habit x Drive x Incen ve Motivators of behavior are therefore no longer found only within the organism (drives, habits), but also in the environment (incentives). Incentives are still the core variable on which organizations can act in the context of employee motivation. o Monetary incentives (wages, bonuses, company cars, etc.) o Non-monetary incentives (status, recognition, events, etc.) Drive and Reinforcement Theories Strongly Cri cized by Humanis c Psychology - Abraham Maslow: o Founding father of humanistic psychology. o Introduced the term "positive psychology". o Investigations of existentialism to create psychological knowledge. o First content theories of motivation tried to explain what needs man has 3 8 Content theories of mo va on: - In the 1950s, the question of what motivates people was an important research topic. Due to the focus on individual motivational factors, these theories were referred to in their entirety as "content theories". Some of the best known content theories are: o Maslow: Need hierarchy (1954), refined by Alderfer (1972) o Murray (1938), extended by McClelland (1961, 1971) o Herzberg (1959): Two Factor Theory Maslow's Theory of the Hierarchy of Needs (1954) - - - On the lower levels there are the "deﬁcit needs". These include basic physiological motives (hunger, thirst), security and belonging. In addition, there are so-called "growth mo ves" (or insatiable needs) such as recognition, appreciation and self-realization, which are related to performance and personal development. Alderfer (1972) continued to work on this model, separating motives into existence, social attachment, and growth. Cri que of the hierarchy of needs: o It is unclear exactly where the dividing lines between the individual hierarchical levels run. o It has not been clarified whether the motives stand in relation to each other in a hierarchy at all. o Theory is based on Western individualistic societies. Henry A. Murray's Theory of Person-Environment References (1938) - - - Murray formulated the ambitious goal: "to inquire into the nature of man" and dedicated his book "Explorations in Personality" to Sigmund Freud ("whose genius contributed most fruitful working hypotheses"). Central question: What are man's aspirations? The list was very complex and not hierarchical: o Submissiveness, Performance, Social connection, Aggression, Independence, Resistance, Respect, Self-protection, Influence, Self-portrayal, Avoidance of pain, Protection of self-esteem, Caring for others, Order, Play, Rejection, Sensual feelings, Sexuality, Experiencing caring, Intellectual openmindedness The achievement mo ve was central to further organizational and HR research: o McClelland's achievement motive theory Important methodological contribu on by Murray: Thematic apperception test (TAT), today standard measurement method for measuring implicit motives McClelland's Theory of Achievement Mo ves (1953) - - Performance is the most intensively researched topic in motivational psychology up to date. McClelland et al. demanded that the one-sided preoccupation with biological deficit motives is not sufficient to fully explore motivation in humans, and that suitable test procedures must be developed to explore motivation in humans. Development of a measurement method for psychogenic needs 4 9 - - - o Achievement motivation as "simple" testable concept o Performance targets are easy to manipulate in the lab o Achievement is a "one-person-game", i.e. no complex group experiments necessary Achievement-motivated behavior: o achievement-oriented behavior is defined as behavior aimed at achieving a standard of quality. One is motivated to master a task, to do something particularly well, or to keep up in the compe on. Parallels to Murray's Theory of Motivation Central aspect of the achievement motive theory: o The motive comes exclusively from the enjoyment of the achievement itself ("thrill of accomplishment") and from the self-evaluating emotions. o Success: satisfaction, pride o Failure: shame, despondency. If performance is only shown in order to receive something (salary, bonus) or to impress others, this is not an indication of a “achievement motive" in the narrower sense of the performance motive theory. The relevance of the achievement mo ve for the ecnomy led to McClelland et al.'s work being very influential in personnel research and practice. o McClelland (1961): Positive relationship between the individual motives of a country's inhabitants and its economic development. o McClelland & Franz (1992): Achievement motive in 31-year-olds correlates strongly with their income ten years later. Protestant work ethics is also regarded as a "source of prosperity” Herzberg's Two-Factor Theory (1959) - - - Frederick Herzberg devised a content theory of work motivation based on two factors o Content of the work (motivators) o Context of work (hygiene factors) Hygiene factors can reduce dissa sfac on, but not bring satisfaction: o Remuneration and salary, management style, autonomy of work, interpersonal relationships, security, work-life balance Motivators can bring sa sfac on: o Work performance, recognition, work content, responsibility, career advancement, growth Herzberg's theory established "job design" and the observance of today's standard hygiene factors was explicitly used for the first time in personnel policy. o Workplace health management, working time models, etc. Modern Mo va on Theories Sources of mo va on - - Intrinsic mo va on (Self-drive): o People pursue an activity because they find it interesting in itself and derive spontaneous satisfaction from it. Extrinsic mo va on (External drive): o requires an instrumentality between the activity and a separable consequence such as material or immaterial rewards. Satisfaction does not come from the activity itself, but from the resulting reward. Evidence for the existence of intrinsic mo va on was obtained from animal experiments - Harlow studies in the 1950s: o Capuchin monkeys work a puzzle voluntarily and without pay 5 10 o Various experiments from the Harlow laboratory suggested that extrinsic motivation might have a negative effect on intrinsic motivation. Decis (1975) cogni ve evalua on theory - - - People are motivated by themselves to learn new things, to seek challenges and to constantly develop themselves. The organism has a tendency to be productive on its own initiative (organismic growth tendency). At the time of its development, this approach stood in stark contrast to behaviorist theories such as operant conditioning (Skinner, 1971), according to which living beings learn and act through external pressure (punitive and reward learning). Deci (1971) showed that extrinsic mo vators can inhibit mo va on (corrupting effect or crowding-out effect) Strong evidence against behaviorist theories of action. Important: o Results of the Deci (1971) studies from today's perspective no clear empirical evidence for corrupting effect (sample size, effect strengths) But: crowding-out effect strongly researched in psychology, economics and business economics Experimental studies on the role of Meaning/Purpose See slides 30-43 Intrinsic vs. Extrinsic Mo va on Important: The individual aspects are not always absolutely distinguishable! The Con nuum of Self-Determina on in the Theory of Self-Determina on by Deci and Ryan (1985) 6 11 Theories of intrinsic mo va on: Flow (Csikszentmihaly, 1975) - - What motivates people to act "purposelessly" (mountaineers, artists, inventors, chess players)? People report being "in flow" in this situation. One becomes "one" with the activity and loses oneself in it. Characteristics of the flow: o Deep involvement in an action o Merging consciousness and action o feeling of strong control o Distorted time perception „You are so involved in what you‘re doing you aren‘t even thinking about yourself as separate from the immediate activity. You‘re no longer a participant observer, only a participant. You‘re moving in harmony with something else you‘re part of“ (Czikszentmihaly, 1974, S. 86). Condi ons and consequences of ﬂow - - Fitting of requirements and capabilities Clear objective Immediate feedback Environmental conditions (undisturbed by mobile phone, e-mail, noise etc.) Concept of the "autotelic person o Personality trait characterized by the ability to set oneself self-determined realistic goals, to perceive difficulties as challenges, to make use of learning opportunities, reduced self-awareness Consequences: o "optimal motivational state" o Optimal state of experience o Peak performance state o Negative: Danger of addiction and risk behaviors (We tend to get in flow for for example gambling) Goals, Voli on and Ac on Control - - - Goals: o Goals are cogni ve representa ons of desired states. Goals differ from desires in the commitment they have for the person. While one still indulges in positive fantasies about desires, "how nice it would be if...", goals are connected with a definite decision to act, i.e. with the intention to actively bring about the desired target state (Bargh et al., 2010). Volition o Psychological term for what we call "willpower." o Narziss Ach was one of the first to analyze the meaning of will for behavior o Theory about the efficacy of will Action control o Cognitive ability to achieve goals (working memory, etc.) It is not always an easy way to mo ve sa sfac on... - Virtuoso violin playing requires effort and many hours of practice To have an athletic body means to do sports, if you would rather sleep, or to do without a piece of cake. To realize one's career aspirations requires “willpower“ and grit (qualification times, training, etc.). In short: On the way to the goal we often have to take a stony path. This requires self-regula on (i.e. the ability to remain true to the set goal and the ability to align behavior with the goal). 7 12 Example: Theory of Fantasy Realiza on (Oe ngen, 2000) - - Gabriele Oettingen researched strategies on how people can be more successful in developing a high degree of commitment to attractive and feasible goals. Central Concept: Mental Contras ng Systematic swinging back and forth between the benefits of a goal (e.g. being a professor at the university) and efforts (giving a lecture every week). o Both effort and reward are salient to people Mental contrasting is more suitable for achieving goals than simple "dreaming". Example: Learning versus performance goals (Carol Dweck, 1999) - People differ systematically in their naïve theory: o Entity Theory (fixed mindset) o Changeability Theory (growth mindset) o The former see personality traits (intelligence, math knowledge, musical talent, etc.) as fateful (fixed), the latter see it as an workable variable (growth). o Framing to learning goals can be performance-enhancing, since it "makes sense" to learn something or to achieve something. The Strength Model of Self-Control (Baumeister et al., 1998) - - The exercise of self-control relies on a limited reservoir of self-control energy. Muscle metaphor of self-control o self-control can lose its strength like a muscle, then self-control tasks are less successful Central paradigm: Ego-depletion task:„The core idea behind ego-depletion ist that the self‘s acts of volition draw on some limited resource, akin to strength and energy and that, therefore, one act of volition will have a detrimental mental impact in subsequent volition. [...] We use the term ego depletion to refer to a temporary reduction in the self-capacityor willingness to engage in volitional action (including controlling the environment, controlling the self, making choices, and iniating action) caused by prior exercise of volition (Baumeister et al., 1998, p. 1252-1253). Typical study design: double task Control group may rest mentally, experimental group must solve cognitively difficult task The control group is then in a better position to maintain self-control. Replica on a empts generally not very successful (see ManyLabs studies) What we have not (yet) dealt with (but is immensely important for work mo va on) - The social need for connection (Baumeister & Leary, 1995) is the subject of the lecture on justice. The Equity Theory by Adams (1965) is also the subject of the lecture on justice Implicit versus Explicit Motives Psychology Lecture Theories of expectation (Lewin (1938), Tolman (1959), Vroom (1964), Porter & Lawler, (1968), Kanfer (1990)) follow in the lecture on institutional economics). Power motivation is the topic of the lecture on leadership. Approach and avoidance motivation -> Psychology lecture Emotions -> Psychology Lecture 8 13 Cooperation 3 Split or Steal The basic set up of split or steal and the results (average sum of money at stake: 20k pounds) Two opponents have achieved a 14 thousand dollar win but they have to decide now if they want to split the money or if they will try to take everything for themselves. If they both decide to Steal then both get zero. They dont know the answer of the other one but they can argue with each other and try to convince each other that they’ll pick split. Result: Young men below 30 are the most uncooperative People. Older Men over 30 are way more cooperative. Why are young people less cooperative? They are less fortune and need the money more -> The effect of the payoff would bloom larger for younger peoble that for older. Also young men are way more agressive when they’re young. What would make People more selfish? - Anonymty -> If no one knew me, i would cooperate less - Not knowing who my opponet is Striking parallels between biological and organiza onal wri ngs - - - Organis(...) (Organism/ Organisa on) must perform an number of tasks to survive (...). When will the conditions favor a division of labor, with different individuals performing different tasks? To illustrate this problem with a specific example, consider two tasks, A, and B. We assume that that investment into these two activities must be traded off against each other because time and energy spent on A cannot be spent on B. Division of labor will tend to be favored when the shape of the relationship between proportion of resources allocated to each task and the fi(...) return are accelerating. -> Putting an organizsation into work is very similiar to a Organism Stuart West (Department of Zoology, Oxford University) et al., Proceedings of the National Academy of Science, 2015. In biology, more complex forms of life are also called “new levels of organizations” The human body is an “organization” in which different cells are “employed”. Nerve cells, muscle cells, skin cells, are units with different specializations. The body is an organization in which there is highly specialized division of labor. Then central mechanism to allow for higher complexity is coopera on. Cooperation is probably the most important variable affecting success in business organizations as well. Coopera on-very broadly- is necessary for the evolu on of new levels of organiza on Not only anatomy and physiology is aﬀected by natural selec on, behavior as well - - Evolution of behavior is investigated by o Biology, especially sociobiology o Psychology, especially evolutionary psychology o Economics, especially behavioral economics o Sociology o Mathematics and computer science, especially through agent-based computational models How did cooperation evolve? 1 14 - How can organizations foster a coopera ve work environment (and why should they do it)? Morgan’s Images of the Organization: Organiza ons as organisms... Well, actually, this is not much of a metaphor, it is true Iceberg Model of Organizai on 3 & sichtbar unsichtbar What is coopera on? A donor pays a cost to a Recipient, who gets a benefit The prisoner’s dilemma Cooperating would be the best anwser where they both get the highest payoff. But because they don‘t know what the other one is going to do they both decide to defect. So rational players do the wrong thing https://youtu.be/t9Lo2fgxWHw?si=_vOtKZkn5IhRtRtX Prisonner dilemma with strictly dominant strategy. rational-making - Two ra onal players defect and end up with a low payoff, 0 Two irra onal players might cooperate and receive a higher payoff, b-c. ↳ on intelligence weird Natural selec on chooses defec on Natural selec on needs help to favor cooperators over defectors - Mechanisms for the evolution of cooperation # o Kin selection o Direct reciprocity # * o Indirect reciprocity o Spatial selection # o Group selection - What can we learn from these mechanisms when crea ng a coopera ve work environment? 2 B 15 decisions based * Kin selec on – What does it mean to be related to someone? Kin (= a person we are related to -> share part of the genome) - Identical twins share their genome (the whole genore o In terms of genes, it does not matter is you safe yourself or your twin in case of danger - Full siblings who are not twins share 50 % of their genome o More accurately: For each gene, there is a 50 % probability that they share the same variant - We can leave copies of our genes in the next generation by reproducing, but also by helping relatives reproduce - Half brothers share 25% of their genome, and so on... The coopera ve interac on occurs between gene c rela ves „I will gladly jump into the river to save 2 brothers or 8 cousins“ The value my Inclusive Fitness Theory - - life of The value ofThe =zof my brothers life (n Hamilton‘s rule important they are o r > c/b o Where:  r is the coefficient of relatedness  c is the cost of cooperation *  b is the benefit of cooperation Inclusive fitness theory o People go for maximal fitness where o Fitness = direct Fitness (own genes in self) + indirect Fitness (own genes in relatives) The closer their relation are - of Value sofmy Cousin's life to me , the more Evidence of coopera on among kin in the animal kingdom - - relation Cooperation among kin starts a er birth o Mammals nurse their offspring, bearing a cost, while giving the benefit to the child o Females rarely nurse someone else‘s offspring o Allomothering (taking care of someone else‘s child), however, is frequent o Most common allomother (in vervet monkeys): The female‘s kid sister In marmosets, who form stable pair-bonds, we find high paternal investment in children (i.e., they know it is their offspring) Primates: /Paviane o Baboons: Females spend their whole life in the natal group (the males migrate to a new group at puberty) -> cooperative networks among females o Chimpanzees: Males spend their whole life in the natal group (the females leave at puberty), kinbased adult cooperation occurs among males -> ( Chimpanse Gerüche pheromonale Recogni on of rela ves ↳ - Rodents (Nageltiere) produce pheromonal odors with individual signatures, derived from genes o The closer the relative, the more similar their cluster of MHC genes and the more similar their olfactory signature o Olfactory sensors in the mouse’s nose respond most strongly to the mouse’s own MHC protein. o In rats, pregnancy triggers neurogenesis in the olfactory system (it’s time to learn the smell of a newborn), if neurogenesis is inhibited, maternal behavior is impaired. - Hamilton speculated about a “green beard eﬀect” o If an organism has a gene that codes both for growing a green beard and cooperating with other green beards, green bearders flourish in a mixed society 3 A 16 o Among humans:  Parochialism  Xenophobia  Humanity How are our socie es structured, do we even encounter rela ves? - - - For 95% of our species history, we lived as hunter-gatherers There are still plenty of hunter-gatherer societies living today o Assump on: Contemporary hunter-gatherer societies provide a „window into the past“, showing us how we lived as hunter-gatherers thousands of years ago. Contemporary hunter-gatherer societies show extensive coopera on among the members of a residential unit („bands“), unparalleled by other animals o Band-wide food sharing o High levels of allomaternal child-care o Daily cooperative food acquisition o Collaborative construction and maintainance of living space – Transportation of children and possessions o Provision of public goods on a daily base In addition: slow juvenile growth, late sexual maturity, high fertility, high adult survivorship, long life-span after reproductive phase If we primarily live among non-rela ves, kin selec on alone cannot explain how we solve the prisoner’s dilemma... (i’ll scratch your back, you scratch mine“) Life is not a one-shot game: Repeated prisoner’s dilemma • Player 1: CDCDCCC... • Player 2: DCDDCCC... The Folk Theorem If there is a shadow of the future (He knows we will see each other next week, we know too, he knows we know etc.) AND - Humans care about having a payoff in the future - Cooperation may be an equilibrium strategy of selfishly motivated actors - How does the factor on the future (delta) needs to be? It depends on the benefits of cooperation... Robert Axelrod: What is a good strategy for playing this game? - Political scientist Robert Axelrod famously invited people to the prisoner’s dilemma tournament in the 1980s. - Scientists were contacted and asked to submit a strategy of how an agent will play against another agent in an iterated game, with a probability greater zero that there will be another round. - Many scientists submitted a strategy - The winner was Anatol Rapoport o Systems theory 4 17 Rapoports strategy: Tit-for-tat - I start with cooperation If you cooperate, then I will cooperate again - If you defect, then I will defect - Tit-for-tat is nice (it starts with cooperation), lenient (will return to cooperation if other cooperates), and intends to reach equal payoffs (does not defect in the last rounds)  this is what we would call a nice person - Problem: Tit-for-tat has some weaknesses o Cooperation is instable -> Two “Tit-for-tat”’s can end up in a vendetta because it is fragile o Tit-for-tat is fragile in case of errors -> player attempts to play C, but choses D.  Tit-for-tat: CCCCDCDCDCDDDDDDDDDDD  Tit-for-tat: CCCDCDCDCDDDDDDDDDDDD  We want a strategy that is a bit more resistent against errors Alterna - ve: Generous t-for-tat I start with cooperation If you cooperate, I will cooperate If you defect, then I will cooperate with a certain probability (q = 1 – c / b) Evolution of forgiveness Direct reciprocity allows the evolu on of coopera on... - - ... if the probability of another round exceeds the cost benefit ratio o w>c/b  w = probability of another round  c = cost of cooperation  b = benefit of cooperation Problem: What if the group growth explodes? Indirect reciprocity - I’ll scratch your back, someone else scratches mine Indirect reciprocity works via reputation Experimental results: People help those who help others, helpful people have a higher payoff in the end Gossip spreads reputation “For direct reciprocity you need a face, for indirect reciprocity you need a name” 5 18 Group selec on (Nowak, 2006, Science, Review) - - Selection does not only act on individuals, but also on groups o A group of cooperators may be more successful than a group of defectors Strong debate about the role of group selection, but renaissance under the term “multilevel selection” Models is straightforward: o Population is subdivided into groups o Cooperators help others in their group o Defectors do not help o Individuals reproduce according to their payoff o Offspring are added to the same group o If groups are large enough, they split, another group becomes extinct o Only individuals reproduce, but selection works twofold -> Within each group & Between the groups Selection within groups favors defectors, selection between groups favor cooperators Result: With help of mathematically convenient limits:  Weak selection  Rare group splitting o We observe the result:  b/c > 1 + (n/m), where n is the number of individuals, m is the number of groups Summary – How could coopera on have evolved? - Kin selec on: o The coefficient of relatedness needs to exceed the cost/benefit ratio of cooperation - Direct reciprocity: o The probability of another round has to exceed the cost/benefit ratio of cooperation - Indirect reciprocity: o The probability to know someone’s reputation has to exceed the cost/benefit ratio of cooperation - Spa al selec on (Network reciprocity): o The number of neighbors needs to be smaller than the benefit/cost ratio - Group selec on: o N (group size), M (Number of group), benefits/costs need to be larger than 1 +n/m Importantly: In none of these models is cooperation an altruistic act. It evolves because it maximized the agents payoffs. 10 ways of making your organiza on more coopera ve - - It is essential to work on the main mechanism of the evolu on of coopera on 1. Make cooperation worth while (increase the benefits of cooperation) 2. Make cooperation cheaper (decrease the cost of cooperation) 3. Incur a sense of identity (“green beard theories”, cognitive similarity, instead of kin, create a “shared vision”, “culture of cooperation”) 4. Allow reputation to spread in the organization 5. Create a shadow of the future 6. Create stability in the social network( or use very good reputation systems) 7. Do not undermine the human ability to cooperate (-> we are champions of cooperation as we are) Create ins tu ons that help create a cooperative work environment where it does not intrinsically happen 8. Sanctioning systems 9. Reward systems 10. Threat of ostracism (being kicked out of the group) 6 19 Trust and honesty 4 Trust There are diﬀerent views on trust... - “It is impossible to go through life without trust; that is to be imprisoned in the worst cell of all, oneself.” Graham Greene -> If I dont trust people, there is no way to live -> I trust people all the me (for example i trust the architect, when he builds my house, i leave my stuﬀ in the train, when I need to go to the toilet etc.) - “There is no trust, no faith, no honesty in men; all perjured, all forsworn, all naught, all dissemblers.” William Shakespeare  We see a very diﬀerent view of people! Trus ng People is normally a good idea. Not trus ng comes in organiza on with a cost A view on trust in the 1970s: Important but not well inves gated in management research Trust is to fuzzy to study about What is trust? A working deﬁni on -> Prüfungsfrage - - Trust is making yourself vulnerable to another person’s exploita on with the prospect of receiving some beneﬁt if that other person honors the trust given to them (Rosseau et al., 1998; Fetchenhauer & Dunning, 2010) Examples: o Sharing another’s secret risks public embarrassment, but may receive social support o Handing money over to a bank risks never seeing it again, but may yield a safe storage place, etc. Trust, like coopera on can be a puzzle... Hobbes: „Der Mensch ist des menschens Wolf“ -> I’m scared of punishment and this reculates my behavior (I would shoot with a gun right now, if i wouldn’t be scared to go to prison Trust in close rela onships: Posi ve reinforcement - - Trust in the shadow of uncertain exploita on can be built up over several interac ons by gradual and repeated demonstra ons of trust and coopera on o Two distrus ng par es can come to a more mutually coopera ve stance a er signaling that they can be trusted  » Tit-for-tat with slightly higher costs of coopera on each me they interact  » Graduated reciproca on in tension reduc on (GRIT, Osgood, 1962; Lindskold, 1978). o One party makes a small unilateral gesture of trust and the other party communicates that he or she is willing to match it. Over me, we will observe more trus ng and more trustworthy behaviors as the rela onship intensiﬁes Problem: It works best in close rela onships, but in the workplace we o en work with people who are “strangers”. 20 Trust among strangers - - - Many workplace and social interac ons are short-termed, on-oﬀ types of interac ons o Sourcing of materials with unknown quality o Trus ng a doctor trying to tell you that you need an expensive treatment o Trus ng a mechanic needing to “ﬁx” your car o Trus ng a remote colleague about a detail in a presenta on o Si ng on the train and asking a stranger to “watch the bags” while going to the restroom Trust among strangers is the heart of “social capital” within a certain social group o Country o Organiza on Trust (social capital) is regarded as a pre-requisite for the func oning of modern organiza ons and countries Trust is the lubricant of eﬃcient interac on -> Things work smoothly Social capital measurement in the World Value Survey - The WVS contains a one-item measure of trust: o “Generally speaking, would you say that most people in your country can be trusted or than one cannot be too careful?” - Substan al diﬀerences between countries: Trust can mean various things... (Thompson, 2012) - - - Deterrence-based trust o Based on consistency of behavior (threats and going trough with threats)  Punishment  Reward o Problems: Expensive to maintain (monitoring), Risk of backﬁre (reactance theory) Knowledge-based trust: o Grounded in behavioral predictability o Informa on is suﬃcient to predict behavior o Trust is a consequence of uncertainty Iden ﬁca on-based trust o Grounded in complete empathy with another person’s desires and inten ons. o Typical in close rela onships o Problem: Wrong signals about the rela onship (e.g., prenup al agreements) Correlates of World Value Survey Measure - Financial honesty Economic growth Corrup on Etc.  Good things happen if you have a lot of trust 21 Trust research has increased since the advent of economic games - Dictator game Ul matum game Prisoner’s dilemma Public Good Game Third-party punishment game Trust game Economic games: The dictator game - Two people interact in a one-shot interac on Player A is endowed with 100 tokens and has to decide how much (if any) to allocate to Player B The interac on ends -> Measure of pro-sociality (How much you give, is the measurement, because I could have kept it all for myself, in this case being social cost this many tokens) Economic games: The ul matum game - Two people interact in a one-shot interac on Player A is endowed with 100 tokens and has to decide how much (if any) to allocate to Player B. This is called the proposal. Player B decides to accept or to reject the proposal. If Player B accepts, the money is distributed according to the proposal, if Player B rejects, both players leave without any money. -> Measure of second-party punishment (is Player B punishing unfair oﬀers at his/her own expense) -> Measure of pro-sociality and expected acceptance (what does Player 1 oﬀer, knowing that it may be rejected) Prisoner’s dilemma See lecture “Coopera on” Public good game - Groups of four interact Each member is endowed with 20 tokens and decides how much (if any) to contribute to a common pool. Common pool is mul plied by eﬃciency factor (e.g., 1.6) Common pool is equally distributed among all four players Dilemma: o It is individually best to free ride (payment is endowment plus 1/n of common pool) o It is socially best to contribute (more money gets mul plied by eﬃciency factor) o Eﬃciency factor has to be both suﬃciently high and suﬃciently low  If too low: Ineﬃcient (contribu on of one needs to increase)  If too high: Individually ra onal (MPCR needs to be smaller than 1)  Make Coopera on socially but individuelly costly Public good with punishment - Stage 1: o Like before (PGG) Stage 2: o A er the decision each person can see what the others have contributed and can use money to deduct from others (i.e., punish) o Eﬃciency factor in punishment (punishing 1 token has a consequence of >1 token) Economic games: Gi -exchange game - Two people interact in a one-shot game o Principal o Agent 22 - - Principal cannot observe the worker’s eﬀort, but has to set wage before agent chooses her eﬀort level o Earnings can be, for example: 2 mes the workers eﬀort Agent chooses the eﬀort level and has a posi ve cost of eﬀort o Earnings: Endowment minus cost of eﬀort Equilibrium predic on: o Principal an cipates the workers shirking behavior and, therefore, sets the minimal wage level o Agent minimizes eﬀort o Ineﬃcient outcome Typical results: Posi ve wages and posi ve eﬀort (reciprocity) Measuring trust: The trust game as a sequen al game Above Number refers to payoﬀ of Player 1 If Player 1 decides to trust, Player 2 has the op on to reciprocate (also trust) or to exploit ( not trust). If player 2 has exploidet he would have the higher payoﬀ with 20 Trust game versus prisoner’s dilemma -> Prüfung!! - The trust game is a sequen al game where players move sequen ally o Player 2 gets to decide a er player 1 has made her decision o Player 2 can condi on her behavior to the behavior of player 1 - The prisoner’s dilemma is a simultaneous game where both players move under uncertainty about the ac on of the other o Player 2 cannot “respond”, but needs to act on her beliefs about player 1’s move - From the general structure, the games share a property o Ra onal behavior (ﬁtness maximiza on) favors “no trust” and “no reciprocity” o Irra onal behavior can yield higher payoﬀ - The trust game can be formalized as a “sequen al prisoner’s dilemma” - Solu on concept: Backward induc on o Player 1 tries to guess what Player 2 may do and calculates this into his/her decision - Empirical results are at odds with ra onal concept would suggest o Why? Trust behavior versus risk behavior? - The trust game may just boil down to a simple risk decision: o I can invest 5CHF and may get 10CHF back, depending on some posi ve probability  Shakespeare’s thought: People are not trustworthy, I be er keep my money”  Greene’s thought: People are trustworthy, if I send the money, I will get 10 CHF back - Is trust just risk? o Imagine the following game: You can send money into a machine, and the machine knows the probability with which people typically reciprocate. It uses a random mechanism to decide to reciprocate the money or not.  Do people send the money at higher frequency to the machine or to another human being? How well do measures of risk predict trust behavior? - Generally, trust behavior is not very well explained by risk-behavior 23 o - People who found risky gambles to be a rac ve were no more likely to take their chances with another person in a trust game than those who found the gamble less a rac ve (Kanageratnam et al., 2009; Ashraf et al., 2006) o Measurements of risks in surveys and gambles do not predict behavior in the trust game (Ben-Nur & Halldorsson, 2010). o Measuring risk tolerance in various ways (survey, gambles, thrill-seeking, desire for novelty, disinhibi on) does not show robust correla ons with trust behavior. Trust – apparently – is much more than risk, What? -> Trust is not very well explained and it is more than risk! Can social expecta ons explain trust behavior? - Expecta ons-based theories on trust suggest that trust decisions are based on the es mated likelihood that trust is being reciprocated o Condi onal coopera on.. Etc. - Classical economic approach with ra onal agents: o Do not trust because Player 2 will not reciprocate! - In how far do people belief that others will reciprocate trust? Berg et al.’s (1995) investment game - - The trust game was ini ally introduced as an investment game by Berg et al. (1995) The investment game is a con nuous trust game o Rather than having to send the whole endowment as player 1, s/he gets to send any share of the ini al endowment o Player 2 can reciprocate any amount s/he pleases Meta-study results (Johnson & Mislin, 2011) show that both trust and reciprocity is non-zero and frequent: People trust too much and too li le (Fetchenhauer & Dunning, 2009, J. Econ. Psychol.) - Expecta ons-based models do not explain trust behavior well, due to two observa ons People trust too li le: o People tend to be skep cal about the trustworthiness of others  Expected return: 59.1% versus real return: 90.4% (Cornell U)  Why so cynical? - People trust too much: o People trust much more (45%) than their expecta on (30.7%) would suggest  Why is that? - Their beliefs are oﬀ (they underes mate the actual trustworthiness), hence they should trust much more than they do - Their trust behavior does not match their belief, hence they should trust much less than they actually do - -> Expecta ons cannot alone explain trust behavior  People trust more than they think they should (ra onally) Why are people so cynical about other’s trustworthiness? - There is an informa onal asymmetry in the feedback depending on trus ng and not-trus ng o Trust: People reciprocate the trust (i.e., they are trustworthy) or they exploit 24 - - - o No Trust: People will never learn if the interac on partner would have been trustworthy Study: People saw videos of people (no audio, 10-sec sequence of self- introduc on) and had to es mate their trustworthiness o Trustworthiness is underes mated (cynicism), regardless of ﬁnancial incen ves Experience-sampling hypothesis: o Experience informs people in an asymmetric way o Feedback can decrease people’s cynicism Result: Uncondi onal feedback decreases people’s cynicism In a low-trust environment (e.g., high control), people never learn if people can be trusted... And? Can social expecta ons explain trust? - People’s expecta ons are – on average – oﬀ. They underes mate the trustworthiness of others Feedback asymmetry leads to low levels of upda ng expecta ons in an accurate way. Social expecta ons cannot fully explain trust behavior Are people just seeking to maximize the total payoﬀ (i.e., eﬃciency concerns)? - An alterna ve explana on of trust in the trust game is people’s poten al concern for the common good. o No trust: Total payoﬀ is merely 5CHF o Trust: Total payoﬀ is 20CHF - If people care about the maximum amount of money (irrespec ve who gets it), these eﬃciency concerns may underlie decisions to trust. - Trust game versus extended coin ﬂip (Mensching et al., 2010) o Trust game: send 5 EUR, trustee decides to keep 20 EUR or send 10 EUR back, probability to meet a trustworthy trustee held constant at 50% o Extended coin ﬂip: bet 5 EUR on a side of a coin, if correct receive 10 EUR and another random stranger is given 10 EUR ( fun to do in university: Approach random people and give them money...), if false, random person is given 20 EUR. o Result: Trust rate is larger than be ng rate.  People trust more, that they would bet in a similiar situa on - Eﬃciency concerns do not explain behavior in the trust game to the full extent Rela onal concerns explain trust behavior: Emo onal correlates - - - Results suggest that trust may not be an instrumental choice, but rather reﬂec ng a rela onal concern o It is not about the prospect of receiving money, but about the expressive act of trus ng itself (social norm, preference to trust irrespec ve of outcomes) Research into emo onal correlates provides support for this hypothesis: o There are two layers of emo on relevant in the trust game  How do I feel about the decision itself? (-> immediate emo ons)  How do I feel about the poten al consequences? (-> an cipated emo ons) o An cipated emo ons did not predict trust behavior, immediate emo ons did o People feel strongly about the act of trus ng itself Immediate and an cipated emo ons were largely unrelated Rela onal dynamics of trust - What prompts people to send money even in situa ons in which they are pessimis c about receiving any money back? There is not crystal clear answer, but research is moving... o Rela onship status of interac on partners ma er 25 - o 73% found it acceptable to pay a new employee $7 if the current one le o 83% found it unfair to decrease the wage to $7 of an exis ng employee o Similari es when asked about landlord/tenant rela onships The rela onship status between interac on partners may explain these diﬀerences Lawler et al. (2001, 2008) show how instrumental rela onships become rela onal a er some me Minimal rela onship eﬀect - Mere exposure to a rela onship (“You are matched with another person...”) is enough to trigger expressive concerns Similarity to “Minimal group eﬀect” (see Lecture on “Group processes”) People hold a norm to “be nice” Related phenomenon: Iden ﬁable vic m eﬀect o People are more altruis c to “iden ﬁed” vic ms, rather than an anonymous one o Famous Stalin quote: “One death is a tragedy. A million deaths is just a sta s c” o Common strategy in dona on campaigns Crossing the street to avoid the beggar” - People are some mes mo vated to “avoid” a rela onship as if they know that they would give to a beggar when confronted, but then choose to cross the street to not see him In Dictator games: o People can either play a 10$ dictator game or o Exit the game for a payment of 9$ o More people exit than take the en re endowment or take 9$ and leave 1$ to the receiver Expressive trust as proximate mechanism of coopera on - As socie es grow, coopera on is harder to maintain (i.e., cogni ve complexity, reputa on networks, etc.) Social norms can help and the norm to be nice can be a ?

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