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Bohnet, Iris

Why is private investment so low in Gulf compared to Western countries? We investigate cross-regional differences in trust and reference points for trustworthiness as possible factors. Experiments controlling for cross-regional differences in institutions and beliefs about trustworthiness reveal that Gulf citizens pay much more than Westerners to avoid trusting, and hardly respond when returns to trusting change. These differences can be explained by subjects' gain/loss utility relative to their region's reference point for trustworthiness. The relation-based production of trust in the Gulf induces higher levels of trustworthiness, albeit within groups, than the rule-based interactions prevalent in the West.

Achieving diversity, equity, and inclusion (DEI) in organizations requires behavior change. Short-term costs deliver long term benefits. Short-term costs associated with DEI include discomfort from difference and a perception that DEI can be a zero-sum game where those in power lose out by being more inclusive. Long-term benefits include more creative problem-solving on teams, more objective decision-making, and greater fairness, leading to a more inclusive and innovative culture. The trade-offs are similar to the choices people make in other contexts, such as saving for retirement, exercising, or giving up smoking. When people have to make these choices (short-term cost vs. long-term gain), the majority display cognitive biases and make suboptimal decisions. So, how can companies make smarter DEI choices? Setting organizational DEI goals, and creating accountability for achieving them, is an evidence-based strategy for organizations to advance equity. Specifically, goals are also a high leverage point to increase DEI in the U.S. tech industry.

In this tribute to the 2007 recipient of the winner of the Jeffrey Z. Rubin Theory-To-Practice Award by the International Association for Conflict Management (IACM), we celebrate Linda Babcock’s contributions to diverse lines of research, her tireless and effective efforts to put the insights of her research into practice, and, at a personal level, the impact she has had on each of our lives. Innovative ideas and novel methods have been the hallmarks of Linda’s research on diverse topics: the impact of self-serving conceptions of fairness on negotiations, the labor supply behavior of cab drivers, the impact of damage caps on settlements, the propensity of men and women to initiate negotiations, and the readiness of each gender to volunteer for, and work on, ‘non-promotable tasks’. Linda won this award, however, not only for her path-breaking academic research, but for her interest in, and ability to, convert it into actionable initiatives, From founding the Program for Research and Outreach on Gender Equity in Society (PROGRESS), whose mission is to develop tools to teach women and girls how to harness the power of negotiation to her leadership of the Carnegie Mellon Leadership and Negotiation Academy for Women, Linda shows how academics can play a leading role in translating theory into practice.

We examine a new intervention to overcome gender biases in hiring, promotion, and job assignments: an “evaluation nudge,” in which people are evaluated jointly rather than separately regarding their future performance. Evaluators are more likely to focus on individual performance in joint than in separate evaluation and on group stereotypes in separate than in joint evaluation, making joint evaluation the money-maximizing evaluation procedure. Our findings are compatible with a behavioral model of information processing and with the System 1/System 2 distinction in behavioral decision research where people have two distinct modes of thinking that are activated under certain conditions.

The Women and Public Policy Program’s Advancing Gender Equality in Venture Capital research project examines how the components of venture capital (VC) industry culture, organizational practices and policies, and patterns of interpersonal interaction affect full gender inclusion in venture capital. Our findings provide evidence-based answers to three questions:

1. Why is the venture ecosystem still so male-dominated?
2. What are the industry-wide, organizational, and interpersonal barriers to gender equality and inclusion in venture capital?
3. What can VC firms, individual investors, and entrepreneurs do to dismantle these barriers and meaningfully advance gender diversity and equality in venture capital? To answer these questions, we undertook a comprehensive review of existing literature on gender in venture capital; conducted 21 in-depth interviews with venture capitalists in New England (in collaboration with the New England Venture Capital Association); and analyzed over half a million online conversations between entrepreneurs and VCs (in collaboration with Culturintel).

To trust is to risk. When we lend someone money, we make ourselves vulnerable, hoping or expecting that the borrower will reward our trust and return the money at a later stage, possibly with interest or a reciprocal favor added. This paper examines whether willingness to trust follows the same logic, that is, whether it responds to changes in the expected value of trusting, much like willingness to take risk responds to changes in the expected value of risk taking in various countries of the Arab Middle East, namely, Jordan, Saudi Arabia and the United Arab Emirates and in the United States.

Why is private investment so low in Gulf compared to Western countries? We investigate cross-regional differences in trust and reference points for trustworthiness as possible factors. Experiments controlling for cross-regional differences in institutions and beliefs about trustworthiness reveal that Gulf citizens pay much more than Westerners to avoid trusting, and hardly respond when returns to trusting change. These differences can be explained by subjects’ gain/loss utility relative to their region’s reference point for trustworthiness. The relation-based production of trust in the Gulf induces higher levels of trustworthiness, albeit within groups, than the rule-based interactions prevalent in the West.

Due to betrayal aversion, people take risks less willingly when the agent of uncertainty is another person rather than nature. Individuals in six countries (Brazil, China, Oman, Switzerland, Turkey, and the United States) confronted a binary-choice trust game or a risky decision offering the same payoffs and probabilities. Risk acceptance was calibrated by asking individuals their "minimum acceptable probability" (MAP) for securing the high payoff that would make them willing to accept the risky rather than the sure payoff. People's MAPs are generally higher when another person, rather than nature, determines the outcome. This indicates betrayal aversion.