Executives unconsciously overlook wrongdoing if it benefits them or the company.

Trying to create more value requires that we confront our cognitive limitations. As readers of Kahnemans book Thinking, Fast and Slow know, we have two very different modes of decision-making. System 1 is our intuitive system, which is fast, automatic, effortless, and emotional. We make most decisions using System 1. System 2 is our more deliberative thinking, which is slower, conscious, effortful, and logical. We come much closer to rationality when we use System 2. The philosopher and psychologist Joshua Greene has developed a parallel two-system view of ethical decision-making: an intuitive system and a more deliberative one. The deliberative system leads to more-ethical behaviors. Here are two examples of strategies for engaging it:

First, make more of your decisions by comparing options rather than assessing each individually. One reason that intuition and emotions tend to dominate decision-making is that we typically think about our options one at a time. When evaluating one option (such as a single job offer or a single potential charitable contribution), we lean on System 1 processing. But when we compare multiple options, our decisions are more carefully considered and less biased, and they create more value. We donate on the basis of emotional tugs when we consider charities in isolation; but when we make comparisons across charities, we tend to think more about where our contribution will do the most good. Similarly, in research with the economists Iris Bohnet and Alexandra van Geen, I found that when people evaluate job candidates one at a time, System 1 thinking kicks in, and they tend to fall back on gender stereotypes. For example, they are more likely to hire men for mathematical tasks. But when they compare two or more applicants at a time, they focus more on job- relevant criteria, are more ethical (less sexist), hire better candidates, and obtain better results for the organization.

The second strategy involves adapting what the philosopher John Rawls called the veil of ignorance. Rawls argued that if you thought about how society should be structured without knowing

your status in it (rich or poor, man or woman, Black or white) that is, behind a veil of ignoranceyou would make fairer, more- ethical decisions. Indeed, my recent empirical research with Karen Huang and Joshua Greene shows that those who make ethical decisions behind a veil of ignorance do create more value. They are more likely, for instance, to save more lives with scarce resources (say, medical supplies), because they allocate them in less self-interested ways. Participants in our study were asked whether it was morally acceptable for oxygen to be taken away from a single hospital patient to enable surgeries on nine incoming earthquake victims. They were more likely to agree that it was when the veil obscured which of the 10 people they might be. Not knowing how we would benefit (or be harmed) by a decision keeps us from being biased by our position in the world.

A related strategy involves obscuring the social identity of those we judge. Today more and more companies eliminate names and pictures from applications in an initial hiring review to reduce biased decision-making and increase the odds of hiring the most- qualified candidates.

Creating Value Through Trade-offs

Which is more important to you: your salary or the nature of your work? The wine or the food at dinner? The location of your home or its size? Strangely, people are willing to answer these questions even without knowing how much salary theyd need to forgo to have more-interesting work, or how much more space they could have if they lived five miles farther from work or school, and so forth. The field of decision analysis argues that we need to know how much of one attribute will be traded for how much of the other to make wise decisions. Selecting the right job, house, vacation, or company policy requires thinking clearly about the trade-offs.

The easiest trade-offs to analyze involve our own decisions. Once two or more people are engaged in a decision and their preferences differ, its a negotiation. Typically, negotiation analysis focuses on what is best for a specific negotiator. But to the extent that you care about others and society at large, your decisions in negotiation should tilt toward trying to create value for all parties.

This is easy to see in a common family negotiationone in which Ive been involved hundreds of times. Imagine that you and your partner decide one evening to go out to dinner and then watch a

movie. Your partner suggests dinner at an upscale Northern Italian restaurant that has recently reopened. You counterpropose your favorite pizza joint. The two of you compromise on a third establishment, which has good Italian food and pizza thats a bit fancier than what your preferred pizza place offers. During dinner your partner proposes that you watch a documentary; you counterpropose a comedy; and you compromise on a drama. After a good (but not great) evening, you both realize that because your partner cared more about dinner and you cared more about the movie, choosing the upscale Northern Italian restaurant and the comedy would have made for a better evening.

This comparatively trivial example illustrates how to create value by looking for trade-offs. Negotiation scholars have offered very specific advice on ways to find more sources of value. These strategies include building trust, sharing information, asking questions, giving away value-creating information, negotiating multiple issues simultaneously, and making multiple offers simultaneously.

Question

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