Monday Mornings with Madison

Beware the Dangers of the False Consensus Effect on Business

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Estimated Read Time: 6 min.

False Consensus Effect

Everyone has certain thinking errors or biases.  A common one is dubbed False Consensus Effect.  That’s when people overestimate the degree to which their own behaviors, attitudes, beliefs, and viewpoints are shared by others.  Basically, a person will think ‘I believe this is so and I believe most other people also believe the same thing’ or ‘I dislike something so I think most other people also dislike the same thing.’

In 1977, social psychology Professor Lee Ross conducted a host of studies at Stanford University that showed how False Consensus Effect operates.  He looked at how people tend to project their way of thinking onto other people and believe that other people think the way they do… when in reality they often do not. This fallacy of logic could involve an individual or group who assumes his own set of opinions, beliefs and impressions is more prevalent amongst the public at large than they actually are.  In particular, Ross looked at how these cognitive, perceptual and motivational biases can lead a person or group to misinterpret others’ behavior, creating barriers to dispute resolution and the implementation of peace agreements.

For example, Ross conducted two studies in which the false consensus effect was found.[1]
In the first study, participants read about situations in which a conflict occurred.   They were then given two options for responding to the situation, and then three things to do:

  • “Guess which option other people will choose;
  • Say which option they themselves will choose; and
  • Describe the attributes of the person who will likely choose each of the two options.”[2]

Results showed most study participants thought other people would choose the same option as them, regardless of which option they actually chose.  This reflected the False Consensus Effect, where the person thought others would think the same way he/she did, when actually they often did not.  But, that’s not all.  Another observation that emerged from that study is that when participants were asked to describe the attributes of people who might choose the option opposite to their own, subjects made extremely negative predictions about the personalities of those who did not share their choice.

In the second study, a new set of subjects were asked if they would be willing to take a 30-minute walk around the campus wearing a sandwich board that said “Eat at Joe’s”. To motivate the subjects, they were told they would learn something useful by the end of the study, but they were free to refuse to participate if they did not feel like it.

The second study reconfirmed what had been found in the previous study.  Among those who agreed to wear the sandwich board, 62% thought others would also likely agree. Among those who refused to wear the sandwich board, 67% of them thought others would also not agree to wear the sandwich board.  And, as in the first study, subjects in the second study made extremely negative predictions about the type of person who would make a decision opposite to theirs.

These studies demonstrated that people judge how others make decisions based on their own decisions.  They think “I believe X, and I think most people believe X like me.  Those who don’t believe X like me are somehow defective in their views.”

One Bias Feeds Another

A person with False Consensus Effect might even look for others who agree with his/her viewpoint in order to validate his belief or attitude.  This is Confirmation Bias.  Confirmation Bias is another thinking error in which a person tends to search for, interpret, favor, and recall information that confirms his/her beliefs, while giving disproportionately less consideration to alternative possibilities.  So one bias or thinking error can feed another, fueling a vicious cycle.

While this behavior may not sound terribly harmful or pernicious, it can actually be quite damaging to a business.  Imagine a company where the CEO believes that he knows the best approach to grow the company’s bottom line.  He not only believes this, but also believes that everyone else agrees that his approach is the right approach… whether that is true or not.  That is False Consensus Effect.  That CEO might look for people inside the organization to validate that opinion, casting aside those who disagree and ignoring data that might contradict that position.  That is Confirmation Bias.   That CEO will then pursue that path no matter the consequences.

The False Consensus Effect on Borders’ Demise

Case in point. False Consensus Effect can definitely take some of the blame for the demise of behemoth Borders Books.  For forty years, Borders Books was the second largest bookseller in the world.  It had over 1,200 stores and 10,700 employees, in its heyday.  By 2006, it stopped making a profit, and by 2011, it was closing its door and going out of business.  How did that happen?  There was a whole lot of False Consensus Effect taking place with every decision.

When Barnes & Noble was pulling back on CD and DVD sales, Borders’s CEO and Board of Directors made a big bet on merchandising, going heavy into CD music and DVD sales just as the industry was going digital. The CEO believed that it was a good idea, despite market signs and technological innovations, and everyone got on board with this strategy.

Then, when Barnes & Noble decided to beef up its online sales and develop its own eReader, the Nook, Borders chose to outsource its online sales to fledgling online seller Amazon, basically hiring the fox (Bezos) to guard the henhouse.  This was also a CEO decision made despite arguments against it by staff.  Instead, Borders expanded its physical plant and refurbished stores.  They saw their huge book inventories, which had allowed them to crush small bookstores, as their superpower.  But that huge load of stores – with massive inventories and expensive leases – became the noose around its neck.  They chose to invest in upgrading their noose.

They made bad decision after bad decision.  How could they have made such bad decisions?  Well, Borders kept hiring people who had little interest in and knowledge of books and authors.  They had four CEOs who lacked book-selling experience.  These CEOs made strategy decisions for Borders without having a deep understanding of the industry or understanding how the market was changing.  Instead, they ‘gambled’ on what they believed, convinced the public saw things the same way…. despite scads of evidence and naysayers to the contrary.  Whenever any mid-level leaders challenged the Board and CEO’s thinking, they were ousted. False Consensus Effect certainly contributed to Borders’ leadership’s inability to really see what was happening… until it was too late.

I Know Better Than That!

Any CEO or business leader reading this and thinking “I know better than that” should beware.  That is EXACTLY the problem with the False Consensus Effect.  It causes people to be convinced they are ‘right’ in the face of studies and examples to the contrary.  In fact, this thinking error could be dubbed the “I think I know better… and everyone agrees with me” Effect.  How can leaders be wary of falling prey to the False Consensus Effect?  It helps to understand what influences it.

False Consensus Effect tends to be stronger in:

  1. Situations in which a person considers something very important or feels confident in his point of view.[3]
    This could account for why there was such “certainty” by the media that Trump could not win the Presidency and Brexit could not pass in Great Britain, and yet both came to be.  Pollsters and media pundits believed in their position so strongly that they overestimated the number of people who felt the same way.
  2. Instances where a person is deeply sure his beliefs, opinions, or ideas are the correct ones.[4]
    If a person is absolutely, 100% convinced that passing a law funding school vouchers will improve education in the nation, he is more likely to believe that the majority of other voters will also support that law… even if that is not the case.
  3. Cases where situational factors play a major role.[5]
    For example, if a person has a very bad experience getting his health insurance provider to cover the expenses related to a hospitalization, that person might think the insurance company is terrible.  And, they are more likely to believe that everyone who has the same health insurance is going to feel the same way about it.

In such scenarios, it is important to be cognizant of the False Consensus Effect and realize one person’s experience or belief may not necessarily be shared by everyone else.  For example, when a marketer is deciding on marketing strategy, they should not conclude that some channels reach their clients better than others just because he prefers those channels himself.  Or, when HR managers are choosing candidates, they should not lean toward candidates whose personality is similar to themselves, believing that everyone else is also going to like that type of person.  That may eliminate highly-qualified candidates who don’t fit that profile.

 

Quote of the Week

“Always be suspicious of those who pretend to know it all, claim their way is the best way and are willing to force their way on the rest of us.” Walter E. Williams


[1]January 16, 2010, Ross’ False Consensus Effect Experiments. Explorable.com: https://explorable.com/false-consensus-effect

[2] Ibid

[3]March 21, 2019, Cherry, Kendra, How False Consensus Effect Influences the Way We Think About Others, Very Well Mind, https://www.verywellmind.com/what-is-the-false-consensus-effect-2795030

[4] Ibid.

[5] Ibid.

 

© 2019, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

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