Political Turnover, Gaming, and Venture Acceleration – Chicago News
Let’s explore some of the most interesting stories that have emerged from Chicago business schools this week.
Why Economic Crises Trigger Political Turnover in Some Countries but Not Others – Kellogg Insight
New research from Northwestern Kellogg Professor of Managerial Economics and Decisions Nancy Qian explores “how much the people of a country typically trust other people” in an attempt to understand why recessions are catalysts for political turmoil in certain countries, like Greece, and not others, like Norway.
Qian explains that trust plays a key role.
“If I’m a less trusting person, I might say something like, ‘I don’t understand the details of what our leader is doing, but most politicians are bad and they’re lazy, so it is probably his fault. It’s about how likely I am to attribute the economic problems to circumstance or luck versus to the political leadership.”
The researchers found that “economic downturns were less likely to cause political turnover in high-trust countries, like Sweden (63 percent) than in low-trust ones, like Italy (29 percent).”
Qian explains that their findings “have direct implications for how nations approach economic interactions.”
“If we think our trade decisions are going to have economic effects in those nations, we need to also consider the potential political consequences,” Qian says. You can read the rest of the research here.
Keep Them Guessing, Keep Them Gaming – Chicago Booth Blog
In a new Journal of Consumer Research study from Chicago Booth Professor Christopher Hsee and the Chinese University of Hong Kong’s Luxi Shen, it was found that “people repeat a task more for an uncertain incentive than for a certain incentive, even when the uncertain incentive is financially worse.”
According to the Chicago Booth Blog entry, “one reason uncertain incentives motivate behavior is the psychological boost consumers get in moving from the unpleasantness of uncertainty to the satisfaction of certainty resolution.”
Hsee and Shen’s research suggests that efforts to entice consumers to repeat behaviors “may be even more successful if consumers don’t know the amount of the reward in advance.”
You can read the full article here and find “The Fun and Function of Uncertainty: Uncertain Incentives Reinforce Repetition Decisions” here.
Spine Injury Inspires Mark Van den Avont to Create Better Sports Mats – Gies College of Business Blog
Following a high school spine injury that broke the T11 and T12 vertebrae during a backflip dismount, current University of Illinois mechanical engineering sophomore Mark Van den Avont founded HexNest with the goal to create safer and more cost-effective mats.
HexNest is an outgrowth of Gies’ iVenture Accelerator through which he received a $2,500 summer housing stipend and a $10,000 grant to fund “product development, buying competitors’ mats and purchasing equipment to make his mats.”
Van den Avont writes:
“iVenture has been extremely important because I was able to work on HexNest full-time over the summer and devote all my energy to it. It’s great being around other entrepreneurs as well. I’ll be at the iVenture Accelerator at 10 pm on a Tuesday night or early Sunday morning, and I’ll look to my left and right, and everybody’s here.”
You can read more about HexNest and Van den Avont’s journey here.
Chicago News: Northwestern on Bitcoin, Notre Dame Explores Psychopathy and More
Let’s explore some of the most interesting stories that have emerged from Chicago business schools this week.
New Cryptocurrencies, Same Old Problems – Kellogg Insight
Following Bitcoin’s record high $19,511 BPI at the end of 2017, which has already begun its slow steady decline (its BPI is around $10,800 as of Feb 19), folks outside the standard-issue Silk Road users and modern-day gold prospectors have begun to openly (and loudly) question whether we’re due for a global cryptocurrency takeover. Northwestern University Kellogg School of Management professor Sarit Markovich advises eager beavers to slow their rolls:
“There are certainly huge advantages to blockchain technology, especially when it comes to cross-border transactions. But I doubt we’re going to reach the point where decentralized cryptocurrencies replace cash or distributed ledgers replace central banks. There’s too much room for manipulation. Instead, it looks like the real innovation will occur within large institutions, which is not exactly democratization.”
Markovich goes on to note another problem with the current state of Bitcoin, which is the preponderance of “whales” mining the currency. He explains:
“In addition to ‘mining pools,’ there is also the problem of ‘whales:’ roughly 1,000 people own around 40 percent of all bitcoins. As the market continues to rise, there is a risk that some may be in a position to manipulate the market. For example, they could collude in an effort to drive the price of Bitcoin up, then cash out all at once—and perhaps even bet against the futures market.”
Read more about the future of cryptocurrency here.
Psychopaths Tend to Benefit and Flourish Under Abusive Bosses – Mendoza Ideas & News
Got a boss from H-E-double hockey sticks? You’re not alone. But what might make you unique is your ability to stand heat. It turns out some folks actually do quite well under cruel conditions. It also turns out that these folks might have more in common with Richard Ramirez or John Wayne Gacy than they’d care to admit, according to a new study by Notre Dame Mendoza College of Business assistant professor of management Charlice Hurst:
“We found that primary psychopaths benefit under abusive supervisors. Relative to their peers low in primary psychopathy, they felt less anger and more engagement and positive emotions under abusive supervisors.” “It may reward and retain exactly the kind of people who are likely to perpetuate abusive cultures,” she says. “Psychopaths thriving under abusive supervisors would be better positioned to get ahead of their peers.”
Hust continues, saying:
“If they have a problem of endemic abuse, like Wells Fargo — where former employees have reported that managers used tactics designed to induce fear and shame in order to achieve unrealistic sales goals—and upper-level managers are either unaware of it or are not taking action, they might notice increasing levels of engagement due to turnover among employees low in primary psychopathy and retention of those high in primary psychopathy. At the extreme, they could end up with a highly engaged workforce of psychopaths.”
Read more about Dr. Hurst’s research, entitled “Are ‘Bad’ Employees Happier Under Bad Bosses? Differing Effects of Abusive Supervision on Low and High Primary Psychopathy Employees,” here.
Financial Compensation Can Distract From Emotional Suffering – Chicago Booth Review
University of Chicago Booth School of Business professor Christopher Hsee, Northwestern professor Xueer Yu and Ph.D. candidate Shirley Zhang recently explored the complex analysis required to compensate victims who suffer grave psychological, physical, and financial duress.
What the trio found, surprisingly, is that psychological and physical distress was often much more rewarding than financial damage. And even mentioning financial damage, coupled with psychological and physical damage, often hindered compensation.
The reason? Financial damage is generally empirical and can be exacted with ease.
“It would be better to say ‘I was so scared that I lost two nights’ sleep’ than to say ‘I was so scared that I lost two nights’ sleep and one day’s work,’” the researchers write. “If the victim mentions one day’s work, the mediator would likely compensate the victim for only her one day’s pay. If the victim does not mention one’s day work, the mediator would likely award more, unless the victim has a high-paying job and the judge is aware of it.”
Read more about their research, recently published in the January issue of Organizational Behavior and Human Decision Processes, here.
