Decision Making in Communities: Why Groups of Smart People Sometimes Make Bad Decisions 

Jasmine Martirossian, Ph.D 
ISBN: 0-944715-62-1 
Topic(s): Leadership 

Chapter 3

Popular wisdom--and an old cliché--tell us that two heads are better than one, and leads us to think that when more than one person contributes to the process, together they make a better decision. Does that imply that the more people involved, the better the decision? That seems to be the popular perception. Consider, for instance, the mutual fund companies that emphasize in their marketing literature and public relations campaigns that teams of experts--not individual experts--manage their mutual funds. They are capitalizing on the strength of this perception.

People in some community associations also share the perception that group decision-making is superior. For instance, one condominium association board was determined that all decisions, even those regarding the most minor issues, be ratified by the entire seven-person board. They refused to call the board president a president, or even a chair, adamantly insisting on "point-person," as the acceptable term. They specified that this person would be a mere conduit for communicating with the management company and would have absolutely no leeway for individual decision-making--even in the most trivial matters.

But if groups make better decisions than individuals, why is individual decision-making a highly valued social function? For instance, why is it that the more decision-making power associated with a given job, the better the compensation?

How Do Groups Influence Decision Making?

Let's just assume for now that groups do make better decisions. What is "better?" To answer that, let's also assume that "better decisions" are those limiting risk and increasing caution. To find out if groups actually make decisions that are cautious and relatively risk free, social psychologists have conducted experiments and found that--interestingly--groups make decisions that both limit risk and increase risk, and that both effects are valid and are to be expected as outcomes of group decisions.

Group Decisions Increase Risk

James Stoner wrote up a number of real-life scenarios that called for making drastic decisions and taking risks. In his experiments, he asked individual test subjects to read these scenarios and assess the risk that should be taken on a scale of 1 to 10. Then he presented the same scenarios to groups of test subjects, once again asking them to make a decision and rate the level of risk that should be taken.

Stoner's experiments turned popular belief on its head. In his experiments, people actually increased their level of risk when they were making a decision as members of a group, and they were less willing to take risk when making a decision on their own. His experiments found that "group decisions [are] significantly more risky than the mean of the individual group members' prior decisions." [36] This phenomenon came to be known as the "risky shift."

Group Decisions Limit Risk

Shortly after Stoner's experiments, researchers Marquis and Nordhoy conducted a series of similar experiments that produced the opposite result. They found "evidence [supporting the idea] that group discussion might also lead to more cautious decisions." [37] This means that people in groups also make decisions that are more cautious than decisions they would make on their own.

In light of these findings, what should a community association manager or board member do when working with groups? The logical answer is: gauge the possible outcome based on group discussion and decide which direction the decision will swing--in the direction of increased or decreased risk? In order to do this, you need to understand group polarization.

Group Polarization

The puzzle of these opposite outcomes was solved with the discovery of a phenomenon called "group polarization," which reflects "a tendency for group discussion to enhance the individuals' initial leanings." [38] This means that if a person goes into a group discussion with a specific opinion or take on an issue, that individual's position will be enhanced by the time the group meeting is over. James Stoner summarizes his research in the following way, "For items on which the widely held values favored the risky alternative and on which the subjects considered themselves relatively risky, unanimous group decisions were more risky than the average of the initial individual decisions. The group decisions tended to be more cautious on items for which widely held values favored the cautious alternative and on which subjects consider themselves relatively cautious." [39]

For example, in a condominium association where lighting was insufficient, the board had to decide whether to replace the exterior lights at association expense with modern fixtures--which they would also have to maintain--or at county expense with standard fixtures supplied and maintained by the local utility company. The association had budgeted for the modern fixtures, and the residents wanted them because they were more attractive and provided more light. However, the board suspected that future maintenance costs might burden the association's resources or require a dues increase. During the discussion, individual board members said, "If it were just me, I'd get the attractive fixtures, and figure out later how to pay for the upkeep." But in the end, they voted for the county owned and maintained "institutional style" lights--a position favored strongly by one member who represented the community's fiscal conservatism.

Too Much Invested To Quit

Along with group polarization, groups also experience the "too much invested to quit" phenomenon that has cost many businesses huge sums of money. [40]

For instance, in one experiment Canadian business students were asked to make a decision on investing in a business that had a track record of failures: "72 percent [of students who] reinvested said they would seldom have invested if they were considering it as a new investment on its own merits; when making the same decision in groups, 94 percent opted for reinvestment." [41] Once again, decision-making within the group setting had risk-taking outcomes.

Most of us are familiar with this phenomenon--indeed we talk about it everyday. We say we're "throwing good money after bad," when we have too much invested to quit?or we "get out while the getting's good." And, if the getting out isn't good, we "cut our losses." It's likely we've all experienced it at one time or another as private citizens, professionals, or members of a community association board.

For instance, a condominium association board had hired a superintendent who, after his first three months of stellar performance, totally slacked off. Yet for the next two years, although the board constantly debated what to do with him, they gave him three pay raises, two extra weeks of vacation, a better health insurance policy, and finally determined that this superintendent was not the right fit for the association. They had become the victims of the "too-much-invested-to-quit" phenomenon because they felt that they had already spent considerable amounts of time searching to fill this job, and did not want to feel as if they had wasted resources.

In another example, the president of a community association management company had a client association that, in the past seven years, had contracted with three management companies that collectively provided eight community association managers. Obviously, the association management company that could satisfy this association hasn't been created yet, and the association manager that could make this board happy hasn't been born yet. Nevertheless, this association management company president made an obvious effort to honor his professional commitment, and he tried to please this association at all costs.

However, the group polarization phenomenon and the too-much-invested-to-quit phenomenon were very much at work. As the real or perceived disputes deepened, each side became more entrenched in their original position, yet neither side was willing to end the relationship because each was too invested in the situation to quit. Generally, it's is a good idea to cut your losses in situations like this at the time when you feel that had you know, then what you know now, you wouldn't have invested in them in the first place.

Group Polarization in Communities

The effects of group polarization are all around us, in varied social situations, and can often be observed in communities. "During community conflicts, like-minded people increasingly associate with one another. This amplifies their shared tendencies." [42]

Elvira Jackson, and her neighbors, tell a story of "a long, convoluted conflict that seems to never end"[43] that illustrates community polarization perfectly. Elvira lives in a community association in Mt. Imaginario, California, where she introduced me to several of her neighbors, two former community association board presidents, and one of the original combatants.

The conflict started about seven years ago between two couples: Ed and Melanie, and Gilda and her husband. Ed and Melanie, presently retired engineers, were members of the association's seven-member board. Depending on who's telling the story, they supposedly either left a ditch open or didn't light it sufficiently one Halloween weekend. No injuries resulted, but Gilda and her husband saw this as an opportunity to oust Ed and Melanie from the board. They accused them of gross negligence and the power struggle began.

Although Gilda's husband became president of the board, many residents agree that Gilda was actually running the show. I think this is probably true because I was struck in my conversations with the residents by the fact that no one used this man's proper name, everybody referred to him simply as "Gilda's husband," some even had a hard time recalling his name. I later found out that his name was Greg.

This association is located in the heart of Silicon Valley, and it has seen a tremendous upsurge in property values in recent years. Long-time residents have seen prices skyrocket, but not necessarily their incomes. People who paid about $200,000 for a house in 1995 could sell it in 2001 for $700,000. On the other hand, half of the properties in this association have changed hands many times and brought in new owners with higher incomes--which may have contributed to a sense of division in the community. Additionally, the side that newcomers take in The Conflict has become a way to build identity in this community association.

Today Gilda and her husband are gone; they sold their unit and moved away a year ago, but the community is divided on everything, no matter how trivial. Amazingly, the original issue is a distant memory.

While the scope of this book does not allow me to provide a detailed analysis of the evolution of this conflict, it's clearly a good example of the effect of group polarization run amok within a community association.

Discussion is a key element in the process of group polarization. Indeed, the importance of group discussions and the effect of polarization during community conflicts were confirmed by Coleman's field research on intergroup polarization during community conflicts: "Group discussion . . . is such an important phenomenon in community controversies that in the case of studies examined, most descriptions of behavior during the intense part of the controversy were descriptions of discussion and of attempts to persuade or reinforce opinion." [44] Basically, the gist of this conclusion is that discussion does matter, and it can make or break the sense of harmony within a community.

As polarization increases in a community, so does "homogeneous grouping." This means that like-minded people come closer together, strengthening their sense of being the in-group, clearly distinct from the other side--the out-group. Research on community conflict has shown that "homogeneous grouping was a source of community polarization and the occurrence of social conflict further heightened." [45]

What Causes Group Polarization?

We have established that group polarization is a real phenomenon and part of life in a community, but what makes group polarization a reality? Simply stated: two things--information and a desire to be accepted. Social psychologists refer to these two influences as informational and normative. Informational influence "results from accepting evidence about reality," while normative influence is "based on a person's desire to be accepted or admired by others." [46]

Martin F. Kaplan argues that "informational influence implies that judgments, whether before or after discussion, are based on information about the issue. If judgments shift, it is because one has incorporated new information that was provided during discussion. This information can be provided forcefully, through persuasive arguments, or passively, via information sharing." [47] It follows that processing information is a very relevant part of the group decision-making processes. However, groups may not process all information equally.

First, as group discussion ensues, it "elicits a pooling of ideas, most of which favor the dominant viewpoint. Ideas that were common knowledge to group members will often be brought up in discussion or, even if unmentioned, will jointly influence their discussion." [48] It's easy to understand why the dominant viewpoint will attract more ideas--groups unconsciously strive towards harmony; and, once a position dominates, it becomes an easy reference point that frames and colors the view of the group members.

So what can a community association manager or board member do to shift the position of the group away from the dominant viewpoint?

The Informational Influence

If a person relies on the power of the informational influence, and provides information to the group, he or she can shift the group position away from the dominant viewpoint. However, how one goes about providing relevant information is very important.

When making statements, people "often entangle information about [their] arguments with cues concerning [their] position on the issue. But when people hear relevant arguments without learning the specific stands other people assume they still shift their positions. Arguments, in and of themselves, matter." [49]

It's important to disentangle one's personal position on the issue from arguments about the issue. The power of information to sway a group is obviously weakened if that information or argument is little more than a reiteration of a position. When groups are divided on an issue, one side may disagree with the position of the other side, refusing to hear the arguments.

I have experienced this first-hand in my own five-unit association where each of the unit owners is a trustee. As our self-managed association was going through a tortured process of redecorating the common areas (a process that started two years before I moved in), decisions had to be made about wallpaper. As one of the trustees was showing wallpaper samples--and stating that she loved them--another trustee, who obviously delighted in disagreeing with others, immediately responded that it wouldn't work. It's possible that if one trustee had authoritatively stated that, say, stripes or floras were the patterns we were trying to emulate (that is, if she had provided information), it would have been more difficult for the other trustee to disagree--unless she too had information, rather than statements about likes or dislikes, to support her choice.

Putting the Informational Influence to Work

There are a few techniques for using the informational influence effectively. They include:

Quote the experts: When you make definitive statements referring to authoritative sources (like research publications) you create a distance between your personal position on an issue and the argument for or against the issue itself because such sources represent the views and opinions of third parties. Such statements seem credible and objective. Also, they should be devoid of content that makes them seem emotional.

Use statistics: People are enormously attracted to the power of numbers, even though numbers can be used to mislead. It's what Robert Cialdini calls the consensus effect of influence. For instance, we often decide what movie or television program to watch or which book to buy based on which of these is attracting the greatest number of people. That's why The New York Times publishes a best sellers list and why Nielsen ratings are so valuable to television producers and advertisers. We're curious about what attracts others and we're reassured to know that others have made the same choice--it provides a certain sense of comfort.

Be bold: Make an impassioned argument on the issue. Let's face it; most people don't like to engage in public disagreements. Instead, they'll express their ideas mildly and very diplomatically. However, "like inoculations against disease even weak arguments will prompt counterarguments, which are then available for a stronger attack." [50] This is called attitude inoculation. When people are exposed to a series of mild arguments against their position on a given issue, they become entrenched in their position and very adept at brushing off increasingly stronger arguments. Hence, if you want someone to change their position on a key issue, you are much better off presenting an impassioned and strong argument at the very outset. This will give you a greater chance to sway the position of the other side.

[This sample contains the first half of Chapter 3.]


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