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Tip Sheet: Business, Law & Economics

Tip sheets highlight timely news and events at Washington University in St. Louis. For more information on any of the stories below or for assistance in arranging interviews, please see the contact information listed with each story. For comments on the Business, Law & Economics news tips service, please contact the editor, Robert Batterson at (314) 935-5202 or batterson@olin.wustl.edu.

Tips Sheets: Business, Law & Econ | Culture & Living | Medical Science & Health | Science & Technology

Business school laboratory research on decision-making could shed light on Iraq war planning

Media assistance: Robert Batterson - (314) 935-5202
Source: William Bottom's Web page - (314) 935-6351
Related: Download Bottom's research
Related: International Association of Conflict Management
Related: Society for Judgment and Decision-making

[St. Louis, Mo., February 2003] - As the United States military makes its final preparations for war in Iraq, new research on decision making at the Olin School of Business at Washington University in St. Louis could help shed light on how President Bush and his advisors are going about making their final decisions to go to war. The research was conducted in an experimental laboratory at the Washington University business school and in archival studies of negotiations at the Paris Peace Conference of 1919 by William Bottom, Ph.D., professor of organizational behavior. His research to date has culminated in the publication of two studies applying the decision-modeling research to how groups make decisions and the Versailles Treaty of 1919.

William Bottom
William Bottom
What does the Versailles Treaty -- the fatally flawed agreement that helped bring about a global economic collapse and a second world war -- have to do with making good decisions and how can it be applied to world problems today?

Bottom's ongoing study of the Versailles Treaty's negotiations, he says, "provides an interesting setting in which to examine the nature of rationality and the limits on individuals' ability to deal with complexity." The first paper derived from the work, "Keynes' Attack on the Versailles Treaty: An Early Investigation of the Consequences of Bounded Rationality, Framing, and Cognitive Illusions," is slated for 2003 publication in the journal International Negotiations.

"These were in many ways the most ambitious and far reaching negotiations ever held, and they were also among the best documented," Bottom says. "By studying the evolution of the treaty language across various drafts, the translator's notes of top-level meetings, minutes of the plenary sessions, and the diaries and private letters of the key decision makers, it is possible to reconstruct much of the thought process that went into the final settlement. What you see is a pattern of systematic illusions in thinking that prevented even the most well-trained and experienced participants from making wise decisions."

Bottom says one important consideration that was lost on the Paris negotiators at Versailles in 1919 was the long run relationship with the German public. Terms were struck without carefully thinking through the way in which the terms would be interpreted. "Some of the terms that the American negotiators introduced as a means of helping the Germans were seen in a very different light by the Germans themselves," he says. "For reasons of expedience and domestic political advantage, the Allies chose to impose these terms by ultimatum rather than allowing for a protracted negotiation with German representatives."

"Trust was destroyed in the process," Bottom says. "This was the greatest blindspot and the potential is certainly there for analogous problems with the Iraqi people and with the citizens of other Arab states as the United States prepares to go to war. The distrust of American motives on what is often referred to as "the Arab street" is very great. The western democracies will have to deal with Saddam Hussein for a finite number of years. The relationship with the Iraqi people and with the broader Arab public will ultimately be far more important."

Bottom's findings on how decisions were made at Versailles might be applied to the current Iraq conflict, tensions in the Middle East, and around the world. The treaty itself played a major role in shaping the map of the Middle East.

"The experimental research on judgment and negotiation," says Bottom, "has given us much better insight into the operation of the general psychological and social principles that are at work today to create these kinds of blind spots among decision-makers."

Bottom's work on the Versailles Treaty complements the laboratory research that has been the mainstay of his published work. "I've relied on the Taylor Experimental Lab here at the Olin School of Business," he says. "It's a great resource for testing hypotheses about how people formulate judgments, make decisions, and learn from experience."

In the Taylor Laboratory at the Washington University business school, students work at computers, evaluating information, making decisions, and communicating with each other according to an experiment's design. The lab has been employed to study three-party litigation, negotiation models, and contract incentives.

One of Bottom's recent lab research projects examined group decision-making. "Propagation of Individual Bias Through Group Judgment: Error in the Treatment of Asymmetrically Informative Signals," published recently in The Journal of Risk and Uncertainty and co-authored with two former colleagues at the Olin School, Krishna Ladha, now at New York University, and Gary Miller, now with Washington University's Department of Political Science, showed that under certain conditions individual accuracy decreased as the information available to solve the problem increased. Group decision-making failed to mitigate these individual biases.

"One of the most common tools that decision-makers rely on to overcome their own limitations is to pull together a group to work on the problem, either in a committee or through some sort of teamwork," Bottom says. "But this is no panacea and may actually make matters worse. Much depends on how the groups are composed and the process by which they reach a decision. The failures of the laboratory groups paralleled the experiences at the Paris Peace Conference in 1919 in some respects. The mistakes made with the various committees and subcommittees actually amplified the severity of the Versailles Treaty many times over and together made the final product essentially impossible to implement."

Bottom says it is difficult to judge exactly how decisions are being made about the Iraq conflict in Washington today. "At Paris in 1919, President Woodrow Wilson was extremely confident in his own skills and in the wisdom of his own ideas. He purposefully avoided putting together a strong team of bipartisan advisors who would challenge his thinking. He didn't take in Republican thinking and this proved to be disastrous in the outcome of the final treaty. Had he sought the input of an influential Republican such as William Howard Taft or Charles Evans Hughes, he would likely have had much greater success. President Bush, meanwhile, came into office in 2001 with a reputation as one who would seek many diverse views and keep his own ego in check. His father did this during the Gulf War with very good results. But it is difficult to ascertain with much certainty how the president is utilizing his advisors and what range of views they are giving him."

"The upshot of our laboratory research is that this form of consultation is essential," says Bottom. "It is very difficult to say whether President Bush is doing this or not on the decision to go to war with Iraq. But he should be seeking broad input from Democratic leadership, from other nations, from our Arab allies and from the United Nations."

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