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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.
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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.
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William Bottom
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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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