Business Daily from THE HINDU group of publications Sunday, Sep 30, 2007 ePaper |
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Investment World
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Economics Columns - Simple Economics Fundamental attribution error B. Venkatesh My wife and I sometimes get into trivial arguments. Recently, I tried to help her in the kitchen. As always, I accidentally spilled some food on the kitchen floor. You can imagine the consequences. I was immediately reminded how clumsy I was. Few minutes later, my wife spilled some food too. Her reaction was totally different. She attributed it to the improper design of the tongs! Of course, outside the kitchen, I behave the same way. Social psychologists call such behaviour as “Fundamental Attribution Error”. What does it mean? Personal characteristicsWhen evaluating others, people have a tendency to overestimate the importance of personal characteristics and underestimate the role of situation. Suppose you watch a movie in which the hero plays a role of a wicked person. You tend to believe that the hero is really a wicked person. That is Fundamental Attribution Error. In one experiment, social psychologists in the US asked people to listen to speeches delivered by subjects (in the experiment) on Fidel Castro. Those who spoke in favour of Castro were believed to have a positive attitude towards him. The people were then told that the subjects were directed to take a stand on the topic by a coin-toss. That is, if a subject spoke in favour of Castro, it was because he or she was asked to do so. Despite this, the persons still believed that whoever spoke in favour of Castro had a positive attitude towards him. We do not behave that way when it comes to us — we attribute it to the situation. My wife, for instance, did not consider herself clumsy when she spilled food on the floor. Rather, she blamed the tongs for its improper design! Such behaviour has implications in economics. Take investment recommendations. If the recommendation turns out to be incorrect, you immediately conclude that your brokerage firm has poor-quality analysts. If, on the other hand, you make an investment on your own and that turns out wrong, you may attribute it to the vagaries of the market! More Stories on : Economics | Simple Economics
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