Things to keep in mind while giving and taking advice
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Next time you decide to take an advice even if it is coming from your most trusted source, take it with a pinch of salt. Because what they may do in your situation could be very different.
Professors Jason Dana and Daylian M. Cain from Yale School of Management say that even though ethically we should treat others as we ought to be treated, yet, what people advise others to do is often quite different from what they would choose for themselves.
The researchers analyse various studies to find that advisers are significantly more risk-averse when choosing for others than when choosing for themselves.
And this gap between a person’s advice and their personal choices could exist for several reasons.
One could be because, as the authors say, “Sympathy for others’ losses is a more powerful emotion than happiness for others’ gains,” and so people may be prone to looking at gains and losses differently when choosing for others than when choosing for themselves.
The second is that advisers can expect to be held accountable for advice, either in an implicit or explicit manner. Also, the fact that people generally get blamed more for losses than they are credited for gains does not help the pressure advisers face when doling out advice.
Thirdly, when counsel is coming from those who have financial interests in the guidance being given out, even the most high-quality, unbiased advice should be discounted, say the authors. Even if the advisee is wise to realize this, the adviser is also aware of the doubt that is in the mind of the advisee and anticipates that he will discount the advice. So the adviser will try and engage in a “strategic exaggeration” to compensate for that.
Not just that, “the advisers who have disclosed (the conflict of interest) deem it more morally acceptable to give biased advice because the advisee has been ‘warned’...and thus disclosing financial conflicts of interest can make advisees worse off for being warned”, say the authors.
So how can advice-giving and advice-taking be improved? The authors are sceptical that advisers can rid themselves of the cognitive and motivational biases that skew advice. But for those who want to give good advice, they should project one’s own tastes and advise others to act as they would act themselves.
As for the advisee, instead of asking questions like “What should I do?” it might be better to ask, “What would you do?”
Also if you smell biased advice, the authors urge people to get away from the “prying eyes of interested advisers” and decide during a cooling-off period.