In the business world, most major decisions are recorded in written documents for the sake of posterity and to create organizational “memory”. Still, executives must depend on their own memories for a lot of other things that aren’t recorded in any documents. We remember how someone conducted themselves in a meeting, how a supplier negotiated with us and the kind of service we received at a particular restaurant or hotel.
A key requirement of making good judgements based on memory is that the confidence we have in our memory is justifiable. In other words, if we can recall an event or a particular detail of an event, we would be in trouble if our mind was making up that memory. Is it even possible for us to recall something that never happened?
According to research on memory formation and retrieval, our memories are surprisingly susceptible to misinformation. Research on the “misinformation effect” shows that misinformation fed to us after the occurrence of an event can easily be integrated into our (false) memories of the event. We remember little details and even the emotions that accompanied the event that never happened. As a result, it becomes almost impossible to distinguish between real and false memories of an event.
The incredible part of the misinformation effect is how easy it is for the false information to be installed in the memory and how it affects future behaviours. In one study, researchers imparted a false memory to subjects about getting sick eating boiled eggs when they were young. Later, when offered food, these subjects avoided boiled eggs to the point of saying they disliked them. There was no such dislike of eggs recorded before the memories were implanted.
In a classic experiment done by psychologist Elizabeth Loftus, subjects were shown a video of a car accident and later asked to recall the facts of the accident in the video they saw. Some people saw a red car go past a “Yield” sign before being hit by another car. However, after watching the video, they were asked, “Did another car pass the red Datsun when it was stopped at the ‘Stop’ sign?” After a while, they were shown slides of the car near either a Yield sign or a Stop sign and asked to identify the correct picture from the film they saw. Almost 60% of the subjects chose the picture with the Stop sign as the correct one.
Even more interestingly, after the experiment, the subjects were told exactly what the experiment was trying to test and informed of the manipulation. Almost all the subjects insisted that they had seen the video with the Stop sign,arguing they could remember it quite clearly. They completely believed that they had seen the car go by a Stop sign, all because they were asked in a question whether it had gone by a Stop sign. The study highlighted how malleable our memories are and how easy it is for people to create false memories that they strongly believe in.
In other similar studies, researchers have shown that after watching a video of an accident, simply asking the question “How fast do you think the blue car was going when it smashed into the red car” resulted in higher estimates of speed than when they were asked “How fast do you think the blue car was going when it hit the red car?”
The implications of this phenomenon for decision-making are tremendous. When a piece of misinformation about an event is introduced and accepted at one point in time (say, when you don’t have enough evidence to challenge the misinformation), it can get integrated into our memory structure, thereby, resulting in changing our memories. Any future decision that draws from this false memory will obviously be impacted because of the false foundation.
On the positive side, researchers have demonstrated that merely being aware of this effect caused subjects to be less susceptible to it. When forewarned about the pervasiveness of this effect, people were less likely to be affected by the misinformation and more reliably recalled “true” memories. Awareness of this effect can also help reconcile two differing recollections of the same event by two individuals. They may both be convinced about their versions without realizing that their minds may be playing games on them!
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Dr Praveen Aggarwal and Dr Rajiv Vaidyanathan are professors of marketing at the Labovitz School of Business & Economics at the University of Minnesota Duluth. Dr Aggarwal also serves as head of the marketing department and Dr Vaidyanathan is director of MBA programmes at the University of Minnesota Duluth.