SciAmMind on altruism, money and leadership

The August edition of Scientific American Mind has just arrived online and in the shops. The freely available articles from this edition tackle teamwork and finance as one investigates the psychology of leadership and the other looks at the role of altruism in financial decision-making.

The article on leadership contrasts the traditional view of leadership, often based on a combination of top-down charisma and coercion, with a more recent view that emphasises a leader of someone who facilitates communication and understand the group values and emotional intelligence.

It particularly explores the role of ‘social identity’ in leadership, the idea that people define part of themselves in relationship to the group and a good leader is someone who uses this as the most effective way of bonding and focusing the team.

The article on altruism in financial reasoning looks at the increasing amount of research that shows that individuals are not perfectly rational wealth accumulators and will often incorporate notions of fairness and social concern into monetary decisions, even when this can lead to a loss.

Ockenfels’s Equity, Reciprocity and Competition (ERC) theory, which he developed with economist Gary Bolton of Pennsylvania State University, states that people not only try to maximize their gains but also watch to see that they get roughly the same share as others: they are happy to get one piece of cake as long as the next person does not get two pieces. This fairness gauge apparently even has a defined place in the brain. On eBay, however, fairness takes the system only halfway, researchers have now learned; eBay’s reputation system is critical for augmenting the level of trust enough for the market to work.

Circumstance also sculpts behavior, studies have revealed, regardless of natural character traits or values. That is, whether a person is competing in a market of strangers or negotiating with a partner can make a big difference in whether fairness, reciprocity or selfishness will predominate. In fact, the ERC theory hints at ways to alter economic institutions to nudge people to compete—or cooperate—more or less than they currently do.

Other feature articles in the print edition include ones on the effect of language on decision-making, the psychology of college drop-out, the professed fantasies of school shooters, consciousness and physical sensation, and inherited prosopagnosia (face-blindness).

Link to table of contents for August SciAmMind.
Link to article ‘The New Psychology of Leadership’.
Link to article ‘Is Greed Good?’

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