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Intuition Has Place in Making Decisions Says CSOM's Pratt

01/31/13
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O'Connor Family Professor of Management Michael Pratt. (Photo by Tony Rinaldo)

By Ed Hayward | Chronicle Staff

Published: Jan. 31, 2013

When it comes to making the right decision, trust your gut if you have the right job and the right experience.

That’s the conclusion of O’Connor Family Professor of Management Michael Pratt and colleagues from George Mason University and Rice University, who found intuition is just as effective in decision-making as an analytical approach and sometimes more efficient and effective.

But intuition benefits from the decision-maker’s level of expertise on the subject at hand, according to their report, which was recently published in the Journal of Organizational Behavior and Human Decision Processes.

“It turns out intuition isn’t always bad and there are conditions where it is a good way to make the right decision,” said Pratt. “What we found demystifies a lot of the information out there that says intuition isn’t as effective as if you sat down and walked through an analytical approach.”

Testing intuition against analysis, Pratt and co-authors Erik Dane of Rice University and Kevin W. Rockmann of George Mason found that people can trust their gut and rely on intuition when making a broad evaluation – one that doesn’t include a subset of additional decisions – in an area where they have in-depth knowledge of the subject, also referred to as domain expertise.

Pratt, an expert in organizational psychology, said the findings should help companies understand more about the use of intuitive decision-making by employees and CEOs alike. As people move up in organizations, they’re often required to make judgments that may not be readily solved by rational analysis.  However, emerging leaders have to be careful in making such intuitive judgments, Pratt said.

“The primary takeaway is: Intuition is like nitroglycerine – it is best used only in certain circumstances. Be careful when you use your ‘gut,’” said Pratt. “If you’re working in an industry where you’ve risen through the ranks, your domain expertise will likely better serve an intuitive approach. If you gained your expertise in a different field, you may not have the background to rely as strongly on your intuition.”

Intuition has long been viewed as a less effective approach to critical reasoning when compared to the merits of analytical thinking. Yet as society and businesses place a greater emphasis on the speed and effectiveness of decision-making, the intuitive approach has been identified as an increasingly important tool.

The researchers said the knock on intuition stems from earlier studies that examined intuition in the context of very structured multi-step decisions in areas such as math or logic.  Analytic decisions are great for breaking things down into smaller parts, which is necessary for a math problem. But intuition is about looking at patterns and wholes, which is needed when making quick decisions about whether something is real or fake, ugly or pretty, right or wrong.

The researchers prepared two experiments to test both methods as a means of making a basic decision, or one that doesn’t break down into a subset of smaller tasks. In each experiment, one group of respondents was asked to think intuitively in a short amount of time. A second group was asked to take slightly more time and use an analytical approach.

In the first experiment, subjects were asked to watch videotape of a college basketball game and within a few seconds rate the difficulty of the players’ shots. Among those with experience playing the sport, intuitive decision-makers ranked the shots in accordance with standards set by a group of accomplished NCAA coaches.

In a second test, men and women were asked to decide whether a designer handbag was “real” or “fake”. Among subjects who had owned several brand-name satchels, intuitive respondents were able to make quick and effective judgments about the items.

Some current approaches to management training, where employees are moved from area to area, may not serve those prospective managers in the future, based on the results of the teams’ study.

“Companies spread people too thin sometimes,” said Pratt. “But if you don’t spend enough time in one domain – say you’re moved from finance, to marketing, to R&D – you may become a well-rounded employee, but you may not obtain the experience you need for intuitive decision making.”

The study, “When Should I Trust My Gut? Linking Domain Expertise to Intuitive Decision-making Effectiveness,” is available online at www.sciencedirect.com/science/article/pii/S0749597812000994