Cognitive biases without borders (Me)

Cognitive biases without borders: Assessing and reviewing the
effect of culture on cognition.
by
José L. Arizaga
Supervised by
Dr. David J. Henderson
August 21st 2012
Total word count: 5,988
MG420
MSc in Management
London School of Economics and Political Science

Cognitive biases without borders: Assessing and
reviewing the effect of culture on cognition.
José L. Arizaga
MSc in Management
London School of Economics and Political Science
A bat and ball cost $1.10.
The bat costs $1 more than the ball.
How much does the ball cost?
!
" Algebraically, it is a very simple problem. A twelve year old could arguably solve it on
paper, yet many of us arrive to the wrong solution when attempting to solve it mentally. If
you answered $0.10 and kept reading, you were indeed subjected to a bias of
overconfidence as you placed too much faith on your intuition (Kahneman, 2011). This
overconfidence in one’s mental mathematical abilities is what prevented those mistaken
from carrying out a simple check; if the ball were indeed to cost $0.10, it would imply
$1.10 for the bat, which together would total an incorrect sum of $1.20. The correct
answer is $0.05.
This paper reviews cognitive biases in light of a cultural perspective and provides
testable propositions. It is motivated by the search for evidence that cognitive biases
grounded on self-views are not universal but in fact more predominant in certain
cultures. The five biases considered (self-serving, fundamental attribution error,
anchoring and adjustment, hindsight, overconfidence) can be accounted for using
three of Hofstede’s cultural dimensions (individualism, power distance, masculinity).
The conclusion is that these cognitive biases depend to some extent on our self-
views which are themselves shaped by our culture. The main recommendation is to
incorporate a cultural outlook in future studies related to cognitive biases, as well as
to extend associations of the self beyond individualism and collectivism.
Cognitive biases without borders: Assessing and reviewing the effect of culture on cognition.
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! The human brain, just as any other supercomputer, is limited in its abilities to process,
store, and access information, specially given the finite amount of time at its disposal. As a
result of this cognitive overload and limitation, we tend to seek solutions that are satisficing
(i.e. good enough) rather than optimal. Altogether, this characterises mankind as cognitive
misers (Fiske and Taylor, 1984) having a bounded rationality (Simon, 1955). In seeking such
satisficing solutions, we unconsciously make use of mental shortcuts, known as heuristics.
Although these shortcuts can be useful during times of overwhelming cognitive demands,
they can also lead to severe and systematic errors or biases which tend to go unnoticed and
can have undesirable effects (Gelfand and Brett, 2004). Our cognitive judgments are
therefore often biased because of our lack of mental effort and abilities. Metaphorically
speaking, our minds can be tricked by cognitive biases in the same way optical illusions can
deceive our brains. The fundamental problem is that most of the times biases go unnoticed
and can have harmful effects. Moreover, the error remains convincing even when one is
completely aware of its nature. Awareness of the error does not produce a more accurate
perception, which is what makes cognitive biases even harder to overcome.
! As a practical example, when meeting a person for the first time, we subconsciously
create a first impression in a matter of seconds as memories and associations are retrieved
which help us categorise the individual. Almost always, stereotyping occurs to some degree
as it is an energy-saving mechanism which allows us to ignore irrelevant details. A person
smiling with positive body language can be classified as friendly and open, whereas a
person with crossed arms and legs and a quiet voice may be categorised as shy, introverted,
or simply uninterested in what we have to say. Many argue however that strong and
prejudicial stereotyping has become an aid to misunderstanding rather than
understanding, resulting in unwanted biases (e.g. not all Mediterraneans are lazy or
careless spenders, nor are all Chinese masters in kung-fu or table-tennis) (McGarty et al.,
2002). But would people from certain cultures be more prone to stereotyping, as well as
other biases? One could consider our brains as the hardware, and culture as the software
or operating system. Logically then, analogous to different computer software (e.g. Mac
OS X, Microsoft Windows, Android) using different shortcuts to navigate and save time,
we would expect different heuristics, and thus biases, to predominate in different cultures.
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! Over the past few decades, research on cross-cultural psychology has acquired great
importance and relevance to businesses as globalisation has become a dominating force in
social dynamics. Although research in this field developed and flourished in parallel to that
of cognitive psychology, both fields were initially viewed as separate and independent;
biases were widely considered universal. However, recent evidence has illustrated that
cognitive biases are not etic (universal) but rather emic (culture specific). In fact, since the
late 1990s, academics have been increasingly supportive of the notion that judgment
biases should be reevaluated in light of a cultural perspective (Gelfand and
Christakopolou, 1999, Gelfand et al., 2002, Heacox et al., 2000, Choi and Nisbett, 1998,
Norenzayan and Nisbett, 2000). For example, to boost self-esteem, North Americans have
the tendency to enhance their self-views, whereas East Asians resort to self-criticism and
modesty which will help them fit better in their group (Kitayama et al., 1997). Different
cultures therefore employ different mechanisms to boost self-esteem, and so the type and
nature of cognitive biases may differ.
! Globalisation, and the increased interdependence and homogeneity it has generated in
society has indeed called for a growing need to understand how culture impacts many
aspects of organisational behaviour and psychology. Over the past few decades, the world
has witnessed an increase of cross-cultural business interactions, both inside and outside
organisation, among all levels of employees, and between more industry rivals (Triandis et
al., 1994). Proof of this importance is the recent advances in differences in perception,
attribution, and cognition between Americans and East Asians (Masuda and Kitayama,
2004, Masuda and Nisbett, 2001, Matsumoto and Yoo, 2006). Indeed culture is now
widely recognised as a crucial variable to be included in research related to human
behaviour.
" The principal contributions of this paper are therefore to review and integrate
contributions from cultural and cognitive psychology, and provide testable propositions
alongside. There already exist a few empirical studies which have shown a cognitive
dependence on cultural factors, although most have focused on reasons related to
individualism and collectivism. In order to contribute towards the advancement of cross-
cultural cognitive psychology, we require reading cross-cultural literature with cognitive
lenses, and vice versa. The central question that guided this research was: Do cognitive
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biases differ across cultures, and if so, how and why? More specifically, we consider biases
that show some interdependence and are to some extent grounded on the self: self-serving,
overconfidence, anchoring and adjustment, fundamental attribution error, and hindsight
bias. We begin first by reviewing relevant cross-cultural literature as well as the evolution of
the field over the past century. This is followed by a review of cognitive psychology and its
formal integration with cross-cultural research. The present article aims to contribute
towards the continued debate regarding the effects of culture on our mental distortions, in
hope that employees and managers, as well as as people in general, can identify and avoid
these, thus benefiting interpersonally from today’s increased multi-cultural business
environment and society. It is a step towards understanding social cognition and
behavioural decision making across cultures. The main conclusion is that the cognitive
biases reviewed are a function of culture which both affects and is affected by our self-
views.
Cross-cultural literature
" Culture is defined as the collective programming of the mind which distinguishes the
members of one group or category of people from another (Hofstede, 1980). It is learned
through membership in a group or community. Culture symbolises a fundamental part of
an individual’s physical and social environment, affecting thoughts, feelings, and
behaviours (Fiske, 2000). Culture does not only provide a model of self, it is a model for
self; it defines what the self is, yet prescribes how people should manage their self in
everyday life (Lehman et al., 2004).
" The evolution of cross-cultural psychology has undergone significant changes since it
was first documented over 100 years ago. Matsumoto and Yoo (2006) provide an
exhaustive review of how this area and its research methodologies have evolved over time.
For example, one of the first studies in the field of cross-cultural psychology is that of
Rivers’s (1905) in which he observed individuals from New Guinea and India being more
susceptible to optical illusions than individuals from England. This is an example of the
first phase out of the four identified by Matsumoto and Yoo, during which, studies were
limited to cross-cultural differences.
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" The second phase aimed at identifying meaningful dimensions of cultural variability,
as one of the limitations of the first phase was that researchers claimed that inter-group
differences had a culture source despite there being intra-group variability. This error was
described as the cultural attribution fallacy, in which differences between groups being
compared were inferred as “cultural” when there was no empirical justification. The most
notable work that tackled this issue was that of Hofstede’s (1980) with his eminent cultural
dimension theory. Following the necessity for psychologists to identify meaningful dimensions
of cultural variability that describe subjective elements of culture, Hofstede initially
identified four cultural dimensions: power distance, uncertainty avoidance, individualism/
collectivism, and masculinity/femininity. There are several other frameworks which also
attempt to identify dimensions across cultures such as that of Trompenaars, Hall, and
GLOBE, and one that seeks to consolidate all aforementioned frameworks into one (Steers
et al., 2010). However, this study will use Hofstede’s model as a lot of the research in cross-
cultural cognitive psychology is grounded on his dimensions, thus allowing for a more
comprehensive review.
" The third phase in cross-cultural psychology further contributed in addressing issues
regarding cultural attribution fallacy, as Hofstede’s dimensions were still based on
generalising assumptions (e.g. not all Americans are individualistic despite the US scoring
amongst the highest on individualism). An eminent work in this third phase identified self-
construals as an important mediator of cultural differences (Kitayama and Markus, 1991).
More specifically, they theorised that the cultural context of an individual shapes their
construal of the self (e.g. autonomy and independence in the West, interdependence and
harmony in the East), which ultimately affects cognitive performance, social interactions,
and other mental processes and behaviours.
! However, Matsumoto and Yoo (2006) have since argued that a fourth phase is
required. They claim that, despite all the advances in the field, it is necessary, via linkage
studies, to empirically link the observed differences between groups with the specific cultural
sources that are hypothesised to explain these differences. The present study is grounded
on literature from the aforementioned second and third phases, creating linkages and
propositions that will hopefully lead future studies towards the fourth evolutionary phase of
cross-cultural research.
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National Cultural Dimensions
" Since the 1980s, and as a result of the increased complexity and challenges around the
world, many researchers have strived to design a tool with which to measure differences
and similarities across cultures. Several attempts have been made to capture this essence.
Four currently favoured models are those of Hofstede, Hall, Trompenaars, and the
GLOBE project, although this article will only make use of three dimensions of Hofstede’s
framework: power distance, masculinity, and individualism. These models seek to accomplish two
main things: to provide a well-justiﬁed set of cultural dimensions across which cultures can
be compared and contrasted, and to offer a quantitative assessment (numeric score) for
rating cultures (see Appendix for comprehensive list)(Steers et al., 2010). In a way, these
models serve us as a heuristic to better understand cultures.
Individualism/Collectivism
" Many authors argue this dimension is the most important and probably the most
researched. It refers to the relative importance of individual versus collective interests
within society; whether the peoples’ self-image is deﬁned in terms of “I” or “we”.
Members of collectivistic cultures prioritise group goals and interests over their own. An
emphasis is placed in developing an interdependent self (Kitayama and Markus, 1991).
The opposite is true for members of individualistic cultures, where the self generally takes
precedence over the group, and society encourages developing an independent self-
construal. Most studies on cognitive psychology have focused on individualism and
collectivism, linking these to several psychological differences across cultures (Triandis,
2001, Matsumoto and Yoo, 2006).
" Extensive comparisons have truly been made between Western and non-Western
cultures, generally describing the former as individualistic (IDV) and the latter as
collectivistic (COL). Despite it being a generalisation at large, countries scoring highest on
COL include Venezuela, Indonesia, Taiwan, and China whereas those highest on IDV
include the United States, United Kingdom, New Zealand, and Sweden (see Appendix A
for full list). Individualists tend to develop a separate, detached and independent self,
focusing on one’s own attributes, abilities and traits (Kitayama and Markus, 1991) (Gelfand
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et al., 2002). Americans view themselves at large as better than others (Heine et al., 1999).
On the other hand, collectivistic people generally construe the self as fundamentally
connected to others, deﬁning one self in term of one’s roles, status and obligations
(Kitayama and Markus, 1991).
Power distance
" This dimension refers to the degree to which members of a society accept an unequal
distribution of power. Cultures high on power distance (PDI) are considered hierarchical,
paternalistic, and centralised in power and decision-making. Moreover, assertiveness is
discouraged and self-regulation is encouraged when interacting with people of higher
status (Matsumoto et al., 2008). Countries ranking highest on this dimension include
Malaysia, Panama, Russia, and China (see Appendix B). Subordinates in these countries
expect to be told what to do and generally do not challenge leadership or people in higher
ranks. On the other hand, cultures that endorse low PDI are more egalitarian,
consultative, and democratic. People view each other more as equals regardless of formal
positions. Examples of countries scoring low on PDI include Austria, Sweden, Israel, and
the United Kingdom (see Appendix B). Control is disliked in these countries, and attitudes
towards people in higher ranks are informal and on a ﬁrst name basis. What is more,
underlings may indeed challenge their superiors’ views and decisions.
! In addition, PDI has been shown to be highly correlated (0.67) with individualism and
collectivism (Hofstede, 1980) in the sense that typically, the higher the PDI the greater the
degree of collectivism. This is specially common in Asian cultures guided by Confucian
values which emphasise loyalty towards the group, respect towards the elder, and a set of
hierarchical relationships between members of society. Other studies (Triandis, 1995) have
combined the four types of self related to PDI and IDV dimensions (same, different,
interdependent, dependent) and categorised cultures as vertical individualism (high PDI,
IDV), horizontal individualism (low PDI, IDV), vertical collectivism (high PDI, COL), and
horizontal collectivism (low PDI, COL). These will be referred to later in the study.
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Masculinity/Femininity
! The masculinity (MAS) end of this spectrum represents a preference in society for
competition, assertiveness, confidence, achievement, and material reward for success.
Femininity on the other hand depicts a society which values cooperation, modesty,
relationships, and consensus building. Examples of masculine cultures include Japan,
Venezuela, and Italy, whereas those feminine (scoring low on MAS) include Sweden,
Denmark, and Thailand (see Appendix C). Children in Italy are taught from a young age
that competition is good and that it is important to be a winner in life. Status is acquired
through material possessions such as luxury cars, a big house, a yacht etc. (Hofstede,
2003a). Sweden on the other hand, a very feminine culture, focuses on keeping a healthy
work/life balance. Their culture is based on lagom, which means not too much, not too
little, not too noticeable, everything in moderation (Hofstede, 2003b).
Cognitive biases
! Over the past few decades, the study of cognitive biases has been fuelled by two events
in the field of social sciences (Matsumoto and Yoo, 2006): the emergence of behavioural
decision theory from the affluential work of Amos Tversky and Daniel Kahneman (1974),
and the social cognition movement in social psychology which focused on the mental
limitations of the individual (Gelfand and Brett, 2004). Academics define cognitive bias as a
replicable pattern in perceptual distortion, an inaccurate judgment, or an illogical and
irrational interpretation of reality (Kahneman and Tversky, 1974). Simply put, cognitive
biases are mental errors caused by our simplified information processing techniques within
our subconscious (CIA, 2007); distortions in the human mind. These cognitive biases have
been shown to affect important business processes such as decision making and strategic
planning (Barnes, 1984), negotiations (Bazerman and Caroll, 1987, Gelfand et al., 2002)
and self identities (Swann and Bosson, 2010). In this article, we review five cognitive biases
that affect and are affected by the self.
Self-serving
" This bias refers to the individual need to maintain relatively high levels of self-esteem.
Many people like to feel good about themselves. People use different mechanisms to
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preserve and even enhance their self-esteem, which can ultimately result in self-serving biases.
For example, if sitting an exam and obtaining a high score, an individual will tend to
associate this to their intelligence and their hard work. If, on the other hand, the result is
poor, one will tend to blame the exam difficulty or the professor’s inability to teach.
! Cultural differences in self-esteem and self-enhancement have long been a subject of
great debate and research (Kitayama and Markus, 1999, Kitayama and Markus, 1991,
Swann and Bosson, 2010). An eminent review on the topic is that of Heine and colleagues
(1999) which claimed that self-esteem was pursued more vigorously in Western cultures.
The debate is split however; some are in agreement with higher self-esteem being more
predominant in the West (Kitayama et al., 1997, Chiu, 1993, Cai et al., 2007, Tafarodi et
al., 2010, Radford et al., 1993) (Tafarodi et al., 2010), others claim it is equally present in
the East (Kobayashi and Brown, 2003, Schmidt and Allik, 2005).
" In Western cultures there is indeed a tendency for people to see themselves as better
than others. The aim is to enhance one’s positive attributes to stand out and be that rising
star in the classroom, at work, and life in general (Gelfand et al., 2002). However, studies
have shown that Japanese do not exhibit these type of self-serving biases (Kurman and
Sriram, 2002) although at the same time, these studies have been criticized for measuring a
Western-defined self-esteem, using methodologies developed in the West. The truth is that
self-esteem has a different foundation in the East than it does in the West. Although in the
latter, as mentioned above, self-serving biases are used to enhance one’s own position, in
the former, individuals enhance their self-esteem by fitting in with the group through a
subordination to the group’s interests and norms, displaying humility, and focusing on
individual areas of weakness to improve (Gelfand et al., 2002, Kitayama et al., 1997). This
difference in foundation of the self-esteem between individualists and collectivists is what
Tafarodi and Swann (2001) refer to as self-competence and self-liking, respectively, in their two-
dimensional self-esteem model.
! During negotiations for example, North Americans have been consistently found to
experience self-serving biases through which they view their own behavior and attitudes as
superior (e.g. more fair, constructive, effective) whereas this feeling is attenuated by
collectivistic values (Gelfand and Christakopolou, 1999). Whereas individualists seek to
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maintain a positive self-image, collectivists desire a maintenance of harmony. Studies have
in fact shown that Japanese are more likely to exhibit a modesty bias rather than a self-
serving one (Tafarodi and Swann, 1995, Tafarodi et al., 1999).
" Based on the work of Triandis (1995), vertical individualism (high on PDI and IDV)
such as Slovakians, French, and Polish, (see Appendix D) tend to have the need, as an
individual, to be above average and excel above the rest. Horizontal collectivism however,
lie on the other end of the spectrum in this regard (see Appendix G). Even cultures of
horizontal individualism (low on PDI and high in IDV) such as Sweden (see Appendix E)
do not encourage this concept of “being the best” or “unique” but instead seek an
egalitarian approach. We would therefore expect self-serving biases aimed at enhancing
one’s self attributes and views to be strongest in vertical individualistic cultures and lowest
in horizontal collectivistic ones.
" Proposition 1: Self-serving biases aimed at maintaining one’s own positive self-concept and
" characteristics will generally be more present in vertical individualistic cultures, and least
" present in cultures of horizontal collectivism.
! In the West, situations of success have a greater impact on self-esteem than an
equivalent failure, whereas the opposite is true in the East (Kitayama et al., 1997).
Similarly, successful and positive feedback is considered more motivating in the West
(Heine et al., 2001, Lehman et al., 2004). North Americans are more accepting of
feedback that makes them above average and affirms their positive qualities (Gelfand et al.,
2002) (Kurman and Sriram, 2002). Japanese on the other hand are more accepting of
negative feedback as it enables them to identify their weaknesses, and improve these in
order to better fit in their group. Moreover, group performance feedback has significant
impact on self-evaluations in the East, yet very little in the West (Earley et al., 1999). There
is in fact evidence that Asians have unrealistic positive views of the self when asked to
evaluate themselves on dimensions that are central to their cultural definition of the self
(e.g. communal traits, collectivistic, harmonising etc.) (Kurman, 2001, Kobayashi and
Brown, 2003).
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Overconfidence
! A classic example is that of the bat-and-ball puzzle used at the very beginning of this
study. An overconfidence in our mental processing is what probably lead most of us to a
wrong answer, blindly accepting it to be correct until proven wrong. A well documented
better-than-average finding is that of Svenson (1981) in which he found that 93% of
American drivers rated themselves as better than the median. People exhibit
overconfidence if they make average probability judgments that exceed the proportion of
items answered correctly (Li et al., 2009).
" Overconfidence has been linked to efforts in maintaining self-esteem. People like to
think they are right. The most common technique involves asking participants to answer a
number of general knowledge questions and assign a probability of answering them
correctly; if their mean confidence scores are higher than their mean accuracy scores,
overconfidence was indeed present (Fischhoff, 1982). The reason why many of us fail to
avoid the overconfident bias can be explained by the argument recruitment model (Li et al.,
2009). When people are confronted with a general knowledge question, they try to seek or
recruit arguments for and against our intuition. Arguments are then weighed, and a final
decision is made which will serve as our answer to the questions. Overconfident people will
be biased towards first arguments and not pursue further retrieval or recruitment of
arguments that may help improve our judgment accuracy. It has been referred to as a self-
serving mechanism, which helps preserve one’s self-esteem, specially in Western cultures.
! Proposition 2: Related to Proposition 1, and in viewing overconfidence as a self-serving bias,
! vertical ! individualists will tend to exhibit stronger overconfidence biases, whereas these will be
! weakest !for horizontal collectivists.
Anchoring and adjustment
! In many situations, people tend to make estimates by starting from an initial value
which is then adjusted progressively until it lies within a region of acceptance (Mussweiler
et al., 2004). These adjustments are normally insufficient because it requires mental effort.
In other words, different starting points result in different estimates, which are biased
towards the initial values. This is known as the anchoring bias (Kahneman and Tversky,
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1974). Anchoring biases are robust and have been shown to be present in many
judgmental domains, such as estimates of self-efficacy (Cervone and Peake, 1986), price
estimates (Mussweiler et al., 2000), hindsight and egocentricity bias (Chapman and
Johnson, 2002, Epley, 2004), and negotiation outcomes (Galinsky and Mussweiler, 2001).
In fact, during a negotiation, the first offer typically serves as an anchor as studies have
revealed it is highly correlated (0.8) with the final outcome. Hence the importance of
preparation prior to a negotiation in order to make the first offer and anchor the other
party high, if selling, or low, if buying.
" Anchors can originate externally or internally to the individual. In one study,
participants gave a lower estimate (8,000 feet) of the height of Mount Everest when asked
by researchers whether it was higher or shorter than 2,000 ft., but provided a higher
estimate (42,500 ft.) when asked whether it was higher or lower than 45,500 ft (Jacowitz
and Kahneman, 1995). The actual height of Mt. Everest is about 29,000 ft. Similarly,
anchoring can occur when asked a comparative judgment, followed by an absolute one:
“Is the river Nile longer or shorter than 9,500 km? How long is the river Nile?”. Assuming
we don’t know the answer, studies have repeatedly shown that our final estimate will be
relatively close to the numeric anchor, even if it has been generated randomly, as our
thinking has been biased by it (Kahneman and Tversky, 1974). These are both examples of
external anchoring.
! As covered in the previous section, cultures high in power distance accept unequal
distribution of power and it is discouraged to challenge members of higher social or
professional status. Members from hierarchical cultures (high in PDI) are therefore
expected to exhibit greater anchoring biases when interacting with people of higher status,
so long as this status difference is made known of course. Moreover, we would expect the
anchoring bias to be stronger if status differences are large and the other person is also
from a culture high on PDI. This has practical implications on how we view ourselves and
evaluate our self-efficacy, as these can be anchored to views and feedback from superiors.
Similarly, during negotiations with a person of higher rank, an underling will be more
anchored to the offers proposed by the superior.
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! Proposition 3: Members from cultures high on PDI will generally exhibit stronger external
! anchoring biases when knowingly interacting with people of higher rank status.
! Proposition 4: The greater the status differences between interacting people from cultures high
! in PDI, the greater the tendency to experience an external anchoring bias by the member of
! lower status.
" In terms of internal anchors, these are self-generated and take place inside our minds.
For example, when trying to estimate ourselves the freezing point of vodka, we will
probably generate an initial internal anchor of 0°C (the freezing point of water), and
adjust downwards (since it is generally known that the freezing point of alcohol is lower
than that of water) until a plausible value is reached. The difference with respect to
external anchors is that we know from the beginning that the initial value is wrong and
know that appropriate adjustment is required (Epley and Gilovich, 2005).
! Epley and Golivich (2006) showed that being motivated to engage in effortful thinking
improves adjustment, thus reducing the effects of self-generated (internal) anchors.
Adjustment is effortful, so increasing the motivation to seek more accurate estimates
generally does improves accuracy, though evidence suggests this is only applicable to
internal anchors and not external (Epley and Gilovich, 2005). People who are
overconfident in the accuracy of their judgments think too little about ways in which they
could be wrong (Koriat et al., 1980). Adjustment initiates from the initial anchor and
progresses towards a reasonable value as information is retrieved. For each piece of
information retrieved we decide whether to stop at the current value, or continue
adjusting. Overconfidence may hamper the retrieval of such information, thus adjusting
less and ending nearer to the initial point estimate or anchor. Studies have revealed that
the individualistic West generally shows higher levels of overconfidence, whereas modesty
and humility is valued in the East. The West promotes a self as a super-hero and above-
average member of society which typically results in high levels of overconfidence.
! Proposition 5: Following Proposition 2, internal anchoring biases are more likely to be strongest in
! vertical individualist cultures, where overconfidence is proposed to be highest, and weakest
! in horizontal collectivistic cultures, where overconfidence is expect to be lowest.
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Fundamental Attribution Error (FAE)
" The FAE, also known as the correspondence bias, refers to the tendency to overestimate
the effect of dispositional (internal) qualities and underestimate situational (external)
factors, when attributing another person’s behaviour (Ross, 1977). It is probably one of the
most documented and researched bias in social perception. For example, when we observe
someone arriving late to a meeting, we tend to think it is because he or she is an
unorganised or lazy person, instead of thinking it could be because of severe delays on the
train they normally take.
! There is evidence that the FAE is learned since young children do not make
dispositional attributions until reaching a late stage of their childhood (Langdridge and
Butt, 2004). Moreover, the FAE is arguably not universal as differences have been
accounted for across cultures, predominating in the individualistic West and not as much
in the collectivistic East (Norenzayan and Nisbett, 2000). However, this is arguable as there
is also evidence supporting that FAE is prevalent in both Western and non-Western
cultures (e.g. China, India, and Taiwan) (Krull et al., 1999, Choi and Nisbett, 1998,
Miyamoto and Kitayama, 2002).
! The FAE increases when the observer is cognitively busy engaged in a competing task
(Gilbert and Krull, 1988, Gilbert et al., 1988). As reviewed in the earlier section, members
from masculine cultures champion competitive, proactive, and achievement-oriented
behaviour. Feminine cultures are more engaged in achieving harmony with nature and its
environment, and emphasise a passive are reactive approach to life. In comparison to
feminine cultures, we would therefore expect people from masculine cultures to be more
cognitively engaged in competing tasks, thus exhibiting a stronger FAE.
! Proposition 4: Members from masculine cultures are expected to engage in more competing
! tasks, which ultimately results in stronger FAE.
" Attitude diagnosticity refers to the property of socially constrained behaviour that
suggests a true attitude of the individual. It has been found to be a critical factor in
moderating cross-cultural differences in FAE (Miyamoto and Kitayama, 2002). In their
14

studies, participants were asked to judge whether an argumentative essay reflected the true
opinion of its writer. The essay content was considered highly diagnostic of the writer’s
attitude if it suggested a desire to defend the essay position i.e. long, persuasive, well
composed, and enthusiastic. Individualistic Americans showed strong FAE regardless of
attitude diagnosticity of the essays, whereas collectivistic Japanese only showed strong FAE
when the essays were diagnostic. For essays which were low on diagnosticity Japanese
showed very weak and nonsignificant FAE. Therefore:
" Proposition 7: When there is evidence that an individual’s behaviour does not represent their
" real self, collectivists will show significantly weaker FAE than individualists. Otherwise, the
" strength of the FAE is expected to be fairly similar for both.
Hindsight
" Imagine you have been out on a date. A few days later, the person you went out with
calls asking to meet again. At that point, you might believe you knew all along they would
call. However, the reality may be that previous to the call, you were in fact rather uncertain
and were starting to doubt their interest. Misremembering the degree to which one
accurately forecasted an outcome is known as the hindsight bias. We have heard many times
the “I knew it all along”.
! Hindsight biases can be explained via anchoring (Fischhoff, 1975) as we deliberate
choose the outcome information as an anchor to our previous estimates. Indeed hindsight
bias seems to be very robust (Christensen-Slazanski and Willham, 1991). Although this bias
has been assumed to be universal, there is also evidence that it is not. Koreans and
Easterners in general have showed greater hindsight bias than Americans and Westerns
(Yama et al., 2010, Choi and Nisbett, 2000 for reviews). A study has however revealed that
Japanese exhibit marginally less hindsight bias than Canadians (Heine and Lehman,
1996). Others have even claimed that there is no difference across Eastern and Western
cultures and that hindsight bias is in fact a universal phenomenon (Pohl et al., 2002).
These are the few studies that have investigated cultural differences regarding hindsight
bias and there is still no overall agreement. It is clearly an understudied area which
requires greater efforts.
15

" The degree to which one exhibits hindsight bias is related to how surprised one is after
finding out the outcome; the more surprised one is, the less likely one will suffer the bias
(Brighman and Wasserman, 1999, Ofir and Mazursky, 1997). Estimating that Mt. Everest
is 30,000 ft. will not cause much surprise when being later told that it’s in fact 29,000 ft.
Estimating the total length of the Great Wall of China (including that built by all
dynasties) to be 6,000 km will generally cause greater surprise when finding out it’s actually
more than 50,000 km1. Greater hindsight bias would be expected in the second example.
The question is, are different cultures more prone to being surprised, and therefore biased
in hindsight?
" Self-serving motives may be able to account for different levels of surprise across
cultures. The more one is surprised after finding out the outcome, the greater the feeling
that they were unable to predict a relatively accurate outcome, thus undermining their
intellectual and cognitive abilities. This dissonance between their inaccurate estimate
(expressed through surprise) and the actual value might create a feeling of discomfort
which is relieved by a hindsight bias (i.e. believing one estimated a value closer to the real
one) in order to preserve one’s self-esteem. By this logic, self-serving attitudes are likely to
moderate the likelihood of exhibiting hindsight bias. As covered previously, Western
cultures normally display greater self-serving biases that enhance and distinguish the self.
We therefore expect people high in IDV to show greater hindsight bias, in agreement with
the work of Heine and Lehman.
" Proposition 8: Individualism generally leads to a greater need for enhancing the self. Hindsight
" biases will predominate more in cultures high in IDV as a mechanism to protect one’s self-
" esteem.
16
1 http://www.thegreatwall.com.cn/en/goc/goc-2.htm

Concluding remarks
" The cognitive biases reviewed in this study have not been selected at random. There
exists considerable interdependence between them since, to a certain degree, they are
grounded on our self-concepts. How we view ourselves affects how we think, how we
process information, and how our minds trick us in the process. Culture has a clear impact
on the self, which, considered to be our mental software, affects the type of mental
shortcuts our brain — as mental hardware — uses to cope with the colossal amount of
information we are exposed to. These shortcuts typically lead to a distortion of reality.
When closing business deals, negotiating terms of a contract, evaluating a possible merger
or acquisition, or reviewing performances and actions of others, the last thing we want is
for reality to be distorted. As globalisation has led to a substantial increase in multi-cultural
interactions between people and organisations, it is necessary to study these distortions in a
light of a cultural viewpoint, though beyond the overstudied individualistic and
collectivistic nature of the self. Moreover, the practical implications of testing the above
propositions are extensive, as it not only applies within a business context but also a
personal one. The individual, like an atom, is the basic unit of matter within corporations,
institutions, societies, and the world in general. Understanding how and why this atom is
limited in its abilities is of monumental importance in order for it to succeed in the
increasingly complex world that we live in.
17

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23

Appendix
A. Individualism2
Country IDV Country IDV Country IDV
United States 91 Slovakia 52 Kuwait 25
Australia 90 Spain 51 Arab Emirates 25
United Kingdom 89 India 48 Serbia 25
Hungary 80 Japan 46 Tanzania 25
Canada 80 Argentina 46 Morocco 25
Netherlands 80 Iran 41 Egypt 25
New Zealand 79 Russia 39 HK 25
Italy 76 Brazil 38 Chile 23
Belgium 75 Turkey 37 China 20
Denmark 74 Uruguay 36 Bangladesh 20
France 71 Zambia 35 Singapore 20
Sweden 71 Greece 35 Vietnam 20
Norway 69 Croatia 33 Ethiopia 20
Switzerland 68 Philippines 32 Thailand 20
Germany 67 Iraq 30 South Korea 18
South Africa 65 Romania 30 Taiwan 17
Finland 63 Mexico 30 Peru 16
Poland 60 Nigeria 80 Trinidad 16
Luxembourg 60 Bulgaria 30 Ghana 15
Estonia 60 Ireland 30 Costa Rica 15
Malta 59 Slovenia 27 Indonesia 14
Czech Republic 58 Portugal 27 Pakistan 14
Austria 55 Malaysia 26 Venezuela 12
Israel 54 Saudi Arabia 25 Guatemala 6
24
2 Source: http://geert-hofstede.com/countries.html

B. Power distance3
Country PDI Country PDI Country PDI
Slovakia 104 Slovenia 71 Czech Republic 57
Malaysia 104 Bulgaria 70 Spain 57
Iraq 95 Tanzania 70 Malta 56
Saudi Arabia 95 Morocco 70 Pakistan 55
Panama 95 Egypt 70 Japan 54
Guatemala 95 Vietnam 70 Italy 50
Philippines 94 Sierra Leone 70 South Africa 49
Russia 93 Brazil 69 Argentina 49
Romania 90 France 68 United States 40
Kuwait 90 Poland 68 Luxembourg 40
Arab Emirates 90 HK 68 Canada 39
Serbia 86 Colombia 67 Netherlands 38
Mexico 81 Turkey 66 Australia 36
Venezuela 81 El Salvador 66 United Kingdom 35
Nigeria 80 Belgium 65 Germany 35
China 80 Thailand 64 Sweden 31
Bangladesh 80 Peru 64 Norway 31
Ghana 80 Portugal 63 Ireland 28
Indonesia 78 Uruguay 61 New Zealand 22
India 77 Zambia 60 Denmark 18
Singapore 74 Greece 60 Israel 13
Croatia 73 South Korea 60 Austria 11
Ecuador 73 Taiwan 58
25

C. Masculinity4
Country MAS Country MAS Country MAS
Slovakia 110 Greece 57 Romania 42
Japan 95 HK 57 Peru 42
Austria 79 India 56 Croatia 40
Venezuela 73 Argentina 56 Bulgaria 40
Italy 70 Bangladesh 55 Tanzania 40
Switzerland 70 Belgium 54 Vietnam 40
Iraq 70 Morocco 53 El Salvador 40
Ireland 70 Canada 52 Ghana 40
Mexico 69 Luxembourg 50 South Korea 39
United Kingdom 66 Malaysia 50 Uruguay 38
Germany 66 Arab Emirates 50 Surinam 37
China 66 Pakistan 50 Guatemala 37
Lebanon 65 Brazil 49 Russia 36
Poland 64 Singapore 48 Thailand 34
Philippines 64 Malta 47 Portugal 31
Colombia 64 Israel 47 Estonia 30
South Africa 63 Indonesia 46 Chile 28
Ecuador 63 Turkey 45 Finland 26
United States 62 Egypt 45 Costa Rica 21
Australia 61 Taiwan 45 Slovenia 19
Nigeria 60 France 43 Denmark 16
Saudi Arabia 60 Iran 43 Netherlands 14
New Zealand 58 Serbia 43 Norway 8
Czech Republic 57 Spain 42 Sweden 5
26

D. Vertical individualism5
Country PDI IDV
Slovakia 104 52
Belgium 65 75
France 68 71
Poland 68 60
Italy 50 76
Czech Republic 57 58
Malta 56 59
Spain 57 51
E. Horizontal individualism6
Country PDI IDV
New Zealand 22 79
Denmark 18 74
Australia 36 90
United Kingdom 35 89
United States 40 91
Austria 11 55
Canada 39 80
Israel 13 54
Sweden 31 71
27
5 Ranking based on sum of PDI and IDV, in decreasing order
6 Ranking based on differences between IDV and PDI, in decreasing order

F. Vertical collectivism7
Country PDI IDV
Guatemala 95 6
Malaysia 104 26
Saudi Arabia 95 25
Venezuela 81 12
Italy 50 76
Indonesia 78 14
Philippines 94 32
China 80 20
Singapore 74 20
Russia 93 39
Vietnam 70 20
HK 68 25
South Korea 60 18
G. Horizontal collectivism8
Country PDI IDV
Costa Rica 35 15
Ireland 28 30
Trinidad 47 16
Jamaica 45 39
Argentina 49 46
28
7 Ranking based on differences between PDI and IDV, in decreasing order
8 Ranking based on sums of PDI and IDV, in increasing order

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