Most of us lose confidence from time to time. We get passed over for a promotion, feel awkward in social situations, or a golf game went badly.
New research shows that experiencing low confidence in one area can lead to attempts to boost our status in another, even if it means engaging in fraud. If we seek better financial status, we may behave more selfishly or cheat, according to researchers.
However, we may go in the opposite direction, choosing altruism as the best way to restore our confidence.
The new study from the University of Toronto Rotman School of Management shows we’re more likely to take that route when the behavior can be seen by others, or when we have a sense of social solidarity.
“The state of confidence can fluctuate very easily when our situation changes and confidence can increase selfish, money-making behaviors or altruistic acts depending on whether money or altruism is perceived as the primary source for status that can restore low confidence,” says researcher Claire Tsai, an associate professor of marketing who co-authored the study with Jia Lin Xie, a professor of organizational behavior and human resources management.
Knowing that our tendency to behave selfishly or selflessly can shift, and that employee fraud alone costs U.S. companies $50 billion annually, “it’s important to understand the interplay between situational confidence and selfish behaviors,” adds Tsai.
For the study, the researchers performed a series of experiments to test how people responded when triggered into a state of temporary low confidence by recalling past negative events or engaging in challenging cognitive tasks.
The researchers discovered that low confidence participants avoided purchasing more expensive, environmentally friendly products and kept more cash for themselves when splitting a monetary gift with another participant. They also awarded themselves significantly more unearned bonus money when checking their performance under an honor system.
Well over one-third of the low confidence people cheated, compared to 10 percent in the high confidence condition, the researchers reported.
However, when participants made public choices or made decisions within a strong community, lower confidence actually increased the preference for green products and generosity in sharing monetary resources. Otherwise, they tended to be stingier in their choices than high confidence participants, the researchers noted.
Data from the U.S. and China show that government employees nearing retirement and in deputy leadership positions are at highest risk of engaging in corruption, the researchers say. To avoid that kind of activity, management should try to understand factors that can lead to reduced confidence and increased status-seeking among employees, suggest the researchers.
“Are there ways that we can help people increase their confidence? Are there ways to acknowledge their contributions to the organization? Such public acknowledgement can restore lower confidence effectively,” says Tsai.
The study was published in the Journal of Behavioral Decision Making.
Photo: Claire Tsai is an Associate Professor of Marketing and a co-founder of the Behavioral Economics in Action Research Cluster at the University of Toronto’s Rotman School of Management. She has worked in financial services in New York, Taipei and Hong Kong. She adopts a behavioural economics approach in studying decision making in areas of financial decisions, food consumption and well-being. She studies overconfidence and how this bias systematically influences judgments and decision making. She also studies the science and economics of happiness, which she terms Hedonomics. Her work appears in leading marketing and psychology journals, including Journal of Consumer Research and Psychological Science. Credit: Rotman School.