INSEAD research shows mindfulness meditation linked to better decisions

One 15-minute focused-breathing meditation may help people make smarter choices

Middle East, Americas, Asia, Europe
10 February 2014

INSEAD, the leading international business school, today announced together with The Wharton School, new research findings which appear in the February issue of Psychological Science, a journal of the Association for Psychological Science. Andrew Hafenbrack, INSEAD doctoral candidate in Organisational Behaviour and the study’s lead author, in collaboration with Zoe Kinias, an Assistant Professor of Organisational Behaviour at INSEAD, and Sigal Barsade, the Joseph Frank Bernstein Professor of Management at the Wharton School at the University of Pennsylvania, conducted four studies to test the idea that mindfulness meditation could improve decision-making by increasing resistance to the sunk-cost bias.

People have trouble cutting their losses: They hold on to losing stocks too long; stay in bad relationships; and continue to eat heavy desserts despite being full. Such behavior is driven by what behavioral economists call the “sunk cost bias” or “sunk cost fallacy.” A more familiar expression to describe the phenomenon is “throwing good money after bad." New research from INSEAD and The Wharton School suggests a fresh solution to counter this bias: mindfulness meditation.

Mindfulness meditation cultivates awareness of the present moment and clears the mind of other thoughts, often by focusing attention on the physical sensations of breathing. Although mindfulness meditation practice began in Asia at least 2000 years ago, it is only in recent decades that Western clinical psychologists used this tool to effectively reduce negative emotions and stress.

The INSEAD and Wharton team has discovered how to apply mindfulness meditation to help overcome sunk cost challenges, which can be deeply rooted. “Part of the problem,” explains Andrew Hafenbrack, “is that most people have trouble admitting they were wrong when their initial decisions lead to undesirable outcomes. They don’t want to feel wasteful or that their initial investment was a loss. Ironically, this kind of thinking often causes people to waste or lose more resources in an attempt to regain their initial investment or try to ‘break even.’ We found that a brief period of mindfulness meditation can encourage people to make more rational decisions by considering the information available in the present moment, while ignoring some of the other concerns that typically exacerbate the ‘sunk cost bias.’”

In one online study, the researchers surveyed American participants about how much they typically focus on the present moment. Participants also read 10 sunk-cost scenarios—such as whether to attend a music festival that had been paid for when illness and bad weather made enjoyment unlikely—and then reported how much they would let go of sunk costs in each of them. The results revealed that the more people typically focused on the present moment, the more they reported that they would ignore sunk costs.

To test whether mindfulness caused an increased resistance to the sunk-cost bias, the researchers conducted an additional three experiments. In each, participants listened to a 15-minute recording made by a professional mindfulness coach. For one group of participants, the recording led them through a focused-breathing meditation that repeatedly instructed them to focus on the sensations of breathing. The other group of participants listened to a recording that asked them to think of whatever comes to mind, a practice that is not a form of meditation. Participants then responded to sunk-cost scenario questions. In the final study, participants also answered questions about the time period on which they focused – that is present, past, or future - and the emotions they experienced.

The results show that mindfulness meditation increased resistance to the sunk-cost bias in each of the three experiments. “The debiasing effect of mindfulness meditation in sunk-cost situations was due to a two-step process,” said Professor Kinias. “First, meditation reduced how much people focused on the past and future, and this psychological shift led to less negative emotion. The reduced negative emotion then facilitated their ability to let go of sunk costs.”

“This tool is very practical,” said Professor Barsade. “Our findings hold great promise for research on how mindfulness can influence emotions and behavior, and how employees can use it to feel and perform better.”

To view the research findings in the February issue of Psychological Science, please click on http://pss.sagepub.com/content/25/2/369

As one of the world’s leading and largest graduate business schools, INSEAD brings together people, cultures and ideas to develop responsible leaders who transform business and society. Our research, teaching and partnerships reflect this global perspective and cultural diversity.

With campuses in Europe (France), Asia (Singapore) and the Middle East (Abu Dhabi), INSEAD's business education and research spans three continents. Our 165 renowned Faculty members from 41 countries inspire more than 1,300 degree participants annually in our MBA, Global Executive MBA, Specialised Master’s degrees (Executive Master in Finance and Executive Master in Change) and PhD programmes. In addition, more than 11,000 executives participate in INSEAD Executive Education programmes each year.

INSEAD continues to conduct cutting-edge research and innovate across all our programmes. We provide business leaders with the knowledge and awareness to operate anywhere. Our core values drive academic excellence and serve the global community as The Business School for the World.

Chris Howells
Tel +65 6799 5490
Email: chris.howells@insead.edu

Aileen Huang
Tel +65 6799 5552
Email: aileen.huang@insead.edu

Ilan Goren
Tel: +33 6 78 04 25 77
Email: ilan.goren@insead.edu

Cheryl Ng
Tel +65 6799 5490
Email: cheryl.ng@insead.edu

Linda Furtado
Tel + 971 2 6515309
Email: linda.furtado@insead.edu

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