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Forbes: Meditate For More Profitable Decisions

 9/25/2013 @ 4:09AM |3,401 views   INSEAD Knowledge, Contributor

   It’s a practice rooted in Hinduism and adopted by beatniks seeking spiritual guidance. Now evidence shows meditation can improve business decisions and save your company from expensive investment mistakes.

By Zoe Kinias, INSEAD Assistant Professor of Organisational Behaviour and Andrew Hafenbrack, INSEAD PhD student in Organisational Behaviour with Jane Williams, Editor, Knowledge Arabia

Meditation has become an increasingly popular practice amongst the C-suite elite. And, with CEOs such as Rupert Murdoch (News Corp NWSA -0.28%); Bill Ford (Ford Motor F -0.83% Company); Rick Goings (Tupperware); and Marc Benioff (Salesforce.com CRM -4.49%) all touting its benefits, executive coaches are picking up on the trend introducing mindful techniques to programmes to calm the mind’s “chatter,” assist focus and manage stress. But new empirical evidence suggests it’s more than just a “feel good” exercise, and as little as 15 minutes of meditation can actually help people make better, more profitable decisions, by increasing resistance to the “sunk cost bias.”

The sunk cost bias–also known as the sunk cost fallacy, or the sunk cost effect–is recognized as one of the most destructive cognitive biases affecting organisations today. Put simply, it’s the tendency to continue an endeavor once an investment has been made in an attempt to recoup or justify “sunk” irrecoverable costs. The phenomenon is not new; psychological scientists have been studying the “escalation of commitment” since the mid-1970s, noting its ability to distort rational thought and skew effective decision-making. Often, it’s a subconscious action, which can result in millions of dollars being invested into a project, not because it’s a sound investment but because millions of dollars have already been spent.

Avoiding the trap

But it’s a mind trap you can avoid as suggested by the paper Debiasing the Mind Through Meditation: Mindfulness and the Sunk Cost Bias by Andrew Hafenbrack, INSEAD PhD student in Organisational Behaviour, Zoe Kinias, INSEAD Assistant Professor of Organisational Behaviour and Sigal Barsade, the Joseph Frank Bernstein Professor of Management at The Wharton School. Their research shows just 15 minutes of mindfulness meditation– such as concentrating on breathing or doing a body scan–helps raise resistance to this problematic decision process, and open the way to more rational thinking.

“Prior research shows the more we invest in something (financially, emotionally, or otherwise), the harder it is to give up that investment and the more inclined we are to escalate a commitment,” Hafenbrack notes. “In many cases negative emotions; fear, anxiety, regret, even guilt or worry over past decisions, subconsciously play a part in the decision-making process.”

Most noted examples include…  (click below to continue)

http://www.forbes.com/sites/insead/2013/09/25/meditate-for-more-profitable-decisions/