Economic Organizations Problem Set 2

Economic Organizations, Institutions and Markets
PROBLEM SET 2
1. PROBLEM 1: The moral matrix of political views
This video in which J. Haidt discusses the moral roots of liberals and conservatives is directly
linked to central concepts from Topics 1 and 5: https://www.ted.com/talks/
jonathan_haidt_the_moral_roots_of_liberals_and_conservatives. (Note that, in case you use
Spanish subtitles, the US term “liberal” is translated to Spanish as liberal, when instead the
actual US meaning is “leftist”.)
a) According to Haidt, which are the predominant attitudes of people with different political
ideologies (“liberal” or leftish versus “conservative” or rightist) with respect to new
experiences?
Liberals are more opened to new experiences and conservatives have a more closed mind.
Liberals are opened to diversity and variety, and conservatives prefer familiar and save
experiences.
b) Which are the five pillars of morality in Haidt’s theory? Moral controversies most often
refer to which pillars?
1. Harm/Care => important for liberals

2. Fairness/Reciprocity => important for liberals
3. Ingroup/loyalty
4. Authority/Respect
5. Purity/Sanctity
c) How would you relate this issue with the concept of “moral circle” and current political
views on “corporate social responsibility” (CSR, which we will discuss more deeply in Topic
6)?
For humans social approval is so important, because we are social animals and we always want
to be in a group, and be respected by the other members of the group.
d) Why is being morally humble important?
e) Try to map some current political controversies—such as, e.g., immigration, nationalism,
abortion, euthanasia—into all or some of the moral “pillars” in Haidt’s theory.
Abortion could not be considered a pure practice, so conservatives tend to reject it.
Immigration may involve accepting unknown and different people in your country, so
conservatives tend to reject it.
f) Why does the political divide in moral views between left and right might contribute to a
better society?
This political division usually helps creating a more balanced society. In the case of liberals,
they defend the change, the revolution, and on the other hand, conservatives defend stability,
so this political division eventually create a more balanced society.
g) Why is lack of moral diversity bad for the performance of a group?
2. PROBLEM 2: The efficiency of self-deception
Some evolutionary biologists argue that the ability to deceive is important in relationships
between animals, including humans, as is, of course, the ability to detect deception, which is its
counterpart. 1 Could then a propensity for “self-deception” be efficient and thus tend to be
favored by evolution? Think, if that were the case, what consequences it involves for
management training. Assuming that the study of economics provides a good knowledge of the
truth, what does this analysis imply for the role that organizational economics may play for
managers’ training? And the courses in “business ethics” or the literature on “job enrichment”
and the “empowerment” of workers?
QUESTIONS
1. What does it mean that human behavior is “hardwired”?
It means that the human mind has patterns of behavior that are inborn, and they are the
result of the sexual selection and behavior selection throughout thousands of generations.
Examples of these patterns are classification or loss aversion.
2. Provide a brief explanation from the point of view of Nicholson and a brief business
implication of each of the following “programs” that according to him are hardwired in
our mind:
a) Emotions before reason
Nicholson explain that emotions are the first screen to all information received, because, in
the past, the reaction speed used to make the difference between die or survive. This fact
has some implications nowadays, for example, is the reason of why a bad new is more
powerful that good news, and this is, the feeling of loosing 100$ is more powerful than the
feeling of wining 100$.
Another implication of this is that tell someone he or she failed could not be the best idea
if you want to motivate that person.
b) Confidence before realism

In the past, usually those who believed they would really survived, so having confidence on
yourself was a very important trait in the past. As a consequence, people are driven to feel
good about themselves, and have confidence normally are important in order to face the
problems with optimism, but It’s important to keep in mind that not everything can be
under your control.
c) Classification before calculus
Throughout the years, humans have developed a prodigious capability for classification and
sorting. In the past, classification played a very important role identifying the dangerous
animals, or who to trust. And all based on appearance or visible behaviors.
This is a fact nowadays as well. For example, research has shown that managers sort their
employees into winners and losers as early as three weeks after starting to work with
them.
d) Desire to obtain status (innate tendency towards forming hierarchies)
Status played a very important role in the Stone Age, especially for men. Females used to
search high status men for reproduction. Men fought with each other to get a higher status
and reproduce more easily.
This inborn competitiveness is visible nowadays too, and specially in business. For that
reason, almost all communities have hierarchies, because they appear naturally over time,
even if you try to eliminate it.

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Economic Organizations, Institutions and Markets

1. PROBLEM 1: The moral matrix of political views

1. Harm/Care => important for liberals

d) Why is being morally humble important?

2. PROBLEM 2: The efficiency of self-deception

1. What does it mean that human behavior is “hardwired”?

a) Emotions before reason

b) Confidence before realism

c) Classification before calculus

d) Desire to obtain status (innate tendency towards forming hierarchies)

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