Topic: Decision Making
Publication: Organizational Behavior and Human Decision Processes
Article: Do we listen to advice just because we paid for it? The impact of advice cost on its use.
Blogger: Benjamin Granger
Now, presumably, expensive advise is really good advice, right? I mean, if a consultant charges big bucks, then she must know what she is doing, right?
In a series of experiments, researcher Francesca Gino (2008) found that regardless of how accurate advice actually is, people tend to value and rely more heavily on expensive advice than on free advice. In other words, given the same exact recommendations, participants in Gino’s experiments tended to accept and follow advice when they paid money for it! When the advice was free, people tended to neglect it. (So the moral of the story is, quit your current job and start charging people lots of money for your advice! They might just take it!)
Gino’s findings are eye-opening since they suggest that it may not necessarily be true that expensive advice = good advice. We (and organizations) may simply ASSUME this to be true! (And everyone knows what happens when we ASS U ME!)
But let’s put our decision maker hats on for a moment and think about what happens when we pay money for professional advice or recommendations. Do we say to ourselves “I just spent a ton of money; I sure
as heck ain’t going to ignore the advice”? If so, it’s also likely that organizations rely on the same
thought process. Seriously, who in their right mind would neglect advice for which they had spent hundreds or even thousands of dollars.
If nothing else, these findings should open the eyes of organizational leaders and us for that matter. Gino’s findings suggest that people tend to rely on costly advice more heavily than free advice, regardless of its actual value!.
So, managers beware…Although we may think costly advice is more valuable than cheap or free advice, this doesn’t make it so.