How to Spot and Help Gullible Decision Makers

SUMMARY

The Cambridge dictionary defines gullibility as “the quality of being easily deceived or tricked, and too willing to believe everything.” Gullibility has become very relevant in an era of misinformation, disinformation, and fake news. It becomes much more relevant if you are managing decision-makers because we want them to have an accurate perception of reality including the facts of the problem they need solving, the alternatives open to them, etc. There is a danger to dismiss the relevance of gullibility if you are surrounded by educated people. However, many fraud victims like the Bernie Madoff’s Ponzi scheme are educated, intelligent and accomplished individuals. My primary tip is to get to know your decision-makers, what they believe in, what they read and listen to, where they get information and how accurate are their data sources.  These steps demand a greater vigilance on you who manage decision-makers to be careful with your own sources of information, spend time with them to point out incorrect information, and improve reward systems to influence diligence and prudence in sourcing accurate data.

INSPIRATIONAL QUOTES

TRANSCRIPT

The Cambridge dictionary defines gullibility as “the quality of being easily deceived or tricked, and too willing to believe everything.” 

In this week’s episode, I have chosen to tackle the issue of gullibility. This is not a political issue. It is a human issue. But I will tackle it from the lens of decision-making. What do I mean by this? I will be more concerned that we educate decision-makers in our homes, small businesses, government, nonprofits and for-profit organizations.

We don’t want gullible decision-makers because we want them to have an accurate perception of reality include the facts of the problems they are solving and the alternatives open to them.

• If your house employee is gullible, she or he could allow a stranger to enter on the basis of a disinformation that you have asked that stranger to get a jewelry box in your bedroom.
• If your nonprofit manager is gullible, she or he could channel donations to dubious poor communities or foundations getting donations for these.
• If your hiring manager is gullible, she or he could make a job offer to a very good and intelligent young college graduate who has deceived all her teachers and classmates to giving her a loan and making up stories about her family tragedies. 

Gullibility has become very relevant in an era of misinformation, disinformation, and fake news. These three are similar terms but they vary in degrees of intention to deceive.

• Misinformation: “Incorrect or misleading information” that spread around and the source is not assumed to have any no intention to mislead people.
• Disinformation: False information that is spread in order to deceive people
• Fake news: Mimicking the form of mainstream news, fake news appear to be news, spread on the internet or using other media, usually created to influence political views or as a joke.

What are the damage caused by gullible decision-makers? There’s economic harm like loss of money or property, there is loss of personal integrity or integrity of information. There is also the shift in organizational culture where mistrust abounds like no one is sure who is telling the truth.

I have had huge amount of readings on fraud and how fraudsters target the gullibility of individuals when I was preparing and improving on my seminars on ethics and fraud. Hence I am a little bit more observant people make decisions without checking if they have accurate data as basis. 

Some caveats or warnings before I proceed to my tips on how to spot and help gullible decision-makers.

Hugo Mercier, a cognitive scientist living in France said in a YouTube interview "Why Humans Are Less Gullible Than We Think" that we are overly optimistic about our own abilities and pessimistic about other people. In other words, people themselves believe they are not gullible and while they could say other people are gullible. 

In addition, many research has shown the lack of association between gullibility and intelligence. Stephen Greenspan, author of the Annals of Gullibility, spent much of his career as a professor of educational psychology at the University of Connecticut. And he wrote the Annals of Gullibility after his experience of being one of the 4800 victims of Bernie Madoff’s Ponzi scheme. (I will explain the Ponzi scheme later.) What Greenspan noted is that he is not the only educated accomplished person among the 4800 duped by the fraudster Bernie Madoff. He knew psychology but he did not know much of finance and financial investments. He did not even know of Madoff because he put his money in an investment company that invested their clients funds in Madoff’s company.

Now for a brief background on the Ponzi scheme. It was named after Charles Ponzi. In the 1920s, Ponzi promised a 50% return within a few months of getting an investor. That means that for every 100 they invest, they get 50 more. But Ponzi was simply using funds from investor B to pay the 50% fake returns to investor A who came earlier to his company than investor B.  The whole scheme imploded when he did not get new investors.  So in his Ponzi scheme, Bernie Madoff did not invest the money in the stock market or any legitimate market for the monies to earn. He made use of money from new investors to give some interests to earlier investors. When the US economy went into a crisis and more whistleblowers reported the red flags in Madoff’s operations, Madoff called his family and told them about the whole Ponzi scheme.

Another example: Arthur Stimpson of Norfolk, England—a university graduate and member of the Royal Institute of Chartered Surveyors—received an email in 2007 telling him that he had won £2.7 million in the Spanish National Lottery. So he called the number given to claim his prize.  However, before email sender could send him the prize, he had to shoulder some “administrative costs” in transferring the money to him. Over the course of two years, Stimpson gave more than £400,000 for the administrative costs and surely did not get the prize. In the end, the educated, respectable and intelligent Arthur Stimpson lost all that he owned, and was jailed for fraud.

So the next time you see an intelligent person believing in disinformation, don’t waste your time asking, "how could she be so gullible?" Don’t waste your emotions bemoaning your intelligent friends cannot distinguish fake news from real news. Because the uneducated people or the ones lacking in intellectual sophistication don’t have to be always the most gullible people in the world. Let us not associate anymore the lack of education with gullibility

People have intentions which motivated them to believe in a fraudster. Martin Biegelman who wrote Faces of Fraud said that fraudsters would target the elderly and the unemployed because they have greater reason to try their luck and make their savings earn interest, or their savings give them job.

Hugo Mercier whom I mentioned earlier even argued that people are not really gullible, they are not easy to fool into believing unfounded things. They listen to what they did not realize as disinformation, they compare with what they know, they reject it if the two are not compatible. In other words, people have reasons why they buy into disinformation. The source of the disinformation could have been for these people a competent person, someone they could trust, or many people have believed in that fraudster, or he offers good arguments. I could say that the fraudster never enters an empty territory in the minds. People already have something in their mind, perhaps an elderly has been thinking of where to invest her money and suddenly here comes a very good speaker of a fraudster who told her about the money-making investment. 

These are not all-encompassing research data. I would recommend that you do your own readings of these information that I gave to you.

So let’s proceed to my tips, how do you spot and help gullible decision-makers.

Get to know the person. Ask instances in the past when she trusted a wrong information, how she discovered it, and what she learned from it. It should not be a reason not to trust that person anymore especially if her other qualities have a good fit with the organization. But be more careful and attentive for similar decision-making situations. To be managing other people is really to be a teacher, to help them think well. And it's very important that their knowledge is consistent with reality. 

Recommend reading materials that are accurate. Review how your people are double-checking their data with several sources. Give rewards to people who have more sources of information and better quality of source information in their market research, for example. 

Don’t accept information that is not correct. When I would discuss business cases with managers, and I hear them mention data that is not in the case, I would approach them and with the case at hand, I would ask, are we looking at the same case. And normally the error is in them because they misread the data or their personal and career history made them think they already know how to decide on the case. But I would appreciate their history and remind them again that we are discussing the case and not their particular experience. 

I really like the case method to ground the students (whether undergraduates or practicing managers) in the realities of a specific case, which is a real case of a business, the names might have been changed but they really happened. They are not fictional. 

Find out what they are reading and recommend why they could be limited to similar sources that are not accurate. For example, social media algorithms will recommend in your Facebook or YouTube home feed what you normally like watching or reading. I will show you that by simply choosing incognito (concealing one’s identity) window or tab and Youtube would present different videos as their data does not know the viewer yet.

If you present a good argument to a person who has gullibility history, there is possibility that she could agree with you if you have a more accurate data. That is why I believe that the person-to-person conversation is more effective than mass conversions of the disinformed or gullible persons. If I approach a mechanic after reading a lot of articles about my car’s defective engine that is needing repair, I could probably believe the mechanic if I am convinced that he knows really what to do with my car. I could be more academically intelligent than him but I bow to his excellent knowledge and experience in everything about cars. But remember that I did my internet research first. My mind already has some data about my car’s defective engine. I just had to be more convinced.