In This Issue Oh Canada! LES Annual Meeting Takes A Global View President's Message: Power Networking Hits The Mark Licensing Foundation Graduate Student Business Plan Competition Healthcare Sector: CEMC Activities Atlanta Recap: A Traveler’s Guide To LES Local Chapters LES E-vent Resource Center—Have You Tried It? Sponsorship Program Enhances Meetings And Education Book Review Slate Of Officers And Trustees For 2007 Introducing The LES Certified Licensing Professional |
Sector Spotlight New Committees, Activities and Trends
Decision Making Confirmed By Neuroeconomics
Traditional economic theory has maintained that humans and their organizations are rational decision-making entities, that each individual (and organization) has a clear sense of his own preferences, tries to maximize his own well being, and makes consistent choices over time. The decision maker evaluates the reward and the probability of the reward for each choice, in a deliberative calculation of utility. Recently, neuroeconomics has added actual measurements of neural activity to the theories of economics. Neuroscientists have studied decisions by examining the effects of brain damage from stroke and other injuries, monitoring the activity of brain regions and neurons with functional imaging (fMRI and PET) of brain blood flow, single neuron recording, or EEG. Neurobiologists have confirmed the biological calculation of utility. Reward values for each choice, it seems, are encoded as the integral of the excitatory input to the neurons. Single-cell recordings from neurons have shown that neural responses scale reliably with reward magnitude. In simple forced-choice tasks, the firing rate of neurons reflecting the selection of a response exhibit a progressive increase following presentation of a stimulus (information). The time it takes these response-selective neurons to cross a threshold of activity predicts the timing of the behavioral response. Negative utility (response conflict, errors, negative feedback and pain) calculations are also seen in neuronal responses and the magnitude of increased activity correlates with the magnitude of anticipated consequences.1,2 Thus, biology confirms some of the fundamentals of economic theory with neuronal calculations of utility. However, human behavior is not the product of a single unified process, but rather reflects the interaction of different specialized subsystems. In many forms of decision making, especially those that involve a high level of risk and uncertainty, brain regions that are active in biases and emotions interact with the calculation of utility in decision making. There are also automatic systems that deal quickly with the familiar (the classic example is the automatic rapid recognition of faces). In remembering the way the decision was made, these automatic systems are often not recognized by the decision maker as playing any role. Although most of the time, these less deliberative systems interact synergistically to determine behavior, at times they compete, producing different responses towards the same information. Examples of deviations from simple rational calculation of maximal utility are common. An important example is loss aversion. People and organizations often place disproportionate weight on avoiding losses compared to gains of similar absolute value. For example, most people are reluctant to play a gamble with 50% chance of winning $25 and 50% chance of losing $20, despite the gamble’s overall positive expected value.1 Another example of deviation from the simple calculation of utility is termed the certainty effect, where we are prone to underweight probable versus certain outcomes, preferring certainty out of proportion to the uncertainty in the other choice. And we all know the effect of framing of the question, termed the isolation effect, which finds inconsistent preferences for identical outcomes based on the story around the question, differences in choices that reflect how the outcomes are framed.3 There is also strong evidence that discounting is much steeper for short time delays than for longer delays, a phenomenon known as ‘hyperbolic time discounting.’ Offered a choice between $10 today and $11 in a week, many people are likely to choose the immediate $10. However, offered the choice between $10 in a year and $11 in a year and a week, most people would chose the $11, now considering the extra week of wait inconsequential. From the economist’s perspective, the calculation should be whether an extra dollar is worth a week’s wait or not.1 Imaging studies suggest immediate gratification activates the limbic structures involved in emotion, while delayed gratification activates evolutionarily newer cortical regions that evaluate trade-offs.4 These violations of the utility theory that humans commit have been replicated in animal studies; they are basic to our biology.5 Those of us trained as scientists may want decisions to be rational and not dependent on how we frame the question, or subject to uneven loss aversion. But for business development, persuasion and guidance toward good decisions means we must work with the decision making that biology has created. 1 Alan J. Sanfey, George Loewenstein, Samuel M. McClure, Jonathan
D. Cohen (2006). Neuroeconomics: cross-currents in research on decision-making. Trends
in Cognitive Sciences 10 (3): 108-116.
Chemicals, Energy and Materials Sector CEMC Activities... Don't miss the "Future Forward Chemical and Energy Day" on Wednesday, October 17, at this year's Annual Meeting in Vancouver where the sector will offer an impressive lineup of speakers for the mini-plenary session with topical workshops to follow. Many of the leading topics in today's energy world will wrap up in one exciting day. The focus is innovation from intellectual assets and ways of creating value propositions using intellectual property. The speakers for the mini-plenary session include Lorena Foster, Alberta Research Council, the team leader in the Heavy Oil and Sands Group and David Gobey, Director of Marketing, ATECH, Ohio State University. They will discuss innovative academic/local industry partnerships in the Ohio Bio Products Innovation Center. Also, Gordon Petrash from Cargill will highlight sustainable chemistry opportunities and Ron Mosso, COO of NanoGram will present the latest in NanoTechnology issues. In addition, Dr. Katsuyuki from Showa Denko, K.K. will enlighten the group on green chemical processes via catalyzation through solid heteropolyacids. Also, do not forget the CEMC and Government Laboratory Transactions Sector co-sponsored Add-On Seminar PDS 202 (IAM Strategy) Cyber-Competitive Intelligence, Monday, October 15. This intensive, hands-on competitive intelligence methodology intermediatelevel workshop will present scoping and proposing relevant projects, current on-line information services, patent information sources, and the use of an available advanced search tool. Participants will be given useful tools and techniques for developing meaningful projects, resulting in relevant recommendations for business action. A case study will be presented on the subject of Nanotechnology. Three members of CEMC will present: Phil Barnett, Pricewaterhouse-Coopers, Ada Nielsen, BP America and Jack Peregrim, Paragon Development. There is also a Chemicals, Energy and Materials Sector dinner, Tuesday, October 16 in anticipation of "Future Forward Chemicals and Energy Day." Volunteers! We are always looking for support. Anyone interested or with ideas for the CEMC sector, please contact Les Goff, Co-Chair CEMC, at leslie.goff@noetictechnologies.com.
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Executives Society (U.S.A. and Canada), Inc. |
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Business
development (and many other activities) involves decision making. Out-licensors
decide what to tell a potential partner about an opportunity. In-licensors
decide which opportunities to evaluate or to pursue for a deal. Each side decides
the worth and structure of a deal. Given our role bridging science and business,
and the central role of decision making in our world, learning a bit about
the science behind how decisions are made seems worthwhile. 