Christian Kremer
The Dark Side of Decision-Justification
Abstract
Research and practice expect decision-justification to improve risk decisions, however, this study predicts that when decision makers are encouraged to justify their decisions, non-diagnostic information about a heterogeneous relationship with the source of information also influences risk decisions. In a laboratory experiment, I vary decision-justification (absent vs. present) and non-diagnostic heterogeneity information about the source of information (less heterogeneous vs. more heterogeneous). The study finds that the influence of non-diagnostic heterogeneity information on the variation in risky decision-making behavior depends on the existence of decision-justification. Risky decision-making behavior varies more when the decision must be justified and when the decision-maker and the source of information are more heterogeneous. According to social-identity and self-categorization theory, the higher variation in risky decision-making behavior is explained by a higher variation in affective reactions when information about out-group members rather than in-group members is evaluated. The study informs companies about the possible disadvantages of decision-justification and undesirable effects of heterogeneity.