Might Anonymity Help Devil’s Advocacy?

One of the important biases in business is the sunk cost fallacy – the tendency to throw good money after bad. For example, you’ve spend tens of thousands on developing a new product, but it’s still not working. A common thing to do is go on with the development simply because “you’ve already spent so much on it”. However, what should matter is the future: is more money likely to make it happen? The past is irrelevant – that money has already been spent.

Surely, watching over employees should reduce this problem?

Unfortunately, not necessarily. While some research tends to show is that being accountable for your choices makes you less susceptible to sunk cost fallacy, sometimes accountability makes the effect even worse! Research is mixed on this, but for now I’ll accept that accountability is not the magic bullet. Well, there have been other ideas for reducing the fallacy.

A common suggestion (for example, see Kahneman’s HBR paper) for improving the situation is to have somebody in the team play devil’s advocate, in effect trying to poke holes in whatever plan anyone proposes. For example, McCarthy et al. (1993) propose that entrepreneurs get outside advice on whether to try to expand their business, since “[e]ntrepreneurs should recognize that the escalation bias tendency is likely to occur”. What I’m concerned is that in the political environment of a larger company, such devil’s advocacy might not be very effective. The devil’s advocate has to face the fact that she may be the only one trying to argue against the decisions, and so may be perceived negatively, no matter how hard we try to dissociate her persona from the role. Furthermore, having to disagree may be so uncomfortable for some people that they’ll just pretend to be devil’s advocate – thus not really deeply challenging, but just presenting superficial questions. If all other team members are excited enough, nobody might notice.

Thus, I’ve started thinking that perhaps the devil’s advocate role might be better with anonymity. Getting outside advice is good, but perhaps getting outside anonymous advice is better. The person to complete the “devil’s report” could be from the team, or from the outside – although if it’s from the team then I guess she might not be motivated to do it properly. But for an outsider, anonymity ensures that your image stays good, and also that you don’t necessarily have to be at the meeting (always a good thing). On the other hand, personified devil’s advocacy ensures that the team has to face the issues and actually resolve them – they can’t just throw the devil’s report into the bin. So ultimately I think the choice between anonymity and personified devilry rests on what you need the most: the hardest counterargument anyone can produce, or a person who makes sure that you actually answer all the counterarguments.