Behavioral Assumptions and Management Ability

• Authors: Benito Arruñada.
• BSE Working Paper: 110923 | September 15
• Keywords: Evolutionary psychology , economics , management , relational heuristics , rationality , self-interest
• JEL codes: A23, B41, D01, D87, M12, M51
• Evolutionary psychology
• economics
• management
• relational heuristics
• rationality
• self-interest

The paper explores the consequences that relying on different behavioral assumptions in training managers may have on their future performance. We argue that training with an emphasis on the standard assumptions used in economics (rationality and self-interest) is good for technical posts but may also lead future managers to rely excessively on rational and explicit safeguarding, crowding out instinctive relational heuristics and signaling a “bad” human type to potential partners. In contrast, human assumptions used in management theories, because of their diverse, implicit and even contradictory nature, do not conflict with the innate set of cooperative tools and may provide a good training ground for such tools. We present tentative confirmatory evidence by examining how the weight given to behavioral assumptions in the core courses of the top 100 business schools influences the average salaries of their MBA graduates. Controlling for the self-selected average quality of their students and some other schools’ characteristics, average salaries are seen to be significantly greater for schools whose core MBA courses contain a higher proportion of management courses as opposed to courses based on economics or technical disciplines.