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Inside Information Doesn’t Always Lead to Better Decisions

“Tip-offs in business are surprisingly common (and, except for stock market insider trading, legal) and often make the person on the receiving end feel special—they now know something that others don’t and have an opportunity to be among the first to act on this new information,” according to the Harvard Business Review.

“For example, your boss might reveal inside information about an upcoming organizational change, giving you a heads-up on how these changes might affect you. Or a client might mention a recent not-yet-public decision, one that has consequences for your company’s relationship with their firm. While this secret information may seem beneficial to us when we are part of the privileged minority that receives it, recent brain imaging research suggests otherwise.”

In a recent paper, Rafael Huber and colleagues “found that when people receive ‘private” information,’ their brains respond by overweighting this information when making decisions. Even when it may be optimal to follow other advice, private information will make the brain ignore it.”

Another paper by Jennifer Louise Cook and colleagues “found that people who have dominant personality styles might be at further risk of distorted decision-making.”

The conclusion from Harvard Business Review: “Privileged information meant to help us can actually hurt us. By becoming more conscious of the brain’s exaggerated responses to information delivered secretively, we can avoid becoming victims of our own hyper-responsive brains.”