How the 'optimism bias' colors our thinking in mediation

NPR had a terrific story the other day on the findings of Tali Sharot, a University College London neuroscientist who studies the way in which individuals assess their own personal risk in relation to known risk in the general population. I was particularly interested because this sounds a lot like the way litigants in a particular case assess their case-related risk in relation to the more generalized risk that all litigants face. Professor Sharot was asked to explain why, in a recent study, it was found that only one in five parents feared that their children would grow up to be overweight when, statistically, 69 percent of adult Americans are overweight or obese and more than 80 percent of people say that they are worried about obesity as a public health problem.

Professor Sharot theorizes that the answer lies in the concept of the optimism bias. She says: "People underestimate their likelihood of experiencing all kinds of negative events, including medical illnesses. And they do that for their family members as well. So not only do we think we are immune more than other people, we think that our kids are also more immune than other kids."

She explains the optimism bias this way: "The optimism bias is our tendency to overestimate our likelihood of experiencing positive events in our lives, and underestimating the likelihood of experiencing negative events in our lives, such as divorce or cancer." This immediately brought to mind the "kissin' cousin of optimism," confirmation bias, a phenomenon that I have written about previously. Confirmation bias is the tendency to gravitate toward the facts and arguments that support your case and disregard the facts and arguments that erode your case. Sharot gives an example: "If someone says, 'My likelihood of suffering from cancer is about 20 percent,' and we say, 'You know, the average likelihood is actually worse, it's about 30 percent,' the next time around when you ask them, they say, 'Well, I still think my estimate of suffering from cancer is about 22 or so.'"

Interestingly, Sharot found that as much as people resist the idea that bad news applies to them, they readily accept positive news. She explains: "If they start off saying, 'My likelihood of suffering from cancer, for example, is 40 percent,' and you say, 'You know, the average likelihood, is better - it's only 30 percent,' the next time around they would say, 'Well, in that case, my likelihood is maybe 32 or so.'"

For those of you who might think that this science sounds a little fuzzy, Sharot identified two areas in the frontal lobe of the brain that seem to regulate the way in which people process good and bad information. When she temporarily disabled the normal brain function using a magnetic field, she found that the bias disappeared.

What are the implications of these interesting findings for lawyers and litigants who find themselves in a mediation trying to settle disputes? I believe that they are significant and powerful. In my mediation practice I have repeatedly had lawyers tell me they and their client would overcome what were, realistically, insurmountable challenges in a case. In a very real sense, what they were saying was akin to something like this: "I know that in the usual case, we would be sent packing, but that's not going to happen to us in this case." It's remarkably close to the parent saying: "I know that nearly 70 percent of kids will grow up to be overweight, but that's not going to happen to my kid." In short, the manner in which the brain of that lawyer and that client is processing information is preventing a realistic assessment of risk. And since a realistic assessment of risk is essential to the mediation process, if Professor Sharot is correct in her analysis, this is a significant issue.

I have had much success in helping parties and their counsel more accurately assess risk by pointing out the fact of confirmation bias and its impact in the context of a lawsuit. I believe that discussing confirmation bias is effective because it's easy for people to understand (mostly because we all experience it and once it's been labeled, we can see it so clearly in our daily behavior). Once confirmation bias is put "on the table" for everyone to see, lawyers and clients usually become instantly aware of the manner in which they are focusing only on the good and ignoring the bad. Professor Sharot's observations make me think that I need to also discuss optimism bias - because it too seems to have a profound impact upon our thinking process.

This issue arose in a recent case where a party was suing for emotional distress but had no physical injury, no treatment, no loss of work, and as far as the evidence showed, no tangible support for the idea that there was, in fact, any emotional distress (the underlying incident certainly didn't support the claim). But that didn't stop this particular party for a minute from saying to me in the mediation: "My claim is worth $5 million. Any jury will understand my claim and award me $5 million." When I pointed out that $5 million verdicts, in the context of an actual physical injury, much less a pure emotional distress claim, are usually awarded only when there are catastrophic injuries, the immediate response was: "I will get a $5 million verdict in this case." Was this optimism bias at work in its purest form? Perhaps so. Perhaps this individual was saying: "You could show me that there have been no jury verdicts in that range in the last five years that didn't have catastrophic injuries, but my case will be different." This statement isn't really very different from: "You could tell me that 70 percent of kids will become overweight, but not my kid."

The other fascinating idea that arises from Professor Sharot's research is the way in which we process positive news. This made me wonder about the neuroscientific basis for what I see many times in a mediation: loss aversion. Loss aversion is the idea that people fear loss more than they will strive for gain. In the context of mediation, it might work something like this: "You have the possibility of getting more at trial than what the defense is offering today, but if you lose, you will get nothing and you will have lost the chance to put this money in your pocket without any further risk." Perhaps people process this information using the optimism bias and conclude that taking the money that is being offered for settlement is a positive, not a negative.

All of this research may be helpful to explain what seems so many times to be perfectly irrational behavior or analysis that seems so totally divorced from reality. As important as this may be for mediators (as an opportunity to better understand why parties and their lawyers are taking what seem to be peculiar positions), it may ultimately be more important for litigants and their counsel (so that they can understand some of the physiological reasons that are interfering with a more rational analysis). It's unreasonable and unrealistic that any of us can approach the process of analyzing risk with the pure logic of, say, Mr. Spock, but becoming aware of the science behind judgment calls may help all of us be better at our jobs when it comes time to settle disputes.

Robert S. Mann mediates and arbitrates construction, real estate and commercial disputes through ADR Services, Inc. He can be reached at rmann@ADRservices.org.