Filene Co-Hosts Colloquium on CEO Decision-Making Pitfalls

MADISON. Wis. – Even the best CEOs in a wide range of industries are subject to making predictable errors that affect their organizations and their careers negatively. Many of these errors relate to how CEOs think about decisions when substantial uncertainty is involved. To apply the best strategic thinking to credit union decisions, the Filene Research Institute, Pepperdine University and the University of Wisconsin convened a research colloquium, Strategy Errors Made by Even the Smartest CEO's: How to Avoid Them in Credit Unions, at the Pepperdine Graziadio Executive Center, February 3-4. The colloquium brought together credit union CEOs and top researchers in the decision-behavior field. The purpose was to examine frequent CEO strategy errors in business; how these errors are made in the credit union industry, and how they can be avoided. Researchers Charles Holt, A. Willis Professor of Political Economy at the University of Virginia; and Gary Charness, Professor of Economics, University of California, Santa Barbara, led participants through experimental situations in game theory which exposed them to potential errors in negotiation and value judgments. The presenters suggested that research is leading to new behaviorally-relevant strategies in economics. Among the 10 decision-making pitfalls examined were overconfidence, the risks involved in successful bidding, elements of adverse selection and the inclination to maintain the status quo. Credit union CEOs were then charged with applying the principles presented by Holt and Charness to real-life credit union policies and practices. In small group discussions, they addressed issues such as indirect lending, CEO/board relations, technology mandates and strategic planning considerations. Reports on these discussions will be included in a forthcoming Filene publication to be distributed to Institute members. The nonprofit Filene Research Institute examines vital issues affecting the future of credit unions and consumer finance. More than 1,500 credit unions, credit union organizations, and credit union executives are members of the Institute. The Institute is located in Madison, Wis., and works in cooperation with the Center for Credit Union Research at the University of Wisconsin-Madison.