September 2020: Nobel-Prize-Winning Insights for Trial Lawyers

Quinn Emanuel Urquhart & Sullivan, LLP
Contact

Quinn Emanuel Urquhart & Sullivan, LLP

In his day job, Daniel Kahneman is a renowned psychologist.  On the side, he is a Nobel laureate in economics.  In his lucid and fascinating book, Thinking, Fast and Slow (Farrar, Straus and Giroux 2011), Kahneman shares with the lay reader psychology’s understanding of, well, understanding—the hows and whats of human thought.  In the processes of the mind, careful and conscious thought—the part of thinking that we think of as thinking—is actually an intermittent, reluctant and junior participant.  The book is a rewarding and essential read for trial lawyers given Kahneman’s lessons related to decision making and their applications to persuasion.

How does a psychologist win a prize in economics?  As it happens, rational economic decision making—specifically, the ability to rationally decide the value of things—is the foundational assumption of microeconomic theory.  However, Kahneman showed that people do not and cannot make such rational decisions.  Yes, people regularly and routinely decide the value of things; we certainly intend and firmly believe those decisions to be rational; and they demonstrably and invariably are not.  That is psychology for economists.

Although the irrational way people actually think and value things is not the existential threat to legal practice that it is to economics, it remains absolutely consequential because it dictates the levers of persuasion. (Spoiler Alert: The logical application of law to fact isn’t happening, try as we may.) 

A. Kahneman and Valuation

The civil law is concerned almost exclusively with valuation—with estimates of what sums will justly compensate a plaintiff for some inflicted harm.  Although Kahneman does not directly address how juries arrive at damages estimates, he describes experiments that demonstrate how people estimate value is influenced by factors that have nothing to do with actual value.

For example, Kahneman urges readers to consider two questions: (1) “Was Gandhi more or less than 144 years old when he died?” and (2) “How old was Gandhi when he died?”  Introduction of a random number like 144 in the example above will often produce answers that are affected by this absurdly high number, which has the effect of anchoring the response.  Suggestion has a priming effect.  For example, if we asked a group whether Gandhi died older than the age of 35, and then we asked the same group to guess what age Gandhi actually died, predictions will be closer to 35. Participants who are asked whether Gandhi was more or less than 144 years old when he died will predict that Gandhi was much older at his death than the group of participants who were asked whether Gandhi was older than 35 at the time of his death.  The impact of introducing these meaningless numbers is completely unrecognized by the person making the estimate. 

Kahneman performed another experiment where a “Wheel of Fortune” type wheel was spun to come up with a random number.  The wheel was rigged. With one group of participants, the wheel stopped at 10, and the participants were asked to write the number down. A second group of subjects did the same, except the wheel of fortune came to rest on 65 instead of 10.  Each group was then asked to estimate what percentage of nations in the UN were African Nations.  Those who spun a 10 gave an average estimate of 25%. Those who spun a 65 estimated that nearly twice as many—45%—of the nations in the UN were African.  The Wheel of Fortune was an incredibly persuasive, albeit entirely subconscious, factor in estimating “value”! 

In the Wheel of Fortune experiment, the participants were laypeople with little to balance against the wheel other than gut feeling.  They were neither trained nor experienced, and had no meaningful information to weigh against mere suggestion.  But Kahneman describes an experiment that fills in these holes.  The experiment involved professional real estate agents—people who routinely and seriously evaluate home prices.  A group of them confidently reported that they were not influenced by being told another’s conclusion, and a biased one at that—the price “asked.” These real estate professionals were wrong.

In the experiment, real estate agents were asked to value a real house on the market.  The agents visited the house and were given a comprehensive booklet of information that included a summary of sales and industry-type data, a listing price, and an asking price.  Half of the agents were shown an asking price that was substantially higher than the listed price.  The other half of the agents were shown an asking price that was substantially lower than the listed price.  Each agent was then asked to give his or her own estimate on a reasonable buying price for the house and the lowest price at which he or she would sell the house if he or she owned the house.

After giving their estimates, the agents were asked what factors affected their judgments.  Although the real estate agents claimed confidently that they completely ignored the asking price, as any professional should in estimating a reasonable buying price, the results showed otherwise.  The asking price had a 41% anchoring effect on the real estate agents’ reasonable buying price calculations. Despite the real estate agents’ pride in their self-perceived ability to ignore the asking price, the agents’ anchoring effect was only 7% lower than the 48% effect the asking price had on a set of business school students with no real estate experience who went through the same experiment.

We have long known that the seller’s asking price is important, but that importance goes beyond what was thought.  It is not merely the price that the seller is asking; it is the value the seller is teaching—teaching even the well taught who are trained to ignore that piece of data.  Yes, “the ask” is the vital start and sometimes end of negotiations, but the effect on perceived value is greater.  Asking price does not alter finishes, increase the number of bathrooms or move neighborhoods, hearts or desires.  These are elements of value against which asking price has no power—except that we cannot escape its powerful influence.  If we try, we “notice” the erroneous feeling that we were not influenced.

We’ve seen how professional realtors’ estimates of market value were impacted by a mere asking price.  Are there similar effects on legal decision-making, on the minds of well-trained legal scholars?  That issue was tested in the context of criminal sentencing by actual, experienced judges. Kahneman describes an experiment in which German judges were given an identical case file, with identical facts, applying identical laws to an identical offender, and asked to state an appropriate sentence.  Prior to passing that sentence, each judge was given a factually meaningless hypothetical question.  Each judge rolled a pair of dice, copied the result onto a piece of paper, and was asked whether their sentence would be higher or lower than the number they just recorded.  The judge was then asked what his or her actual sentence would be.  The dice were loaded, with half the judges “randomly” rolling 3 and half of them “randomly” rolling 9.  Judges who wrote down the meaningless 3 sentenced the defendant to an average 5 months imprisonment.  Those who rolled 9 imposed 60% more time in prison—an average sentence of 8 months instead of 5.  This result transcends the “after and before lunch” folklore about how judges sentence defendants.  It is difficult to imagine a single factor that would swing the appropriate punishment as much as did a meaningless roll of the dice. 

These and other experiments are presented by Kahneman to confirm his conclusion that irrational thoughts and associations that cross one’s mind—and there always are such thoughts and associations—hold unnoticed and massive influence over what we experience to be thorough rational thought.  These are the minds to which we trial lawyers present our cases.

What insight does this research give about one of the law’s most fundamental tasks—estimating damages to be awarded to a plaintiff?  As noted above, this is a question not considered explicitly by Kahneman.  But his research tells us that the jury’s estimate will not be based entirely on rational factors.  Indeed, it suggests that when plaintiffs are presenting damages numbers at trial, they should strongly consider putting large numbers before the jury, even if there is a fear that the jury will consider the number inflated.  Defendants often rely on the “greedy plaintiff” defense—that the numbers put out by plaintiff are so absurd that the damages number, if not the entire case, should be rejected by the jury.  But Kahneman’s research shows that one asked to make a “valuation” or estimate can know a high number is ridiculous, overstated, irrelevant, and even false, and yet that number can impact the value that person is asked to come up with, because it acts as an anchor.  Anchoring for damages can be done directly or indirectly.  For example, in a case seeking lost profits, a plaintiff should emphasize the huge revenue from which the profits will be calculated.  That significantly large number may act as an anchor that gives the jurors comfort in awarding the significantly lower (but nonetheless large) damages number. 

This is not to say that a plaintiff should not be worried about credibility.  However, if you have a solid and emotionally appealing liability case and have built credibility on the issue of liability, large numbers presented for damages seem unlikely to hurt your credibility on liability, and may result in a larger award.

Kahneman also reported that people are more confident in their conclusions if they do not hear an opposing side of an issue.  Defendants are often loathe to give the jury an alternative to plaintiff’s damages number, thinking that they don’t want to dignify the number with an alternative.  Kahenman’s research suggests this is a dangerous strategy.  The lack of an alternative number makes it easier for the jurors to conclude that plaintiff’s number is the correct one. This is because it is in our nature to avoid the rigors of analytical thought.  Humans try to avoid the cognitive strain of analytical thought. So, as a defendant, don’t give the jury an easy path to avoiding difficult analysis.  Present the jury with an alternative.  Preferably, a simple and understandable one.

B. Reducing Cognitive Effort

The research about the anchoring effect in estimating values is a species of Kahneman’s analysis of how the brain takes pathways of thinking that reduce cognitive effort.  Simply put, the mind is disinclined to think rationally—it always begins with the easy, the familiar, the closest at hand and the common, the “fast” thinking of Kahneman’s title, to which the mind applies minimal, if any, effort and consideration (effort and consideration being the titular “slow” thinking).  So don’t expect people to make the effort required to apply logic to a complex problem, especially if there is an easier path.  In fact, give them easy pathways to arrive at the “logical” or evidence-supported conclusion that is favorable to you.  These pathways include the use of analogies, reference to common experience (or experience the hearer believes is “common”—Kahneman discusses widely held factual beliefs that simply are not true).  The general principle is that anything you can do to reduce cognitive effort will help. 

Some of the simple techniques identified by Kahneman to reduce cognitive effort by making things easier to understand are well-known to jury consultants: He explains, for example, that for graphics you want to maximize the contrast between characters and their background.  If you use color, you are more likely to be believed if your text is printed in bright blue than in a middling shade, better bright red than green or yellow.  A simple reason—it is easier to read.  If you care about being thought credible and intelligent, do not use complex language, which is more demanding of the listener.  Complex writing makes writers seem less smart, more pretentious and untruthful.  Don’t make the reader or listener have to work!  In addition to making your message simple, try to make it memorable, that way it may be more easily called to mind.  Put your ideas in verse if you can; they will be more likely to be taken as truth.  Far and away the most memorable argument in the annals of American criminal defense? “If the glove doesn’t fit, you must acquit.”

But a finding that might be most relevant to the trial lawyer is that people will subconsciously reduce cognitive effort by substituting a complex question they are being asked to answer with a simpler question, which the person will feel comfortable deciding, and which will be used as a functional substitute for the complex question. Kahneman calls this “substituting” questions.  It is something that is a common tool of the human mind and that even the highly educated do without prompting.

This is most documented when people are asked to judge probability.  Kahneman explains: “We asked ourselves how people manage to make judgments of probability without knowing precisely what probability is.  We concluded that people must somehow simplify that impossible task, and we set out to find how they do it.  Our answer was that when called upon to judge probability, people actually judge something else and believe they have judged probability.”  This is the phenomenon of “slow thinking” giving way to “fast thinking” in action.  People avoid answering questions that require thoughtful analysis “if the answer to a related and easier heuristic question comes readily to mind.”

An example Kahneman gives is “The Linda Problem,” a problem in which college students substituted intuition for rational analyses.  The students were given information about a profile of a young woman named Linda: She is single, very bold and very intelligent.  As a student, Linda was deeply concerned with issues of discrimination and social justice.  The graduates were then asked which of the following two options is more likely to be true? (A) Linda is a bank employee, or (B) Linda is a bank employee who is also active in the feminist movement.

Most of the people who participated in this experiment chose option B.  That choice is wrong as a matter of logic and probability.  In both options, Linda is a bank employee.  If the options were identical, the probability of those options being true would be identical.  But option B ADDS a detail—that Linda is ALSO involved in the feminist movement—which can only lower the probability of B being true compared to A.  In fact, even among students in Stanford’s Graduate School of Business who had extensive training in probability, 85% said the statement “Linda is a feminist bank teller” was more likely than the statement “Linda is a bank teller.”  Why?  In answering the question, an easy question (how much sense does statement B make?) was substituted for the more difficult question (how probable is statement B compared to statement A?). 

This suggests that in trial, you should appeal to a jury’s intuition—common sense, prior experiences, analogies, etc.—when asking them to answer questions that require a difficult application of law to fact.  Indeed, if you can, present the jury with an easier question that will help them come to a decision on a more complex question.  A possible example: The average person is relatively comfortable with judging a witness’s honesty and credibility.  It doesn’t take specialized training or education to do so.  However, the average person is much less comfortable deciding who is correct on a question that requires the testimony of highly educated experts to provide the answer.  So if you have two opposing experts who do detailed and complex analyses that point to two different conclusions, present jurors with a question they are more comfortable answering—such as, which expert seemed more forthcoming?  Which expert did they think they could trust?  Substituting the “complex” question with the “intuitive” easier question presents the jury with an easier pathway to reach the conclusion you desire. 

In other words, make the human mind’s predisposition to “fast thinking” work for you, and recognize when it may work against you. 

Conclusion 

Kahneman tells us a lot about the how of thinking, and demonstrates that “slow thinking,” the careful analysis of rational thought, often does not exist and, even if possible, is easily derailed by “fast thinking.”  These “human” minds are the only minds to which civil trial lawyers can present their cases: minds tasked with turning bone and blood, insights and effort, memories and even lives into dollars—and arriving at not a number on a pair of dice, but the literal value of everything.  Economists gave Kahneman their Nobel Prize for his insights.  It is the least we lawyers can do—always to keep such minds in mind and address them mindfully insofar as our minds allow.  

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Quinn Emanuel Urquhart & Sullivan, LLP | Attorney Advertising

Written by:

Quinn Emanuel Urquhart & Sullivan, LLP
Contact
more
less

Quinn Emanuel Urquhart & Sullivan, LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.