PSYC3520_Assessment2

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Herzing University *

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3520

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Psychology

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Dec 6, 2023

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1 Self-Serving Bias, Loss Aversion , and Egocentric Thinking: A Case Study Frank, a psychologist with a new private practice, faces challenges in attracting clients with health insurance due to high fees and financial concerns. Despite this, he takes great pride in his practice and relishes in letting his friends and colleagues know that he is running a successful private practice. When a new client, Eduardo, presents with symptoms of helplessness and a need for support, Frank notes that Eduardo seems to meet all the criteria for Dependent Personality Disorder, which is not covered by insurance and is complex to treat. Because of this, Frank, motivated by financial considerations, labels the client’s condition as Major Depression to ensure insurance coverage. Eduardo asks Frank if his insurance will cover treatment, and Frank responds that, indeed, insurance does cover treatment for Major Depression. The client welcomes the diagnosis and treatment plan, and upon the end of their interaction, both Frank and Eduardo let out a sigh of relief. This case study reflects the social psychology concept of self-serving bias, which is the tendency for individuals to attribute positive events to their character or abilities and attribute adverse events to external factors, often disregarding the potential impact of their actions on others (Baumeister & Bushman, 2020). It often leads to a distorted perception of reality and unethical decision-making. Research Support Research Summary Campbell and Sedikides (1999) found that threat plays a significant role in amplifying self- serving bias. When individuals perceive a threat to their self-concept or self-esteem, such as the possibility of failure, criticism, or negative evaluation, they tend to engage more in self-serving bias. Forsyth (2008) further supported the notion of self-serving bias as a self-defense mechanism, finding that it allows people to maintain their self-esteem and self-image by interpreting experiences in a way that portrays them in a favorable light. In addition, Lammers and Burgmer (2018) found that feelings of power increase self-serving bias, amplifying individuals’ tendencies to attribute positive outcomes to themselves while attributing any failures to external factors. Research Interpretation Campbell and Sedikides (1999), Forsyth (2008), and Lammers and Burgmer (2018) all demonstrate that self-serving bias serves protective purposes for one’s sense of self-esteem. When individuals concentrate solely on their accomplishments while neglecting their shortcomings or negative feedback, they safeguard their ego from potential harm and reinforce their positive self-image, suggesting that self-serving bias plays a role in maintaining psychological wellbeing. The notion that both threat and feelings of power increase self-serving bias is of particular significate, shedding light on how this bias operates as a coping mechanism to alleviate the discomfort of potential self-threats and contribute to individuals’ overall

2 emotional comfort (Campbell and Sedikides, 1999; Lammers and Burgmer, 2018). In the broad field of social psychology, self-serving bias can be observed in various contexts. For example, when an employee attributes their promotion to their exceptional skills while attributing any failures to factors beyond their control, such as bad luck, they are engaging in self-serving bias in an attempt to protect their self-esteem and maintain a positive self-image (Baumeister & Bushman, 2020). Application of Self-Serving Bias Self-serving bias is evident in various facets within the case study. For example, despite being aware that Eduardo meets the criteria for both Major Depression and Dependent Personality Disorder, Frank opts to diagnose Eduardo solely with Major Depression to capitalize on insurance coverage advantages. This highlights how Frank’s self-serving bias prompts him to prioritize his financial worries and the desire to maintain a positive image, overshadowing the delivery of accurate and beneficial treatment for Eduardo. As research has shown that self- serving bias is amplified in the face of threat, Frank may be even more likely to engage in this bias in order to safeguard his self-image (Campbell and Sedikides, 1999). Frank is also facing the threat of being unable to pay his bills and potentially losing his private practice, which could undermine both his sense of financial stability and self-esteem. It is evident that Frank’s self- esteem is tied closely to his identity of being a successful psychologist running a private practice, so the threat of losing his practice holds significant weight for him. Frank further exhibits self-serving bias in his interaction with Eduardo. When Eduardo vulnerably expresses his confusion and need for help, Frank replies that he is “just the person to help him,” and he confidently emphasizes how the pair will work together to move forward. Lammers and Burgmer (2018) found that feelings of power increase self-serving bias, which could be relevant in Frank’s case. By positioning himself as the solution to Eduardo’s problems, Frank may be enhancing his own sense of authority, power, and competence, aligning with self-serving bias (Forsyth, 2008). Frank’s sigh of relief at the end of the interaction could signify his desire to maintain his positive self-image and achieve a desired outcome, thereby exemplifying the self-serving bias that often drives individuals to prioritize their own interests. Ethical Reasoning Application Ethical Concept Loss aversion is a psychological concept that influences decision-making processes by causing individuals to attach greater significance to avoiding potential losses than to securing equivalent gains (The University of Texas at Austin, n.d.). This phenomenon is rooted in the concept that the emotional impact of a loss far outweighs the emotional impact of an equivalent gain (The University of Texas at Austin, n.d.). Research has shown that people dislike losses about twice as much as they enjoy gains, highlighting the emotional influence of losses on decision-making (The University of Texas at Austin, n.d.). A study published in Psychological Science found that when decisions were presented to people in a way that emphasized potential losses, they were

3 more likely to act unethically or make unfair choices (Kern & Chugh, 2009). This indicates that the fear of losing something important can sometimes lead people to make questionable decisions, even if it means acting in ways they wouldn’t normally (Ken & Chugh, 2009). Supportive Evidence The concept of loss aversion is evident in Frank’s case study through the description of his behavior and his interaction with Eduardo. For example, to Frank, the idea of losing his practice is deeply distressing and constitutes a significant potential loss, so he is more likely to take actions aimed at avoiding this undesirable outcome, which are oftentimes unethical (The University of Texas at Austin, n.d.). Frank decides to diagnose Eduardo with Major Depression despite being aware of his Dependent Personality Disorder, highlighting his willingness to prioritize avoiding potential losses. By approaching the situation with a mindset of loss aversion, Frank prioritized his financial concerns and self-image over the wellbeing of Eduardo, compromising the ethical foundation of his decision-making process (University of Louisville, n.d.). Under normal circumstances, Frank would likely be less willing to overlook the complexity of Eduardo’s condition and opt for a diagnosis that protects his own interests. However, in order to avoid the potential loss of financial security, self-esteem, and success, he is more willing to take such actions (Kern & Chugh, 2009). Critical Thinking Application Critical Thinking Issue Egocentric thinking is the inclination to interpret the world based on one’s own perspective, often leading to irrational behaviors (Capella University, n.d.). Research has found that similar to self-serving bias, egocentric thinking serves various psychological purposes, such as self- protection, self-promotion, and validation (Sedikides et al., 2021). While humans innately seek the perceived benefits of this type of distorted thinking, it can hinder accurate understanding of others’ viewpoints and impede rational decision-making. Overcoming egocentric thinking is crucial for fostering critical thinking. Egocentric thinking inherently violates the fairness standard as defined by the Paul-Elder Critical Thinking Framework, which prioritizes considering multiple viewpoints for critical thinking (University of Louisville, n.d.). However, there are effective ways to combat this tendency, such as actively considering others' experiences and empathizing with their perspectives (Samuel et al., 2020). Supportive Evidence Various instances of egocentric thinking are displayed throughout the case study. For example, Frank expresses that not only does he feel a sense of personal pride from running a private practice, but he enjoys his friends and colleagues knowing that he is successful in his private practice. This demonstrates that Frank’s ego plays a significant role in shaping his motivations and how he wants his practice to be perceived (Capella University, n.d.). Additionally, Frank displays egocentric thinking when he reassures Eduardo that he is the right person to help him.

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4 This emphasis on his ability to provide help, despite his knowledge that Eduardo should ideally receive treatment for both mental health conditions, enhances his image as a capable and successful psychologist, potentially reinforcing his self-esteem (Sedikides et al., 2021). Frank’s financial predicament within the case study also exemplifies his engagement in egocentric thinking. As he navigates the challenges of his financial situation, his decisions reflect a pronounced focus on self-interest at the expense of adequately considering Eduardo’s needs. According to Samuel et al. (2018), empathizing with others’ experiences is vital in reducing egocentric thinking, which may have resulted in a more ethically sound outcome in this case study. By not fully considering the profound implications of his choices on Eduardo’s wellbeing, Frank not only perpetuates his egocentric thinking but also inadvertently neglects the foundational principle of fairness that underscores ethical decision-making (University of Louisville, n.d.). This lapse in impartiality further hinders his ability to foster critical thinking, potentially leading to unethical decisions such as the one observed in the case study. References Baumeister, R. F., & Bushman, B. J. (2020). Social Psychology and Human Nature (5th ed.). Cengage Limited. https://capella.vitalsource.com/books/9780357713754 . Campbell, W. K., & Sedikides, C. (1999). Self-Threat Magnifies the Self-Serving Bias: A Meta- Analytic Integration. Review of General Psychology, (3) 1, 23-43. https://doi- org.library.capella.edu/10.1037/1089-2680.3.1.23 Capella University. (n.d.). Egocentric Thinking. https://campus.capella.edu/critical- thinking/qualities-of-the-thinker/egocentric-and-sociocentric-thinking/egocentric- thinking . Forsyth, D. R. (2008). Self-serving bias. Jepson School of Leadership Studies. https://scholarship.richmond.edu/cgi/viewcontent.cgi? article=1164&context=jepson-faculty-publications .

5 Kern, M. C., & Chugh, D. (2009). Bounded Ethicality: The Perils of Loss Framing. Psychological Science, 20 (3), 378–384. https://doi.org/10.1111/j.1467- 9280.2009.02296.x . Lammers, J., & Burgmer, P. (2019). Power increases the self-serving bias in the attribution of collective successes and failures. European Journal of Social Psychology, 49 (5), 1087- 1095. https://doi.org/10.1002/ejsp.2556 . Samuel, S., Frohnwieser, A., Lurz, R., & Clayton, N. S. (2020). Reduced egocentric bias when perspective-taking compared with working from rules. Quarterly Journal of Experimental Psychology, 73 (9), 1368–1381. https://doi.org/10.1177/1747021820916707 . Sedikides, C., Alicke, M. D., & Skowronski, J. J. (2021). Chapter Five - On the utility of the self in social perception: An Egocentric Tactician Model. Advances in Experimental Social Psychology, 63 , 247-298. https://doi.org/10.1016/bs.aesp.2020.11.005 . The University of Texas at Austin. (n.d.). Loss Aversion. Ethics Unwrapped. https://ethicsunwrapped.utexas.edu/video/loss-aversion . University of Louisville. (n.d.). Paul-Elder critical thinking framework. Ideas to Action. http://louisville.edu/ideastoaction/about/criticalthinking/framework .

PSYC3520_Assessment2

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