Research Process and Model Building

Research Process: From Question to Policy

Case Studies vs. First Principles

• Harvard Business School's MBA program heavily relies on case studies, which involve analyzing a situation and proposing a solution.

• This approach, however, will depart from pure case studies to emphasize reasoning from first principles.

• The goal is to build up a story from fundamental truths and then test that story, rather than starting with a potential solution.

Step 1: The Research Question

• The research question is arguably the most important part of the entire research process.

• It should be based on observations or ponderings about the world.

  • Examples of observations: rising obesity rates, clustering of specific businesses (fast food, car dealerships, gas stations) on the same street, increase in tent cities, decrease in smoking rates.

• It's crucial to develop a focused question and avoid getting sidetracked by the world's complexities (rabbit hole effect).

• Daniel Kahneman and Amos Tversky exemplify best thinkers who constantly posed questions to one another.

  • They were economists, psychologists, and scientists, renowned for their intelligence.

  • Kahneman won a Nobel Prize for their work, and Tversky would have if he hadn't died prematurely.

  • Kahneman and Tversky's Case Studies/Questions:

    • Missing a Flight Scenario (Undoing Process):

      • Observation: Missing a flight by one minute feels significantly worse than missing it by several hours, even though the practical outcome (missing the flight) is identical.

      • Research Question: Why do we feel more upset when a negative outcome (like missing a flight) is narrowly avoided compared to when it's missed by a large margin?

      • Proposed Explanation (Undoing Process): When an event is a near miss (e.g., missed by $1$ minute), it's easier to mentally undo a single action that would have changed the outcome (e.g.,

Case Studies vs. First Principles

• Harvard Business School's MBA program heavily relies on case studies, which involve analyzing a specific real-world situation and proposing a solution based on existing examples or patterns.

• This approach, however, will depart from pure case studies to emphasize reasoning from first principles.

  • First principles reasoning involves breaking down complex problems into their fundamental truths or basic axioms and building up a solution from scratch, rather than relying on analogies or previous solutions.

  • The goal is to build up a story from these fundamental truths and then test that story through empirical observation or experimentation, rather than starting with a potential solution and justifying it.

Step 1: The Research Question

• The research question is arguably the most important part of the entire research process because it defines the scope and direction of all subsequent research activities.

• It should be based on observations or ponderings about the world around us, sparking curiosity and a desire to understand underlying mechanisms.

  • Examples of observations that could lead to research questions:

  • rising obesity rates in specific demographics or regions.

  • clustering of specific businesses (e.g., fast food restaurants, car dealerships, gas stations) on the same street or interchange.

  • increase in tent cities and homeless populations in urban areas.

  • decrease in smoking rates over several decades, despite initial resistance.

• It's crucial to develop a focused question and avoid getting sidetracked by the world's complexities, which often leads to the rabbit hole effect.

  • The rabbit hole effect refers to getting lost in tangential information or related but ultimately irrelevant details, thus losing sight of the original research objective. A well-defined question helps maintain focus.

• Daniel Kahneman and Amos Tversky exemplify best thinkers who constantly posed insightful questions to one another.

  • They were pioneering economists, psychologists, and scientists, renowned for their collaborative work on cognitive biases and prospect theory.

  • Kahneman won a Nobel Prize in Economic Sciences in $2002$ for their groundbreaking work, and Tversky would have received it jointly if he hadn't died prematurely in $1996$.

  • Kahneman and Tversky's Case Studies/Questions:

  • Missing a Flight Scenario (Undoing Process):

    • Observation: Missing a flight by one minute feels significantly worse and leads to greater regret than missing the same flight by several hours, even though the practical outcome (missing the flight) is identical.

    • Research Question: Why do we feel more upset when a negative outcome (like missing a flight) is narrowly avoided compared to when it's missed by a large margin?

    • Proposed Explanation (Undoing Process / Counterfactual Thinking): When an event is a near miss (e.g., missed by $1$ minute), it's psychologically easier to mentally undo a single action that would have changed the outcome (e.g., "If only I had left one minute earlier," or "If only I hadn't stopped for coffee").

    • This ease of constructing an alternative reality (a "counterfactual") where the negative event didn't occur intensifies feelings of regret and frustration.

    • Conversely, when the gap is large (e.g., missed by $3$ hours), it's harder to pinpoint a single, easily undoable action, making the counterfactual less salient and the emotional response less intense.