Behavioral biases in conflict resolution in the financial sector: Empirical evidence from Bulgaria

Conflicts in organizations are inevitable and have an impact on individual and organizational performance. Individual behavioral traits like belief perseverance biases, information processing biases and emotions can be both sources of conflicts and barriers to conflict resolution. We identify a significant research gap on behavioral biases in resolution of workplace conflicts and opportunity for transfer of knowledge in combining conflict management theory and behavioral biases approach. Objectives: The main purpose of the paper is to examine behavioral biases in resolving conflicts in financial sector organizations in Bulgaria and explore the relationship between behavioral biases and conflict resolution. Methods/Approach: Based on a Google forms questionnaire we investigate the perceived level of conflict resolution, the inclination to 17 behavioral biases and collected demographic information from 231 employees. We apply descriptive statistical analysis, Cronbach’s Alpha reliability test, one-sample t-test, Cohen’s d coefficient and Spearman’s Rho correlation analysis. Results: The findings reveal that employees consider their conflicts as highly resolved. They show overconfidence, conservatism, confirmation, self-attribution, optimism, representativeness and herding bias, halo and horn effect. Multiple positive correlations between pairs of biases are found. Higher positive correlation is observed between conservatism and confirmation bias, whereas higher negative correlation is found between conservatism and out-group bias. We identify positive and significant correlations between conservatism, confirmation, overconfidence, optimism, herding, regret aversion bias (errors of commission), halo effect and the level of conflict resolution. Conclusions: The paper provides original findings on behavioral biases that financial employees are prone to, on the relationships between these biases as well as on the positive relationship between certain biases found and the level of conflict resolution.