Lake Wobegon Effect

The American writer-broadcaster Garrison Keillor presents the radio show a Prairie Home Companion from the fictional place “Lake Wobegon, where all the women are strong, all the men are good-looking, and all the children are above average.” The Lake Wobegon effect refers to the tendency of some negotiators to take the position that everything they are offering is qualitatively better than what the counterparty is offering. The Lake Wobegon effect is particularly prevalent in cross-license negotiations where one party will take the position that all of its patents are valid and infringed, but few or none of the counterparty’s patents are valid and/or infringed. As a negotiating tactic it is usually antagonizing and counter-productive.

Psychologists also employ the term as short hand for “positive self assessment bias,” i.e., a tendency of some people to evaluate themselves as “above average” despite the absence of any objective evidence that this is the case. It is also known as illusory superiority. It has also been suggested to explain the tendency of remuneration committees to raise CEO pay to a number above the current average that may not reflect actual performance, because “no one wants to admit their CEO is below average,” or colleges and indeed law schools to charge nearly the same tuition as the most highly regard institutions, regardless of how highly regarded they are academically (or the quality of their graduates’ career prospects.)