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Behavioral Economics Guide 2015 (with an introduction by Dan Ariely)
Abstract
Full-text download available at https://www.behavioraleconomics.com/be-guide/the-behavioral-economics-guide-2015/
... La metodología utilizada por el BE consiste en localizar las anomalías de los modelos económicos tradicionales y recurrir a elementos principalmente provenientes de la psicología, para proveer un marco analítico de mayor riqueza y precisión a la hora de investigar la conducta de los individuos en el ámbito de los procesos de decisión. Tal enfoque metodológico se basa principalmente en técnicas experimentales, algunas de laboratorio y otras en campo, que permiten brindar explicación a fenómenos sociales y sus posibles aplicaciones directas con mayor realismo, basados en el principio de "test and learn", es decir, poner a prueba las hipótesis a partir de experimentos con grupos y variables controladas y aprender de los resultados (Samson, 2015). ...
... En concordancia con tales deniciones, el BE se desarrolla bajo un contexto interdisciplinario para explicar el comportamiento de mercado bajo condiciones variadas de conducta e información a nivel individual. De esta manera, más allá que desplazar los hallazgos dentro de los modelos de equilibrio general en la teoría neoclásica, se busca extender sus límites actuales para incluir una gama de conductas y condiciones de información descartadas a priori en la corriente principal Samson, 2015). ...
... Tal escasez produce un cambio de lógica; es decir, sentir que se tiene muy poco de algo determina nuestras decisiones y comportamiento. Los estudios sobre escasez cognitiva sugieren que la condición de privación económica puede reducir recursos mentales importantes, lo que lleva a un efecto perjudicial sobre los juicios y las decisiones económicas, que de otra manera podrían ayudar a los pobres a mejorar su situación (Samson, 2015). ...
Objetivo:
Explorar una ruta teórico-conceptual que exhiba algunos momentos en la evolución de la Economía del Comportamiento (EC), también conocida como Behavioral Economics (BE). A través de la descripción de algunas aplicaciones y resultados obtenidos, generados a partir de los hallazgos dentro de esta disciplina; específicamente en el ámbito de política pública. Este método se ha convertido en una útil herramienta en el plano del diseño de política pública en otras regiones del mundo, pero para México es todavía un campo poco explorado, tanto en el ámbito académico como en la esfera gubernamental. Por lo que se convierte en un área de oportunidad para estas dos instancias.
Metodología:
Se recurrió a la revisión de bibliografía sobre el tema, guías específicas, conferencias en internet y artículos de revistas científicas.
Resultados:
Se constata que, con el BE se logra complementar los modelos del mainstream económico de la economía con elementos de la psicología, generando un patrón analítico que confronta a las anomalías de la teoría económica, con los hallazgos sobre el comportamiento económico del individuo. A partir de esto se amplía el conocimiento sobre el tema de toma de decisiones y, sobre esta plataforma conceptual y metodológica, eventualmente se pueden rediseñar las políticas de gobierno relacionadas a estos efectos.
Limitaciones:
No se encontró literatura que permita dar luz de la implementación del BE en la política pública de México, tampoco se detectó experimentación, ni formación de capital humano entrenado para estos fines.
Conclusiones:
Existe una deficiencia en la implementación de las aplicaciones y metodología del BE en nuestro País. Esto la convierte en un terreno fértil y de oportunidad, lo cual redunda en un refinamiento del entendimiento del comportamiento humano, tanto en el ámbito académico como para diseñadores de política pública.
... These practices of co-design and co-delivery are among the most effective ways of engaging laypeople in active participation (Bovaird & Loeffler, 2014;Osborne et al., 2016;Vink et al., 2016). Engagement can be enhanced by using mechanisms such as identity and social utility, goal framing and pre-commitment to feel involved and willing to invest time and energy in actively participating (Samson, 2015). ...
... The high school students were engaged in research topics, such as helping the researchers validate the questionnaire and test the web app used for administering the survey. The web-based survey was developed as a 'test' of each teenagers' lifestyle, which ended by providing a cartoon profile with suggestions for improving their habits by activating mechanisms of informational feedback, warnings and past choices (Eysenbach & Wyatt, 2002;Sunstein, 2014;Samson, 2015). The teenagers were divided into ten groups (one for each Tuscan province) to improve peer group pressure and team-working skills and to stimulate competitive and collaborative mechanisms among them. ...
... The teenagers were divided into ten groups (one for each Tuscan province) to improve peer group pressure and team-working skills and to stimulate competitive and collaborative mechanisms among them. During this first week, researchers consistently explained the importance of the students' role in the beFood research project to leverage mechanisms such as identification, increasing salience and building on social utility (Cialdini et al., 2015;Samson, 2015). The students were made aware that their work was fundamental to spreading the new knowledge they learned and that the dissemination of the 'healthy message' could improving their peers' lifestyle. ...
Evidence on the effectiveness of health promotion interventions is mixed, especially in terms of the magnitude of their impact and long-term adherence. This paper proposes a comprehensive approach informed by behavioural economics of developing behavioural change programmes, which is designed to educate, activate, engage and empower people by taking into consideration individual and social mechanisms. Three applied pilots and their results are presented in order to illustrate the approach using cognitive and social mechanisms to lead to better health outcomes, individually and community-wide. More research is needed to explore levers and barriers for the systemic adoption of this framework in implementing health promotion interventions.
... Na opinião de Samson (2015), é sedutora a ideia de se observar os indivíduos e pressupor que esses se constituem num grupo de pessoas sensatas e racionais que levam uma vida de forma equilibrada. Todavia, se houver dinheiro suficiente em jogo, essas pessoas tendem a deixar de se comportar como homus economicus e optar por tomadas de decisão de consumo baseadas em fatores de cunho emocional. ...
... Nesse ponto, Samson (2015) destaca que as pessoas tendem, inconscientemente, a sofrer influência por conta de informações prontamente disponíveis na memória, por sentimentos gerados automaticamente e por informações marcantes relacionadas ao ambiente social. Tendem, também, a resistir às mudanças, a ser maus preditores de preferências futuras, a estar sujeitos à memória distorcida e a ser afetados por estados fisiológicos e emocionais. ...
À luz da economia neoclássica moderna, o homo economicus é um ser com um senso particular de racionalidade. Contudo, como se explica o fato de tantas pessoas se arruinarem gastando dinheiro com trivialidades de pouca utilidade? O excesso de confiança, apoiado na presunção de que a maioria dos indivíduos tem suas próprias habilidades, conduz à superestimação equivocada da probabilidade de sucesso, afetando suas preferências e culminando com alternativas de decisões de consumo arriscadas. Se houver dinheiro suficiente em jogo, as pessoas deixam de se comportar como homo economicus, passando a agir como homo emoticus. Nessa acepção, a economia comportamental poderá contribuir significativamente para a tomada de decisão racional de consumo dos indivíduos, visto que, esta nova corrente do pensamento econômico, leva em consideração o comportamento humano real, sua cognição humana e social, e suas tendências emocionais de racionalidade.
... Representan un proceso de sustituir una pregunta difícil con una más fácil para tomar decisiones rápidamente. (Samson, 2015;p.34). proporcionada, para tomar decisiones racionales informadas y para perseguir sus derechos basados en la información (Samson, 2014). ...
En la teoría económica, se considera que la libre competencia es necesaria para alcanzar eficiencia en los mercados, así como un pilar fundamental para promover y garantizar el bienestar del consumidor. No obstante, está supeditada a la existencia de un sistema jurídico apropiado, el cual se encuentre estructurado y diseñado para propiciar la competencia, garantizando que opere de la forma más favorable. En consecuencia, se pretende analizar el rol que tiene el Estado en la construcción y encauce del derecho económico, particularmente desde un enfoque de la teoría económica institucional y la economía conductual. Igualmente, explorar aquellos escenarios en que las prácticas competitivas generan resultados subóptimos, perjudicando a un sector de la sociedad y, paradójicamente pudiendo limitar el funcionamiento del mercado. A partir de un análisis comparativo, se propende dilucidar los elementos esenciales para la construcción del Derecho económico, tomando como presupuesto la imperiosa necesidad de regir la competencia bajo estándares de moralidad que permitan la edificación de un orden social y económico justo.
... Our approach aims to leverage insights from behavioral science, including behavioral economics (BE) [3] and the Theory of Planned Behavior (TPB) [4]. BE suggests that a small feature of the environment can predictably influence a behavior. ...
Objective
To incorporate user-centered design processes into the refinement of nudges designed to reduce no-shows among healthcare appointments for military veterans in the Veterans Health Administration (VA).
Methods
We developed candidate nudges as brief messages based on four broad concepts in behavioral science. We then conducted iterative waves of multi-stage interviews (N=27) that included a pile sorting task, a “think-aloud” review of each message, and prototype letter reviews. Rapid consensus analysis of each wave’s feedback iteratively refined message language.
Results
Veterans rejected several theoretically plausible messages focusing on avoiding the burden of rescheduling missed appointments or the monetary cost of no-shows. Participants suggested framing calling to cancel an appointment as helping other veterans and emphasized a new motivational theme: expressing personal concern for the veteran.
Conclusion
Use of iterative UCD methods allowed for early identification of both messages inappropriate for veterans and new veteran-generated nudges around non-judgmental validation that could be incorporated in the design of our pragmatic trial.
Practice Implications
Rapid team-based qualitative analysis, iterative material design, and space in the study design to incorporate entirely new insights from participants into study materials are all approaches that can improve communications of what matters most to a specific population.
... In this direction, within the framework of Economics and economic psychology, researches are conducted by such scientists as: Grishina N. P., 2012;Mordashkina Yu., 2013;Goretskaya V. A., 2014;Korshunova G. V., Nemtsev A. D., and Romanova L. E., 2017;Cechin V. V., 2017, etc.). As for foreign researchers, it is worthwhile mentioning such researchers as Loewenstcin, 1996;Carmon, Z. and Ariely, D. 2000;Wertenbroch, K. 2002, Ariely, Loewenstein, andPrelec, 2003;Ariely, D., Bracha, A., and L'Huillier, J.-P. 2010;Shiv B., Carmon Z., and Ariely D., 2005;Samson, A., 2015. Individual cognitive features along with perception, memory and thinking (Kornilova, 2002;Vavilov, 2005;Nenasheva, 2009), which influence the financial decision-making process, include cognitive style as well. ...
Currently, a new interdisciplinary field of research – financial behaviour-is rapidly developing. Psychological characteristics of the subject of financial behaviour can have a significant impact on the decision-making process in this field. Cognitive style, as an individual way of processing the information perceived by the subject, is one of the factors determining such procedural features of financial decision-making as: the time spent on decision – making, the speed of decision-making, the emotional state of the individual during decision-making, the nature of perceptual information processing (especially oculomotor activity), as well as the type of decision strategy - rational, irrational or marginal.
... Furthermore, Daniel Kahneman developed BE through his contribution "maps of bounded rationality", he argued two types of thinking on decision making: system 1 and system 2 work with three systems of cognition: perception, intuition, and reasoning (See figure 2). He defined BE as an attempt to describe two spaces through traditional economics and BE (Samson, 2019). "BE is the combination of psychology and economics that investigates what happens in markets in which some of the agents display human limitations and complications" (Mullainathan, & Thaler, 2000). ...
Individuals seek to satisfy their needs by making decisions and doing acts to reach satisfaction and happiness. The behavioral development economics cares to understand the problems to reach satisfaction and happiness. If cognitive distortions influence behavioral development economics, there is a relationship between them. Therefore, the paper illustrates the nature of behavioral development economics and cognitive distortions status of both in Egypt, during the government implements an Economic Reform Programme. Moreover, the research seeks to find the relationship between them and presents scientific interpretation for some problems by using the result of the relationship. I use a literature approach to understand behavioral development economics and cognitive distortions and descriptive analysis of official data to know the status in Egypt. The paper investigates the effects of implementing ERP and the relationship on decision making, and the behavior of individuals in population growth, the consumption culture, consumer behavior, and production culture. This research finds the individuals had a problem in their knowledge base and socialization that led to cognitive distortions. It leads to influence negatively on the economic behavior of an individual, the economic performance of state and then on behavioral development economics.
Trotz der überwältigenden öffentlichen wie wissenschaftlichen Resonanz, auf die der Nudge-Ansatz von Thaler und Sunstein gestoßen ist, bleiben die genauen Konturen dieses Theorie und Policyvorschlages unscharf. So ist an vielen Stellen unklar, worin die spezifische Differenz gegenüber klassischen Formen der Verhaltenssteuerung liegen soll. Für eine Bewertung des Ansatzes in seinen Vorzügen und Nachteilen gegenüber klassischen Steuerungsformen ist eine solche klärende Einordnung jedoch notwendige Vorbedingung. Der Aufsatz arbeitet daher die bestehenden Definitions- und Abgrenzungsprobleme von „Nudge“ und „Libertärem Paternalismus“ heraus und plädiert sodann für einen Kernbegriff von „Nudge“, der dessen Extension einschränkt, um ihn als originären und eigenständigen Vorschlag einzugrenzen. Ein so präzisiertes Verständnis von Nudge wird dann hinsichtlich seiner Eigenschaften sowie der Gemeinsamkeiten und Unterschiede zu klassischen Formen der Verhaltenssteuerung ins Verhältnis gesetzt.
The neighbourhood provides a spatial context within which the well-being of individuals and households are shaped. Central and local governments recognise this essential role of neighbourhoods and often rely on deprivation indices to identify deprived areas and to guide policy actions. However, neighbourhoods are not confined to administrative boundaries, and looking at area-based deprivation on its own understate the significance of spatial context and the importance of what is nearby.
This thesis uses a spatial analytical approach to explore the impacts of neighbourhood spatial attributes on the measurement of deprivation. The aim is to improve the understanding of how these local spatial contextual differences could be integrated into the measurement of deprivation and why it matters.
Using different conceptualisations to define neighbourhood spatial context, modified versions of the 2015 English Index of Multiple Deprivation were produced to examine the effect of differences in neighbourhood spatial structure, spatial scale and spatial relations on the indices.
The findings of the research show that our understanding of deprivation in an area can be influenced by the spatial context of the neighbourhood. Accounting for neighbourhood spatial context within the measurement of deprivation significantly altered the IMD2015 rankings and decile classifications. The research also demonstrates that incorporating neighbourhood spatial attributes in assessing relative deprivation is methodologically feasible and can highlight areas which are deprived in terms of both within neighbourhood socioeconomic characteristics and characteristics of the wider local environment that forms part of its spatial opportunity structure.
This paper presents the theoretical foundations of Behavioral Law and Economics (BLE), as well as the practical implications of some key findings of this discipline. The author examines the roots of this discipline, its development, the most important representatives and opponents, and, most importantly, the boundaries of this discipline in relation to the
neoclassical Law and Economics (L&E), on the one hand, and Behavioral Economics, on the other hand. Since BLE “borrows” certain findings from psychology (especially from social psychology), it raises the issue of interconnection between these two disciplines, which will be analyzed en passant. The central questions that need to be addressed are whether BLE is a special and sufficiently developed scientific discipline, or is it only a
theoretical upgrade over its base (the neoclassical L&E), and what are the practical achievements and significance of its key findings in the field of dispute resolution policy?
Full-text download available at https://www.behavioraleconomics.com/be-guide/the-behavioral-economics-guide-2017/
Food waste is a problem that permeates the whole food supply chain. It causes economic loss, negative effects on the climate and depletion of finite resources. The scale of required change necessary to counteract the negative effects is huge. In Sweden's schools food waste loss is a matter of a costly wastage, both from an environmental perspective, but also with regard to municipalities' limited resources. Due to this, there is a big demand for waste loss reducing measures. Something that can help mitigate the extent of the food waste problem is behavioral change. Unfortunately, we cannot expect change to occur on one’s own. We need tools that can nudge us in the right direction.
This thesis is a theoretical base that explores and describes how nudging, a tool for sustainable behaviors, can be a part of the solution to the food waste problem in school canteens. Recommendations for design and implementation of such change strategies are presented, with a special focus on planned interventions (nudges) and practical application. The goal is that the study will contribute to the application of behavioral insights in the environmental field. The foundation of the thesis consists of two earlier studies, a literature study, aimed at examining nudging as a tool for sustainable societal development, and a pilot study, aimed at examining students' behavior in canteens, and how they deal with leftovers. The first study found a number of practical shortcomings if nudging (the tool) is to be used successfully, long-term and more extensively in environmental work. The pilot study found irrationally made decisions among students.
In order to answer how nudging can be part of the solution to the food waste problem in schools, the thesis applied the strategic framework for sustainable development. According to the strategic framework for sustainable development nudges employs as a catalyzing action while nudging is a tangible tool for strategic behavior change management. In the thesis nudging and nudges are presented as two separate parts of the behavior change management process, this also illustrates how each part can be part of the solution to the problem, because it clarifies the scope of the notions and their role in resolving the issue. Based on knowledge gained from the pilot study, the thesis draws conclusions that there is a theoretical potential to use nudging to encourage sustainable development in school canteens and reduce food waste, especially when students are about to leave the canteen, but also in the serving situation and during everyday school hours. Identified areas to focus on when applying nudges were mainly evaluation and feedback, smart anchors, order, normative messages, commitment, reminders, fewer options, strategic planning, loss disclosure and less social proof.
In addition to this, the thesis finally gave suggestions for working with nudging from an above- or below perspective (by integrating assessment questions in the decision-making process) to adjust the application of interventions.
Full-text download available at https://www.behavioraleconomics.com/be-guide/the-behavioral-economics-guide-2016/
Humans and animals make inferences about the world under limited time and knowledge. In contrast, many models of rational inference treat the mind as a Laplacean Demon, equipped with unlimited time, knowledge, and computational might. Following Herbert Simon's notion of satisficing, this chapter proposes a family of algorithms based on a simple psychological mechanism: one-reason decision making. These fast-and-frugal algorithms violate fundamental tenets of classical rationality: It neither looks up nor integrates all information. By computer simulation, a competition was held between the satisficing "take-the-best" algorithm and various "rational" inference procedures (e.g., multiple regression). The take-the-best algorithm matched or outperformed all competitors in inferential speed and accuracy. This result is an existence proof that cognitive mechanisms capable of successful performance in the real world do not need to satisfy the classical norms of rational inference.
Staged 2 different videotaped interviews with the same individual--a college instructor who spoke English with a European accent. In one of the interviews the instructor was warm and friendly, in the other, cold and distant. 118 undergraduates were asked to evaluate the instructor. Ss who saw the warm instructor rated his appearance, mannerisms, and accent as appealing, whereas those who saw the cold instructor rated these attributes as irritating. Results indicate that global evaluations of a person can induce altered evaluations of the person's attributes, even when there is sufficient information to allow for independent assessments of them. Furthermore, Ss were unaware of this influence of global evaluations on ratings of attributes. In fact, Ss who saw the cold instructor actually believed that the direction of influence was opposite to the true direction. They reported that their dislike of the instructor had no effect on their rating of his attributes but that their dislike of his attributes had lowered their global evaluations of him. (PsycINFO Database Record (c) 2006 APA, all rights reserved).
We review explanations offered by researchers for optimism in comparative risk judgments - the belief that one is at lower risk than other people for negative events. Our review organizes the explanations into four categories. The categories reflect a) the desired end-states of comparative judgments, b) the cognitive processes that guide judgments, c) the information people have or use in making judgments, and d) the underlying affect. For each explanation we review relevant studies. We conclude by discussing whether comparative optimism reflects a distortion in personal risk judgments or judgments of the average person's risk, by addressing the interplay of the various accounts of comparative optimism, and by discussing directions for future research.
We examined how narcissists engage in information processing in a scarcity-related purchase situation. We proposed that narcissists would engage in purchase-related information processing in a way consistent with their conception of themselves as unique and distinctive and would tend to have a strong preference for scarce products that impart unique value. We also predicted that narcissists would tend to purchase scarce products without undertaking deliberate information processing regarding utilitarian product characteristics. We found that narcissists have a stronger preference for scarce products when compared to their non-narcissistic counterparts and that narcissists tend to purchase scarce products without engaging in deliberate information processing regarding utilitarian product characteristics.
Although customized price promotions are increasingly common in the marketplace, relatively little is known about how deal recipients evaluate them. The authors investigate the role of a promotional characteristic that has received little attention in the literature by examining whether consumers' responsiveness to a targeted discount is influenced by their perceptions of the deal's exclusivity (i.e., the degree to which the offer is available only to them or to other consumers as well). The results demonstrate that exclusive promotions may be viewed more, equally, or less favorably than inclusive offers, depending on several factors used in decisions about the delivery of targeted offers (e.g., customer demographics, transactional histories). Specifically, the authors find that exclusive deals are favored over inclusive offers (Study 1), a preference that is pronounced for consumers adopting independent self-construals (Study 2) and for male consumers with a history of purchasing from the marketer providing the offer (Study 3). These exclusivity effects are mediated by the ability of the promotional offer to allow consumers to engage in self-enhancement (Study 3).
Consumers often behave differently than they would ideally like to behave. We propose that an anticipatory pain of paying drives “tightwads” to spend less than they would ideally like to spend. “Spendthrifts,” by contrast, experience too little pain of paying and typically spend more than they would ideally like to spend. This article introduces and validates the “spendthrift-tightwad” scale, a measure of individual differences in the pain of paying. Spending differences between tightwads and spendthrifts are greatest in situations that amplify the pain of paying and smallest in situations that diminish the pain of paying.
For informal justice to be restorative justice, it has to be about restoring victims, restoring offenders, and restoring communities as a result of participation of a plurality of stakeholders. This means that victim-offender mediation, healing circles, family group conferences, restorative probation, reparation boards on the Vermont model, whole school antibullying programs, Chinese Bang Jiao programs, and exit conferences following Western business regulatory inspections can at times all be restorative justice. Sets of both optimistic propositions and pessimistic claims can be made about restorative justice by contemplating the global diversity of its practice. Examination of both the optimistic and the pessimistic propositions sheds light on prospects for restorative justice. Regulatory theory (a responsive regulatory pyramid) may be more useful for preventing crime in a normatively acceptable way than existing criminal law jurisprudence and explanatory theory. Evidence-based reform must move toward a more productive checking of restorative justice by liberal legalism, and vice verse.
Two experiments examined the effects of answering a question about a specific component of life satisfaction on respondents' assessment of their overall satisfaction with life. The results suggest that the use of primed information in forming subsequent judgments is determined by Grice's conversational norms. In general, answering the specific question increases the accessibility of information relevant to that question. However, the effect that this has on the general judgment depends on the way in which the two questions are presented. When the two questions are merely placed in sequence without a conversational context, the answer to the subsequent general question is based in part on the primed specific information. As a result, the answer to the general question becomes similar to that for the specific question (i.e. assimilation). However, this does not occur when the two questions are placed in a communication context. Conversational rules dictate that communicators should be informative and should avoid redundancy in their answers. Therefore, when a specific and a general question are perceived as belonging to the same conversational context, the information on which the answer to the specific question was based is disregarded when answering the general one. This attenuates the assimilation effect. The conditions under which these different processes occur are identified and experimentally manipulated, and the implications of these findings for models of information use in judgment are discussed.
University students in Poland and the United States, two countries that differ in individualistic-collectivistic orientation, indicated their willingness to comply with a request to participate without pay in a marketing survey. Half were asked to do so after considering information regarding their own history of compliance with such requests, whereas the other half were asked to do so after considering information regarding their peers’ history of such compliance. This was designed to assess the impact of two social influence principles (commitment/consistency and social proof, respectively) on participants’ decisions. As expected, although both principles were influential across cultures, the commitment/consistency principle had greater impact on Americans, whereas the social proof principle had greater impact on Poles. Additional analyses indicated that this effect was due principally, but not entirely, to participants’ personal individualistic-collectivistic orientations rather than to the dominant individualistic-collectivistic orientation of their cultures.
This paper investigates the processes underlying consumers’ memory-based store price judgments. The numerosity heuristic implies that the greater the number of relatively lower priced products at a store that consumers can recall, the lower will be their overall price image of the store. That is, people use the number of recalled low-price products to judge the overall store price image. We show that this expectation holds only for knowledgeable consumers. Instead, less knowledgeable consumers use the ease with which low-price products are recalled (i.e., the availability heuristic) as a cue to make store price judgments. Therefore, the fewer low-price products they recall, the easier their recall task, and the lower their price perceptions of the store.Field studies using different manipulations tested and confirmed these predictions. Managerial implications for retailers are offered. Theoretical implications for behavioral price perceptions, memory-based judgments, and the use of heuristic cues are also discussed.
Confirmation bias, as the term is typically used in the psychological literature, connotes the seeking or interpreting of evidence in ways that are partial to existing beliefs, expectations, or a hypothesis in hand. The author reviews evidence of such a bias in a variety of guises and gives examples of its operation in several practical contexts. Possible explanations are considered, and the question of its utility or disutility is discussed. When men wish to construct or support a theory, how they torture facts into their service! (Mackay, 1852/ 1932, p. 552) Confirmation bias is perhaps the best known and most widely accepted notion of inferential error to come out of the literature on human reasoning. (Evans, 1989, p. 41) If one were to attempt to identify a single problematic aspect of human reasoning that deserves attention above all others, the confirma- tion bias would have to be among the candidates for consideration. Many have written about this bias, and it appears to be sufficiently strong and pervasive that one is led to wonder whether the bias, by itself, might account for a significant fraction of the disputes, altercations, and misun- derstandings that occur among individuals, groups, and nations.
There appears to be general agreement among social psychologists that most human behavior is goal-directed (e. g., Heider, 1958 ; Lewin, 1951). Being neither capricious nor frivolous, human social behavior can best be described as following along lines of more or less well-formulated plans. Before attending a concert, for example, a person may extend an invitation to a date, purchase tickets, change into proper attire, call a cab, collect the date, and proceed to the concert hall. Most, if not all, of these activities will have been designed in advance; their execution occurs as the plan unfolds. To be sure, a certain sequence of actions can become so habitual or routine that it is performed almost automatically, as in the case of driving from home to work or playing the piano. Highly developed skills of this kind typically no longer require conscious formulation of a behavioral plan. Nevertheless, at least in general outline, we are normally well aware of the actions required to attain a certain goal. Consider such a relatively routine behavior as typing a letter. When setting this activity as a goal, we anticipate the need to locate a typewriter, insert a sheet of paper, adjust the margins, formulate words and sentences, strike the appropriate keys, and so forth. Some parts of the plan are more routine, and require less conscious thought than others, but without an explicit or implicit plan to guide the required sequence of acts, no letter would get typed.
The way a choice is presented influences what a decision-maker chooses. This paper outlines the tools available to choice architects, that is anyone who present people with choices. We divide these tools into two categories: those used in structuring the choice task and those used in describing the choice options. Tools for structuring the choice task address the idea of what to present to decision-makers, and tools for describing the choice options address the idea of how to present it. We discuss implementation issues in using choice architecture tools, including individual differences and errors in evaluation of choice outcomes. Finally, this paper presents a few applications that illustrate the positive effect choice architecture can have on real-world decisions.
Every day, we make decisions on topics ranging from personal investments to schools for our children to the meals we eat to the causes we champion. Unfortunately, we often choose poorly. The reason, the authors explain, is that, being human, we all are susceptible to various biases that can lead us to blunder. Our mistakes make us poorer and less healthy; we often make bad decisions involving education, personal finance, health care, mortgages and credit cards, the family, and even the planet itself. Thaler and Sunstein invite us to enter an alternative world, one that takes our humanness as a given. They show that by knowing how people think, we can design choice environments that make it easier for people to choose what is best for themselves, their families, and their society. Using colorful examples from the most important aspects of life, Thaler and Sunstein demonstrate how thoughtful "choice architecture" can be established to nudge us in beneficial directions without restricting freedom of choice. Nudge offers a unique new take-from neither the left nor the right-on many hot-button issues, for individuals and governments alike. This is one of the most engaging and provocative books to come along in many years. © 2008 by Richard H. Thaler and Cass R. Sunstein. All rights reserved.
24 17–33 yr olds saw a list of 96 words. They were tested both 1 hr and 7 days later for recognition of words encountered in the study list and their ability to complete graphemic word fragments. Performance on the fragment-completion task was primed (facilitated) by the appearance of the target words in the earlier list. The observed priming effects were independent of recognition memory in 2 ways: (1) although recognition accuracy was greatly diminished over the 7-day retention interval, priming effects were unchanged; and (2) priming effects were as large for the words identified as "new" in the immediately preceding recognition test as they were for the words identified as "old." Priming effects in word-fragment completion may be mediated by a cognitive system other than episodic and semantic memory. (23 ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Tested 3 hypotheses concerning people's predictions of task completion times: (1) people underestimate their own but not others' completion times, (2) people focus on plan-based scenarios rather than on relevant past experiences while generating their predictions, and (3) people's attributions diminish the relevance of past experiences. Five studies were conducted with a total of 465 undergraduates. Results support each hypothesis. Ss' predictions of their completion times were too optimistic for a variety of academic and nonacademic tasks. Think-aloud procedures revealed that Ss focused primarily on future scenarios when predicting their completion times. The optimistic bias was eliminated for Ss instructed to connect relevant past experiences with their predictions. Ss attributed their past prediction failures to external, transient, and specific factors. Observer Ss overestimated others' completion times and made greater use of relevant past experiences. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Staged 2 different videotaped interviews with the same individual—a college instructor who spoke English with a European accent. In one of the interviews the instructor was warm and friendly, in the other, cold and distant. 118 undergraduates were asked to evaluate the instructor. Ss who saw the warm instructor rated his appearance, mannerisms, and accent as appealing, whereas those who saw the cold instructor rated these attributes as irritating. Results indicate that global evaluations of a person can induce altered evaluations of the person's attributes, even when there is sufficient information to allow for independent assessments of them. Furthermore, Ss were unaware of this influence of global evaluations on ratings of attributes. In fact, Ss who saw the cold instructor actually believed that the direction of influence was opposite to the true direction. They reported that their dislike of the instructor had no effect on their rating of his attributes but that their dislike of his attributes had lowered their global evaluations of him. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Recent research has revealed a pattern of choice characterized as
diversification bias: If people make combined choices of quantities of goods for future consumption, they choose more variety than if they make separate choices immediately preceding consumption. This phenomenon is explored in a series of experiments in which the researchers first eliminated several hypotheses that held that the discrepancy between combined and separate choice can be explained by traditional accounts of utility maximization. On the basis of results of further experiments, it was concluded that the diversification bias is largely attributable to 2 mechanisms:
time contraction, which is the tendency to compress time intervals and treat long intervals as if they were short, and
choice bracketing, which is the tendency to treat choices that are framed together differently from those that are framed apart. The researchers describe how the findings can be applied in the domains of marketing and consumer education. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Conducted 3 experiments to test the effectiveness of a rejection-then-moderation procedure for inducing compliance with a request for a favor. Ss were a total of 202 passersby on a university campus. All 3 experiments included a condition in which a requester first asked for an extreme favor (which was refused to him) and then for a smaller favor. In each instance, this procedure produced more compliance with the smaller favor than a procedure in which the requester asked solely for the smaller favor. Additional control conditions in each experiment support the hypothesis that the effect is mediated by a rule for reciprocation of concessions. Several advantages to the use of the rejection-then-moderation procedure for producing compliance are discussed. (15 ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
We explore the influence of social norms on behavior. To do so, we introduce a method for identifying norms, based on the property that social norms reflect social consensus regarding the appropriateness of different possible behaviors. We demonstrate that the norms we elicit, along with a simple model combining concern for norm-compliance with utility for money, predict changes in behavior across several variants of the dictator game in which behavior changes substantially following the introduction of minor contextual variations. Our findings indicate that people care not just about monetary payoffs but also care about the social appropriateness of any action they take. Our work also suggests that a social norm is not always a single action that should or should not be taken, but rather a profile of varying degrees of social appropriateness for different available actions.
When confronted with an ethical dilemma, most of us like to think we would stand up for our principles. But we are not as ethical as we think we are. InBlind Spots, leading business ethicists Max Bazerman and Ann Tenbrunsel examine the ways we overestimate our ability to do what is right and how we act unethically without meaning to. From the collapse of Enron and corruption in the tobacco industry, to sales of the defective Ford Pinto and the downfall of Bernard Madoff, the authors investigate the nature of ethical failures in the business world and beyond, and illustrate how we can become more ethical, bridging the gap between who we are and who we want to be.Explaining why traditional approaches to ethics don't work, the book considers how blind spots like ethical fading--the removal of ethics from the decision--making process--have led to tragedies and scandals such as the Challenger space shuttle disaster, steroid use in Major League Baseball, the crash in the financial markets, and the energy crisis. The authors demonstrate how ethical standards shift, how we neglect to notice and act on the unethical behavior of others, and how compliance initiatives can actually promote unethical behavior. Distinguishing our "should self" (the person who knows what is correct) from our "want self" (the person who ends up making decisions), the authors point out ethical sinkholes that create questionable actions.Suggesting innovative individual and group tactics for improving human judgment,Blind Spotsshows us how to secure a place for ethics in our workplaces, institutions, and daily lives.
Many decisions are based on beliefs concerning the likelihood of uncertain events such as the outcome of an election, the guilt of a defendant, or the future value of the dollar. Occasionally, beliefs concerning uncertain events are expressed in numerical form as odds or subjective probabilities. In general, the heuristics are quite useful, but sometimes they lead to severe and systematic errors. The subjective assessment of probability resembles the subjective assessment of physical quantities such as distance or size. These judgments are all based on data of limited validity, which are processed according to heuristic rules. However, the reliance on this rule leads to systematic errors in the estimation of distance. This chapter describes three heuristics that are employed in making judgments under uncertainty. The first is representativeness, which is usually employed when people are asked to judge the probability that an object or event belongs to a class or event. The second is the availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a class or the plausibility of a particular development, and the third is adjustment from an anchor, which is usually employed in numerical prediction when a relevant value is available.
Managers regularly implement new ideas without evidence to back them up. They act on hunches and often learn very little along the way. That doesn't have to be the case. With the help of broadly available software and some basic investments in building capabilities, managers don't need a PhD in statistics to base consequential decisions on scientifically sound experiments. Some companies with rich consumer-transaction data-Toronto-Dominion, CKE Restaurants, eBay, and others-are routinely testing innovations well outside the realm of product R&D. As randomized testing becomes standard procedure in certain settings (website analysis, for instance), firms learn to apply it in other areas as well. Entire organizations that adopt a "test and learn" culture stand to realize the greatest benefits. That said, firms need to determine when formal testing makes sense. Generally, it's much more applicable to tactical decisions (such as choosing a new store format) than to strategic ones (such as figuring out whether to acquire a business). Tests are useful only if managers define and measure desired outcomes and formulate logical hypotheses about how proposed interventions will play out. To begin incorporating more scientific management into your business, acquaint managers at all levels with your organization's testing process. A shared understanding of what constitutes a valid test-and how it jibes with other processes-helps executives to set expectations and innovators to deliver on them. The process always begins with creating a testable hypothesis. Then the details of the test are designed, which means identifying sites or units to be tested, selecting control groups, and defining test and control situations. After the test is carried out for a specified period, managers analyze the data to determine results and appropriate actions. Results ideally go into a "learning library," so others can benefit from them.
The chameleon effect refers to nonconscious mimicry of the postures, mannerisms, facial expressions, and other behaviors of one's interaction partners, such that one's behavior passively rind unintentionally changes to match that of others in one's current social environment. The authors suggest that the mechanism involved is the perception-behavior link, the recently documented finding (e.g., J. A. Bargh, M. Chen, & L. Burrows, 1996) that the mere perception of another' s behavior automatically increases the likelihood of engaging in that behavior oneself Experiment 1 showed that the motor behavior of participants unintentionally matched that of strangers with whom they worked on a task. Experiment 2 had confederates mimic the posture and movements of participants and showed that mimicry facilitates the smoothness of interactions and increases liking between interaction partners. Experiment 3 showed that dispositionally empathic individuals exhibit the chameleon effect to a greater extent than do other people.
This article introduces the Emergency Purchasing Situation (EPS) as a distinct buying context. EPSs stem from an unexpected event (unanticipated need or timing of a need), as well as high product importance, which are associated with a short time frame for consumer decision-making. Our conceptual review integrates largely disconnected strands of research and theories relevant to EPSs and offers a series of independent propositions to understand how these situations might affect consumer decision-making, specifically heuristic versus reflective information processing in product evaluation. We discuss changes induced by the buying context in terms of regulatory focus, perceived time pressure, and stress. Our propositions further account for purchase involvement in the form of product importance, purchase risk, and product substitutability. Finally, we consider how individual differences (expertise and trust) may affect evaluation processes. Our discussion reflects on the implications of our model, avenues for future research, and how an understanding of EPSs can be used to improve managerial practice.
Hindsight bias can be considered a type of memory distortion. In this article we compare hindsight bias to two other types of memory distortion, the misinformation effect and the experimental creation of false autobiographical beliefs and memories. We underline the similarities in the procedures used to elicit these phenomena and propose that the results favor a reconstructive explanation of all three. We also discuss possible mechanisms that might subsume them.
Three experiments tested the effects of ego depletion on economic decision making. Participants completed a task either requiring self-control or not. Then participants learned about the trust game, in which senders are given an initial allocation of $10 to split between themselves and another person, the receiver. The receiver receives triple the amount given and can send any, all, or none of the tripled money back to the sender. Participants were assigned the role of the sender and decided how to split the initial allocation. Giving less money, and therefore not trusting the receiver, is the safe, less risky response. Participants who had exerted self-control and were depleted gave the receiver less money than those in the non-depletion condition (Experiment 1). This effect was replicated and moderated in two additional experiments. Depletion again led to lower amounts given (less trust), but primarily among participants who were told they would never meet the receiver (Experiment 2) or who were given no information about how similar they were to the receiver (Experiment 3). Amounts given did not differ for depleted and non-depleted participants who either expected to meet the receiver (Experiment 2) or were led to believe that they were very similar to the receiver (Experiment 3). Decreased trust among depleted participants was strongest among neurotics. These results imply that self-control facilitates behavioral trust, especially when no other cues signal decreased social risk in trusting, such as if an actual or possible relationship with the receiver were suggested.
Dual system and dual process views of the human mind have contrasted automatic, fast, and non-conscious with controlled, slow, and conscious thinking. This paper integrates duality models from the perspective of consumer psychology by identifying three relevant theoretical strands: Persuasion and attitude change (e.g. Elaboration Likelihood Model), judgment and decision making (e.g. Intuitive vs. Reflective Model), as well as buying and consumption behavior (e.g. Reflective-Impulsive Model). Covering different aspects of consumer decision making, we discuss the conditions under which different types of processes are evoked, how they interact and how they apply to consumers’ processing of marketing messages, the evaluation of product-related information, and purchasing behavior. We further compare and contrast theoretical strands and incorporate them with the literature on attitudes, showing how duality models can help us understand implicit and explicit attitude formation in consumer psychology. Finally, we offer future research implications for scholars in consumer psychology and marketing.
In four studies in which consumers assembled IKEA boxes, folded origami, and built sets of Legos, we demonstrate and investigate boundary conditions for the IKEA effect—the increase in valuation of self-made products. Participants saw their amateurish creations as similar in value to experts' creations, and expected others to share their opinions. We show that labor leads to love only when labor results in successful completion of tasks; when participants built and then destroyed their creations, or failed to complete them, the IKEA effect dissipated. Finally, we show that labor increases valuation for both “do-it-yourselfers” and novices.
jurors in the U.S. legal system face a difficult challenge; they must ignore negative outcomes, and judge the defendant's pre-outcome actions in a fairway. This method of rejudging the pastwhile trying to ignore certain information, makes jurors vulnerable to hindsight bias. In this article I review a growing body of research that demonstrates the detrimental effects of hindsight bias on legal decision making. Topics examined include: effects of hindsight bias on judgments of legal liability and medical malpractice litigation, the relationship between the severity of the outcome and the size of the hindsight bias effect, the role of visual hindsight bias in the courtroom, and hindsight bias in experts. I end with a review of studies that have attempted to reduce or eliminate hindsight bias in the courtroom.
The authors demonstrate that partitioning an aggregate quantity of a resource (e.g., food or money) into smaller units reduces the consumed quantity or the rate of consumption of that resource. Partitions draw attention to the consumption decision by introducing a small transaction cost; i.e., they provide more decision making opportunities so that prudent consumers are able to control consumption. Thus, individuals are better able to constrain consumption when resources associated with a desirable activity (which individuals are trying to control) are partitioned rather than when they are aggregated. This effect of partitioning is demonstrated for consumption of chocolates (study 1) and gambles (study 2). In study 3 process measures reveal that partitioning increases recall accuracy and decision times. Importantly, the effect of partitioning diminishes when consumers are not trying to regulate consumption (studies 1 and 3). Finally, study 4 explores how habituation may decrease the amount of attention that partitions draw to consumption. In this context, partitions control consumption to a greater extent when the nature of partitions changes frequently.
Consumer behavior offers a useful window on human nature, through which many distinctively human patterns of cognition and behavior can be observed. Consumer behavior should therefore be of central interest to a broad range of psychologists. These patterns include much of what is commonly understood as free will. Our approach to understanding free will sidesteps metaphysical and theological debates. Belief in free will is pervasive in human social life and contributes to its benefits. Evolution endowed humans with a new form of action control, which is what people understand by free will. Its complexity and flexibility are suited to the distinctively human forms of social life in culture, with its abstract rules, expanded time span, diverse interdependent roles, and other sources of opportunities and constraints. Self-control, planful action, and rational choice are vital forms of free will in this sense. The capacity for self-control and intelligent decision making involves a common, limited resource that uses the body's basic energy supply. When this resource is depleted, self-control fails and decision making is impaired.
The chapter presents the two very different basic processes that link attitudes and behavior, along with variants that amount to a mixture of the essentials of each process. Conditions that promote one process or the other also are discussed in the chapter. This discussion of mixed models illustrates the complexity of the role of spontaneous and deliberative processing to understand the manner in which attitudes influence behavior. The basic difference between the two types of models of the attitude-behavior process centers on the extent to which deciding on a particular course of action involves conscious deliberation about a spontaneous reaction to one's perception of the immediate situation. An individual may analyze the costs and benefits of a particular behavior and, in so doing, deliberately reflect on the attitudes relevant to the behavioral decision. These attitudes may serve as one of possibly many dimensions that are considered in arriving at a behavior plan, which may then be enacted.
This paper re-examines the commonly observed inverse relationship between per- ceived risk and perceived benefit. We propose that this relationship occurs because people rely on aÄect when judging the risk and benefit of specific hazards. Evidence supporting this proposal is obtained in two experimental studies. Study 1 investigated the inverse relationship between risk and benefit judgments under a time-pressure condition designed to limit the use of analytic thought and enhance the reliance on aÄect. As expected, the inverse relationship was strengthened when time pressure was introduced. Study 2 tested and confirmed the hypothesis that providing information designed to alter the favorability of one's overall aÄective evaluation of an item (say nuclear power) would systematically change the risk and benefit judgments for that item. Both studies suggest that people seem prone to using an 'aÄect heuristic' which improves judgmental eÅciency by deriving both risk and benefit evaluations from a common source — aÄective reactions to the stimulus item. Copyright # 2000 John Wiley & Sons, Ltd.
This paper explores a heuristic-representativeness-according to which the subjective probability of an event, or a sample, is determined by the degree to which it: (i) is similar in essential characteristics to its parent population; and (ii) reflects the salient features of the process by which it is generated. This heuristic is explicated in a series of empirical examples demonstrating predictable and systematic errors in the evaluation of un- certain events. In particular, since sample size does not represent any property of the population, it is expected to have little or no effect on judgment of likelihood. This prediction is confirmed in studies showing that subjective sampling distributions and posterior probability judgments are determined by the most salient characteristic of the sample (e.g., proportion, mean) without regard to the size of the sample. The present heuristic approach is contrasted with the normative (Bayesian) approach to the analysis of the judgment of uncertainty.
Mental accounting is the set of cognitive operations used by individuals and households to organize, evaluate, and keep track of financial activities. Making use of research on this topic over the past decade, this paper summarizes the current state of our knowledge about how people engage in mental accounting activities. Three components of mental accounting receive the most attention. This first captures how outcomes are perceived and experienced, and how decisions are made and subsequently evaluated. The accounting system provides the inputs to be both ex ante and ex post cost-benefit analyses. A second component of mental accounting involves the assignment of activities to specific accounts. Both the sources and uses of funds are labeled in real as well as in mental accounting systems. Expenditures are grouped into categories (housing, food, etc.) and spending is sometimes constrained by implicit or explicit budgets. The third component of mental accounting concerns the frequency with which accounts are evaluated and 'choice bracketing'. Accounts can be balanced daily
Presents examples in which a decision, preference, or emotional reaction is controlled by factors that may appear irrelevant to the choice made. The difficulty people have in maintaining a comprehensive view of consequences and their susceptibility to the vagaries of framing illustrate impediments to rational decision making. However, experimental surveys indicate that such departures from objectivity tend to follow regular patterns that can be described mathematically. The descriptive study of preferences also challenges the theory of rational choice, as it is often unclear whether the effects of decision weights, reference points, framing, and regret should be considered as errors or biases or whether they should be accepted as valid elements of human experience. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Dietary flavonoids, abundant in plant-based foods, have been shown to improve cognitive function. Specifically, a reduction in the risk of dementia, enhanced performance on some cognitive tests, and improved cognitive function in elderly patients with mild impairment have been associated with a regular intake of flavonoids.(1),(2) A subclass of flavonoids called flavanols, which are widely present in cocoa, green tea, red wine, and some fruits, seems to be effective in slowing down or even reversing the reductions in cognitive performance that occur with aging. Dietary flavanols have also been shown to improve endothelial function and to lower blood pressure . . .