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Animal Spirits: Affective and Deliberative Processes in Economic Behavior
Abstract
We propose an extension of Harsanyi's Impartial Observer Theorem based on the representation of ignorance as the set of all possible probability distributions over individuals. We obtain a characterization of the observer's preferences that, under our most restrictive conditions, is a convex combination of Harsanyi's utilitarian and Rawls' egalitarian criteria. This representation is ethically meaningful, in the sense that individuals' utilities are cardinally measurable and fully comparable. This allows us to conclude that the impartiality requirement cannot be used to decide between Rawls' and Harsanyi's positions.
... The first, and perhaps best-known example of this is the study of judgment and decision-making under risk and uncertainty in the Heuristics and Biases tradition Kahneman 1973, 1974;Kahneman et al. 1982;Frederick 2002, 2005). The second is the refinement of intrapersonal and intertemporal choice models for studying time preferences and self-control problems (Loewenstein 1996(Loewenstein , 2000Bénabou and Tirole 2002;Bernheim and Rangel 2004;Benhabib and Bisin 2005;Loewenstein and O'Donoghue 2005;Fudenberg & Levine 2006). Unlike neoclassical decision models that presume agents to be faultless utilitymaximizers and which often resort to ad hoc explanations to justify deviations from expected utility theory, DPT has provided behavioral economists and neuroeconomists with psychologically plausible foundations to represent the internal dynamics of decision-making (Grayot 2019). ...
... 4 For a critical reflection on Thaler's legacy in behavioral economics, especially with regard to his attempts to make economics psychologically more realistic, see Grüne-Yanoff (2017). examples of this sort of model include Bénabou and Tirole (2002), Bernheim and Rangel (2004), Benhabib and Bisin (2005), Loewenstein and O'Donoghue (2005) and Fudenberg and Levine (2006), to name a few. In particular, multiple-agent models of intrapersonal and intertemporal choice have sought to characterize the "contradictory tendencies of temporally distinct selves by investigating how controlled and automatic processes influence choice behaviors over time" (Grayot 2019, p. 4). ...
... Bénabou & Tirole (2002, 2003, Fudenberg & Levine (2006), adopt a dual-self model in which the decision-maker is temporally divided, the latter, i.e. Benhabib and Bisin (2005), Loewenstein and O'Donoghue (2005), start with a conception of the decision-maker who is already psychologically divided into dual-systems; the model then seeks to understand how both static and dynamic choice phenomena result from interactions between systems. ...
Despite their popularity, dual process accounts of human reasoning and decision-making have come under intense scrutiny in recent years. Cognitive scientists and philosophers alike have come to question the theoretical foundations of the ‘standard view’ of dual process theory and have challenged the validity and relevance of evidence in support of it. Moreover, attempts to modify and refine dual process theory in light of these challenges have generated additional concerns about its applicability and refutability as a scientific theory. With these concerns in mind, this paper provides a critical review of dual process theory in economics, focusing on its role as a psychological framework for decision modeling in behavioral economics and neuroeconomics. I argue that the influx of criticisms against dual process theory challenge the descriptive accuracy of dualistic decision models in economics. In fact, the case can be made that the popularity of dual process theory in economics has less to do with the empirical success of dualistic decision models, and more to do with the convenience that the dual process narrative provides economists looking to explain-away decision anomalies. This leaves behavioral economists and neuroeconomists with something of a dilemma: either they stick to their purported ambitions to give a realistic description of human decision-making and give up the narrative, or they revise and restate their scientific ambitions.
... Common economic justifications for taxing or regulating any good (including harm reduction methods) include the neoclassical rationale of addressing negative externalities, and the behavioral economics rationale of addressing "internalities" that arise because of temptation and self-control costs. To allow for this latter possibility, we extend the benchmark model and consider a dual-self individual who makes farsighted decisions, but pays temptation costs to resist the myopic desire for immediate gratification (Gul and Pesendorfer, 2004;Loewenstein and O'Donoghue, 2004;Fudenberg and Levine, 2006;Gul and Pesendorfer, 2007). Our main results hold. ...
... The economic rationale for taxes or regulations include, from the neoclassical perspective, a desire to address negative externalities, and from the behavioral economics perspective, a desire to address "internalities" arising from temptation and costly self-control (Herrnstein et al., 1993). In this section, we allow for the latter by incorporating a dual-self model, in which observed choices are the result of a disagreement between a rational, forward-looking self that takes into account long-term consequences, and a myopic, impulsive self that prefers immediate gratification without considering future consequences (Gul and Pesendorfer, 2004;Loewenstein and O'Donoghue, 2004;Fudenberg and Levine, 2006;Gul and Pesendorfer, 2007). ...
... I adopt the term 'multiple-agent model' to denote a special kind of interdisciplinary model which conceives of multiple agents with contrasting psychological abilities. For example, Bénabou and Tirole (2002), Bernheim and Rangel (2004), Benhabib and Bisin (2005), Loewenstein and O'Donoghue (2005), and Fudenberg and Levine (2006) each have sought to characterize the contradictory tendencies of temporally distinct selves by investigating how controlled and automatic processes influence choice behaviors over time. In some instances, the intrapersonal dynamic between sequential selves is taken to establish the limitations on the decision-maker's ability to exhibit self-control (Bénabou and Tirole 2002;Fudenberg and Levine 2006). ...
... In some instances, the intrapersonal dynamic between sequential selves is taken to establish the limitations on the decision-maker's ability to exhibit self-control (Bénabou and Tirole 2002;Fudenberg and Levine 2006). In other instances, the conflict between an individual's desire to consume now or later is interpreted as a trade-off between distinct systems, whose aims are regulated by the activation of different cognitive processes (Benhabib and Bisin 2005;Loewenstein and O'Donoghue 2005). Likewise, some neuroeconomic approaches to decision-making have modeled brain processes based on what economists interpret to be optimizing procedures. ...
... However, this model is often contradicted by experimental data (Frederick et al. 2002). Some studies have focused on providing proof that discount rates are not constant but decrease over time (e.g., O'Donoghue and Rabin 1999;Loewenstein and O'Donoghue 2004;Benhabib et al. 2010;Wang et al. 2016); that is, discount rates exhibit a "present bias" or preference for immediate utility. These characteristics can be expressed by a quasi-hyperbolic discounting model defined by Laibson (1997) andRabin (1999). ...
... The variable β is defined as the degree of "present bias", and a smaller β is associated with a larger preference for the present. Individuals with more present-biased preferences show higher levels of impatience in making short-term decisions and tend to pay more attention to the immediate utility (Loewenstein and O'Donoghue 2004;Wang et al. 2016). Therefore, we expect that higher levels of present-biased preferences (i.e., a smaller β) will result in a greater probability of contract breach among the farmers. ...
Farmers’ contract breach behavior is cited as one of the major stumbling blocks in the sustainable expansion of contract farming in many developing countries. This paper examines farmers’ contract breach decisions from the perspective of time preferences. The empirical analysis is based on a household survey and economic field experiments of poultry households participating in contract farming conducted in Jiangsu province, China. A discounted utility model and a maximum likelihood technique are applied to estimate farmers’ time preferences and the effect of time preferences on contract breach in the production and sales phases are explored with a bivariate probit model. The results show that, on average, the poultry farmers in the sample are generally present biased and impatient regarding future utility. The regression results show that farmers with a higher preference for the present and a higher discount rate are more likely to breach contracts, and time preferences play a greater role in the production phase than in the sales phase. When considering heterogeneity, specific investments and transaction costs promote contract stability only for farmers with a low degree of impatience. Moreover, compared with large-scale farmers, small-scale farmers’ contract breach decisions are more significantly affected by their time preferences. These results have implications for contract stability policies and other issues that are impacted by the linking of behavioral preferences to agricultural decisions.
... These two models emphasized the role of emotion in fairness-related decision making, but ignored the regulation of emotion by cognition in modulating behavior. The Dual-Process System claims that the rational system and the emotional system are dual subsystems in fairness-related decision making, with the former prompting an adaptive response to different situations by regulating the latter (Loewenstein and O'Donoghue, 2004;Sanfey and Chang, 2008;Feng et al., 2015). This review summarizes these models of the impact of emotions on fairness-related decision making and the corresponding behavioral and neural evidence. ...
... The Dual-process System claims that there are dual subsystems in fairness-related decision making: one is automatic, with an immediate response and an emotional system with no cognitive effort, whereas the other is controlled and comparatively slow, with a rational system of cognitive effort. The emotional system represents the intuitive response; however, after learning and calculation, the rational system requires an adaptive response to different situations by regulating the emotional system (Loewenstein and O'Donoghue, 2004;Sanfey and Chang, 2008;Feng et al., 2015). Fairness-related decision making is influenced by systematically and effectively regulating responders' fairness perceptions via rational cognitive control (Rilling and Sanfey, 2011). ...
Fairness-related decision making is an important issue in the field of decision making. Traditional theories emphasize the roles of inequity aversion and reciprocity, whereas recent research increasingly shows that emotion plays a critical role in this type of decision making. In this review, we summarize the influences of three types of emotions (i.e., the integral emotion experienced at the time of decision making, the incidental emotion aroused by a task-unrelated dispositional or situational source, and the interaction of emotion and cognition) on fairness-related decision making. Specifically, we first introduce three dominant theories that describe how emotion may influence fairness-related decision making (i.e., the wounded pride/spite model, affect infusion model, and dual-process model). Next, we collect behavioral and neural evidence for and against these theories. Finally, we propose that future research on fairness-related decision making should focus on inducing incidental social emotion, avoiding irrelevant emotion when regulating, exploring the individual differences in emotional dispositions, and strengthening the ecological validity of the paradigm.
... However, the impact of emotions on judgments, evaluations and decisions is significant to consumer behaviour. There are studies that demonstrate that emotions, like cognitions, have an impact on consumption (Damasio, 1994;Loewenstein, 2004). It is important to understand what drives the experience of emotional states, how those emotions uniquely affect decision making and the motivation that consumers might have. ...
... The importance of emotions supports the study from Kagita (2018) and Battiga (2018) which showed that emotions play a key role in making a brand choice and of purchase intention. It also confirms to the findings of Damasio (1994) or Loewenstein (2004) in terms of emotions and Tian et al. (2001) in terms of social status. Not only the emotions and their importance, but also social prestige is relevant. ...
In the last few decades, the role of emotions has been gaining importance across all industries when examining consumer's behavioural decisions. The impact that the emotions have on judgments, evaluations and decisions has long been important not only to psychology, but also to economic sciences. This paper aims to investigate the attitudes and behaviour of Czech women in regards to purchasing, using and their overall attitude to skincare products in the luxury segment, with special focus on emotions and social status as an influential factor. A targeted questionnaire was applied as a base to gain relevant quantitative data. Quantitative data were collected from 782 cosmetics consumers in luxury perfumeries all over the Czech Republic. Data were evaluated by means of descriptive statistics, dependencies were expressed by contingency (Chi-Square Test) and customer segmentation was managed by cluster analysis (k-means method, Euclidian distance). The obtained data clearly shows the significant importance of emotions and social value to certain female consumer segments. The research results provided valuable insights and information for the producers, marketers and managers to understand consumer attitudes, behaviour and social trends in the skincare cosmetics perfumery market and will help them to develop products, marketing and business strategies that are tailor-made to actual consumer needs and desires.
... Second, we embed awareness and present bias in a dual-process model of decision-making, relying on the intuition that decision-making is not made by a unique coherent entity, but by individuals who may operate in a "cold" or "hot" mode (Dual process theories of decision-making rely on the concept of multiple interacting brain systems in neuroscience, i.e., on the existence of several brain systems interacting with each other to make a variety of choices. The idea that choices can be explained by decision-making not made by a unique coherent entity has been developed both in Psychology [16,17] and in Behavioural Economics [18,19]; see [20] for a survey of dual process theories of decision-making in Economics). Our model can thus predict heterogeneity in awareness and present bias across individuals and within individuals over their life cycle. ...
We propose a Markov Decision Process Model that blends ideas from Psychological research and Economics to study decision-making in individuals with self-control problems. We have borrowed a dual-process of decision-making with self-awareness from Psychological research, and we introduce present bias in inter-temporal preferences, a phenomenon widely explored in Economics. We allow for both an exogenous and endogenous, state-dependent, present bias in inter-temporal decision-making and explore, by means of numerical simulations, the consequences on well-being emerging from the solution of the model. We show that, over time, self-awareness may mitigate present bias and suboptimal choice behaviour.
... When I act in confl ict with my best preference, what I think of would be better to do. We do not think that such a confl ict and scission is just a confl ict between affective im-pulses versus reasoned planning (like in Lowenstein version of "dual processing" (Loewenstein and O'Donoghue 2004)). Nor do we thinksee below-that this is the result of a double reasoned decision process were there are consciously calculated advantages but also (prevailing) unconsciously calculated "secondary" outcomes with greater utility. ...
We try not just to reconcile but to “integrate” Cognitivism and Behaviorism by a theory of different forms of purposiveness in behavior and mind. This also implies a criticism of the Dual System theory and a claim on the strong interaction and integration of Sist1 (automatic) and Sist2 (deliberative), based on reasons, preferences, and decisions. We present a theory of different kinds of teleology. Mere “functions” of the behavior: finalism not represented in the mind of the agent, not “regulating” the behavior. Two kinds of teleological mental representations: true “Goals” in control-theory, cybernetic view, with “goal-driven” behavior (intentional action); vs. Expectations in Anticipatory Classifiers: a reactive but anticipatory device, explaining the “instrumental” (finalistic) nature of Skinner’s reinforcement learning. We present different kinds of Goals and goal processing and on this ground the theory of what “intentions” are. On such basis, we can discuss Kathy Wilkes’s hint about the necessarily linguistic formulation of “intentions”; with the hypothesis that her intuition is not correct for any kind on “intention” which may be represented in sensory-motor format, but correct for “volition” and our will-strength for socially influencing ourselves.
... Multiple frameworks have been proposed to explain this pattern of responder behavior (for reviews, see Hallsson et al., 2018;Zheng et al., 2017). While a large number of processes contribute to decision-making in the ultimatum game (for a review of contemporary theories of social decisionmaking, see Murray et al., 2021), the scope of the present study focuses on one such account: the dual-process theory, which describes an affective (emotional) system and a deliberative (rational) system that operate in parallel and compete to determine the decision of the responder (Alós-Ferrer & Strack, 2014;Loewenstein & O'Donoghue, 2004;Sanfey & Chang, 2008; but see Pfeifer & Allen, 2012, 2016, for critiques on the dual-process theory). In the context of decision-making, the affective system is considered to be fast, automatic, and responsible for immediate reactions, whereas the deliberative system is slower, demands effortful control, and has the potential to modulate the affective response (Sanfey & Chang, 2008). ...
Social decision-making is commonly explored in the context of adult responder behavior in the ultimatum game. Responder behavior in the game has been proposed to be the consequence of two competing systems that control behavior: an affective system, which promotes an emotional response to unfair offers, and a deliberative system, which instead encourages a rational response to maximize in-game gains. In a secondary analysis of ultimatum game data in children and adolescents (N = 429), the present study demonstrated that trial-level metrics of responder behavior were reflective of a dual systems framework. However, no consistent relationship was found between responder behavior and trait-level measures of emotion regulation. Choice history was found to influence all measures of responder behavior in the game. These results support a dual systems account of social decision-making in children and adolescents and highlight choice repetition bias as an additional factor influencing decision-making within the ultimatum game. (PsycInfo Database Record (c) 2022 APA, all rights reserved).
... Much work has thus far examined emotions resulting from judgements yet overlooking the reverse relationship by which emotions shape judgements (Lerner et al., 2015;Loewenstein and Lerner, 2003;Pham, 2007). Further research could elucidate whether the decision to adopt an innovation is dominated by deliberative, rational judgements of benefits and risks or whether decision-making is more driven by emotions (Loewenstein and O'Donoghue, 2004). With survey-based studies, proxies such as time to reach a decision could help to understand whether decision-making is dominated by deliberative or affective processes (Slovic et al., 2002). ...
The dominant models of innovation adoption have traditionally overlooked the role of emotions, despite the relevance of this construct in consumer decision-making. To address this historical gap, a notable stream of research on emotions in innovation adoption has emerged in recent years. To enrich our understanding of the psychology of innovation adoption, this paper integrates insights from research on emotions in psychology with a systematic review of the literature on consumer emotions in innovation adoption. Drawing on well-established theories of emotions and decision-making, we derive five fundamental dimensions that help define the role of emotions in the consumer adoption of innovations. A systematic review of existing evidence within the specific field of innovation adoption summarises the existing evidence through the lens of the five dimensions. The contributions of the paper are twofold. First, the paper offers a novel perspective that provides a deeper understanding of emotions as a psychological mechanism enabling or impeding innovation adoption. Second, we set an agenda for invigorating research in this important domain.
... The dual-system theory integrates cognitive and emotional factors in social decisionmaking (Evans, 2003;Lieberman, 2007). This theory posits that there are interactions between two systems in the processing of social decision-making-a more intuitive, bottom-up emotional system, associated with automatic processes, and a more deliberate, top-down rational system, associated with controlled processes (Loewenstein and O'Donoghue, 2004). Under the framework of the dual-system theory, there are two explanations for the rejection of unfair offers in the UG. ...
Neuroimaging studies suggest that the right dorsolateral prefrontal cortex (rDLPFC) is an important brain area involved in fairness-related decision-making. In the present study, we used transcranial direct current stimulation (tDCS) over the rDLPFC to investigate the effects of changed cortical excitability on fairness norm enforcement in social decision-making. Participants received anodal, cathodal, or sham stimulation before performing a modified ultimatum game (UG) task, in which participants were asked to accept or reject the proposer’s offer and self-rate the intensity of their anger at offers on a 7-point scale. The results showed that the rejection rate of unfair offers and anger level were higher in the anodal compared to the sham and cathodal groups, and that the level of anger at unfair offers can predict the rejection rate. Furthermore, the fairness effect of RTs was more prominent in the anodal group than in the sham and cathodal groups. Our findings validate the causal role of the rDLPFC in fairness-related decision-making through tDCS, suggesting that strengthening the rDLPFC increases individuals’ reciprocal fairness in social decision-making, both in subjective rating and behaviors.
... People subjectively assess objective aspects of options, such as projected return, 54 and emotions are thought to impact these subjective assessments. 55,56 People subjectively assess objective aspects of options such as projected return, and emotions are thought to impact these subjective assessments. However, current research on emotion regulation (ER) shows that humans usually have control over their emotional experiences. ...
Purpose
Business competition is getting more intense nowadays, and corporate survival is getting harder; consequently, corporate managers have to make financial decisions in complex and globalized scenarios. As a result, in order to compete in today’s global economy, businesses are contemplating incorporating behavioural components of human psychology into their decision-making processes. Corporations are masters of quantitative analysis, but they rarely pay attention to behavioural elements of organizational success. Emotional intelligence is important in many parts of life; therefore, it is crucial to look at its dimensions when it comes to corporate financial decision-making.
Methods
A simple random sampling technique was used to collect data from 200 senior-level managers from the corporate sector located in the twin cities of Rawalpindi and Islamabad of Pakistan. SPSS version 22 was used to test the hypotheses.
Results
Results of the study show the gender-based variation in corporate financial decision-making detailing the higher impact of EI of males on CFD than their counterparts in the corporate sector organizations. The elements of self-awareness, empathy, motivation and self-regulation affect the financial decision-making of both the genders with varying degrees of influence, whereas social skills do not affect CFD of both genders.
Conclusion
The study findings explicate that the influence of self-awareness and empathy constructs of EI on corporate financial decisions is stronger in female managers than their male counterparts. However, male managers exhibit a significantly stronger influence of motivation, social skills, and self-regulation dimensions on their financial decisions compared to female managers in a corporate setting. Overall, the impact of EI on CFD is slightly higher in male managers. These empirical outcomes imply that organizations should assess the employees not only for technical skills but also based on their emotional intelligence during the recruitment process.
... Various theoretical approaches have indicated that emotions play an active role in some forms of decision making [37]. Regardless of whether they have been assimilated to the "goodness" or "badness" of alternatives for action [38], attributed to activation in basic appetitive or defensive motivational systems [39,40], or reduced to somatic markers associated with current or past behavioral outcomes [41], emotions have been consistently shown to influence decision making. Self-regulation denotes a capacity to regulate attention, affect, and behavior in ways that are attuned to internal and contextual demands [42,43]. ...
Subjective Risk Intelligence (SRI) is the ability to consider risky and uncertain situations as opportunities rather than threats. SRI is constituted by four dimensions: attitude toward uncertainty, imaginative capability, problem solving self-efficacy and stress management. Adolescence is a period in life in which individuals face crucial life-tasks, that nowadays become complex due to uncertainty about future life and career. The present study aims to adapt the Subjective Risk Intelligence Scale (SRIS-A) for use with adolescences and examine its factor structure, psychometric properties, and relationships with related constructs (coping strategies, problem solving self-efficacy and courage). Participants were 641 Italian adolescents, balanced by gender. The results of the study showed that the suggested four-dimension scale structure adequately explained item correlations. Further, adequate reliability, construct validity and measurement invariance by gender were supported, suggesting that SRIS-A has adequate concurrent and convergent validity. Suggestions for further studies of SRI during adolescence using the SRIS-A are discussed.
... This has been widely adopted by many scholars who explicitly or implicitly recall Thaler's contrast between the myopic and instinctual system theorized as the doer and the deliberate, forward-looking system named as a planner. By attributing different names to the two selves, Benhabib and Bisin (2005) theorize a dualism between impulsive and controlled answers Loewenstein and O'Donoghue (2004) oppose effective processes with deliberative ones Fishbach et al. (2003) explain that individuals encounter temptation enticing them to stray from their chosen path and impeding progress toward goal attainment. These concepts give Thaler's idea regarding the relationship between the semi-autonomous selves and automatic and reflective systems. ...
With the present work, we aim to mark a beginning line on the study of decision-making of potential consumers in the insurance sector, with the long-term purpose of defining the optimal cognitive processes to be undertaken when deciding whether to purchase insurance or not. Decision-making in conditions of uncertainty is influenced by the dual-self model doers/planner integrated with the hot–cold states and prospect utility function. Thus, we present a theoretical model of choice-making to evaluate the level of optimal self-control necessary to be exerted if the individual is either in the hot or in the cold state depending on the arousal. This theoretical choice-making model lays the ground for the decision journey by following the long-term utility and avoiding gross mistakes that could lead the consumer not to insure, when the odds suggest doing it, or vice versa, in situations when it would not be necessary.
... We find this dichotomy today in many theoretical analyses of modern behavioral economics that oppose two systems: one would depict a quasi-automatic or shortsight behavior, while the other would reflect optimization (e.g., Loewenstein & O'Donoghue, 2004;Bernheim & Rangel, 2005;Benhabib & Bisin, 2005;Fudenberg & Lenine 2006). In the formal analysis built by Kahneman (2003)-maybe the most general one-these two systems are called ''system 1'' (intuitive system) and ''system 2'' (deliberative system), respectively. ...
By the late 1990s, several converging trends in economics, psychology, and neuroscience had set the stage for the birth of a new scientific field known as “neuroeconomics”. Without the availability of an extensive variety of experimental designs for dealing with individual and social decision-making provided by experimental economics and psychology, many neuroeconomics studies could not have been developed. At the same time, without the significant progress made in neuroscience for grasping and understanding brain functioning, neuroeconomics would have never seen the light of day. The paper is an overview of the main significant advances in the knowledge of brain functioning by neuroscience that have contributed to the emergence of neuroeconomics and its rise over the past two decades. These advances are grouped over three non-independent topics referred to as the “emo-rational” brain, “social” brain, and “computational” brain. For each topic, it emphasizes findings considered as critical to the birth and development of neuroeconomics while highlighting some of prominent questions about which knowledge should be improved by future research. In parallel, it shows that the boundaries between neuroeconomics and several recent sub-fields of cognitive neuroscience, such as affective, social, and more generally, decision neuroscience, are rather porous.
... Similarly, recent advances in neurobiology have also begun to move beyond classic approach/avoidance interpretations of motivation, which have been prevalent in the field of biology, enriching it with a more motive-related vocabulary such as power-status (e.g., Eisenegger et al., 2011;Terburg and van Honk, 2013), affiliation (e.g., Feldman, 2012) and care (e.g., Alcaro and Panksepp, 2011;Valk et al., 2017). Finally, behavioral game theorists (e.g., Camerer, 2003), social dilemma researchers (Dawes, 1980;Kollock, 1998;Fehr and Fischbacher, 2003;van Lange et al., 2013) and neuroeconomists (Glimcher et al., 2013) have also documented that humans often pursue ends other than the maximization of their own payoff in economic interactions (Frank, 1988;Loewenstein and O'Donoghue, 2004), and have, for example, incorporated status-related or altruistic preferences in utility functions to characterize such behaviors (e.g., Loewenstein et al., 1989;Robson, 2001;Sally, 2001;Fehr and Fischbacher, 2003;Fehr et al., 2013). ...
Research from psychology, neurobiology and behavioral economics indicates that a binary view of motivation, based on approach and avoidance, may be too reductive. Instead, a literature review suggests that at least seven distinct motives are likely to affect human decisions: “consumption/resource seeking,” “care,” “affiliation,” “achievement,” “status-power,” “threat approach” (or anger), and “threat avoidance” (or fear). To explore the conceptual distinctness and relatedness of these motives, we conducted a semantic categorization task. Here, participants were to assign provided words to one of the motives. By applying principal component analysis to the categorization assignments we represent the semantic inter-relations of these motives on a two-dimensional space, a “semantic atlas.” This atlas suggests that, while care and affiliation are conceptually close, affiliation is closer to threat avoidance (or fear); opposite to these motives we find achievement, consumption and power, with the latter lying closer to threat approach (or anger). In a second study, we asked participants to rate how well the motive-specific words obtained in the first study described their currently experienced feelings. We find that semantically close motives are also more likely to be experienced together, that is, we replicate most of the semantic relations in the “subjective atlas.” We discuss our findings in comparison to other multi-dimensional models of motivation, which show clear similarities. In addition to these motivational atlases, we provide a database of motive-specific words, together with the valence and arousal scores. These can be used for future research on the influence of motives on decision making.
... Dual control-process notions are ubiquitous in psychology and behavioural economics, where decisions are proposed to reflect a tension between automatic and attentive ('controlled') processes [22,23], deliberative and affective processes [41], long and short-term selves [42], or hot and cold modes of processing [43]. Similar self-reflective hypotheses can be derived in these frameworks (e.g., that a controlled planning process will take account of inferred automatic behaviour tendencies). ...
Dual-reinforcement learning theory proposes behaviour is under the tutelage of a retrospective, value-caching, model-free (MF) system and a prospective-planning, model-based (MB), system. This architecture raises a question as to the degree to which, when devising a plan, a MB controller takes account of influences from its MF counterpart. We present evidence that such a sophisticated self-reflective MB planner incorporates an anticipation of the influences its own MF-proclivities exerts on the execution of its planned future actions. Using a novel bandit task, wherein subjects were periodically allowed to design their environment, we show that reward-assignments were constructed in a manner consistent with a MB system taking account of its MF propensities. Thus, in the task participants assigned higher rewards to bandits that were momentarily associated with stronger MF tendencies. Our findings have implications for a range of decision making domains that includes drug abuse, pre-commitment, and the tension between short and long-term decision horizons in economics.
... Decision-making is suggested to rely on at least two parallel and distinct systems; a retrospectively-driven system based on acquired habits, and a prospective goal-directed system based on deliberate planning [1][2][3][4][5][6][7]. Since these two systems sometimes promote different choices, it's possible to differentiate their relative contribution to decision-making when action-outcome contingencies change; although in reality additional systems may guide decision-making [8] such that increasing reliance on one system does not always decrease reliance on the other [9]. ...
Human decisions can be habitual or goal-directed, also known as model-free (MF) or model-based (MB) control. Previous work suggests that the balance between the two decision systems is impaired in psychiatric disorders such as compulsion and addiction, via overreliance on MF control. However, little is known whether the balance can be altered through task training. Here, 20 healthy participants performed a well-established two-step task that differentiates MB from MF control, across five training sessions. We used computational modelling and functional near-infrared spectroscopy to assess changes in decision-making and brain hemodynamic over time. Mixed-effects modelling revealed overall no substantial changes in MF and MB behavior across training. Although our behavioral and brain findings show task-induced changes in learning rates, these parameters have no direct relation to either MF or MB control or the balance between the two systems, and thus do not support the assumption of training effects on MF or MB strategies. Our findings indicate that training on the two-step paradigm in its current form does not support a shift in the balance between MF and MB control. We discuss these results with respect to implications for restoring the balance between MF and MB control in psychiatric conditions.
People often exhibit intertemporal impatience by choosing immediate small over delayed larger rewards, which has been implicated across maladaptive behaviours and mental health symptoms. In this preregistered study, we tested the role of an intertemporal Pavlovian bias as possible psychological mechanism driving the temptation posed by immediate rewards. Concretely, we hypothesized that the anticipation of immediate rewards (compared with preference-matched delayed rewards) enhances goal-directed approach behaviour but interferes with goal-directed inhibition. Such a mechanism could contribute to the difficulty to inhibit ourselves in the face of immediate rewards (e.g., a drug), at the cost of long-term (e.g., health) goals. A sample of 184 participants completed a newly developed reinforcement learning go/no-go task with four trial types: Go to win immediate reward; Go to win delayed reward; No-go to win immediate reward; and No-go to win delayed reward trials. Go responding was increased in trials in which an immediate reward was available compared with trials in which a preference-matched delayed reward was available. Computational models showed that on average, this behavioural pattern was best captured by a cue-response bias reflecting a stronger elicitation of go responses upon presentation of an immediate (versus delayed) reward cue. The results of this study support the role of an intertemporal Pavlovian bias as a psychological mechanism contributing to impatient intertemporal choice.
Central to this study is the exploration of theoretical frameworks such as Goal Setting Theory These theories provide a foundational understanding of how goal setting and motivation influence financial behavior and decision-making. Empirical studies are examined to highlight the tangible impact of goal setting on financial behavior and investment performance, emphasizing the practical benefits of clearly defined financial objectives. The research methodology encompasses both qualitative and quantitative approaches, with data collected through surveys and interviews. This dual approach ensures a comprehensive understanding of the demographic profile of respondents and their financial goal-setting practices. The study analyzes factors influencing investment performance, such as income levels, education, risk tolerance, and market conditions, providing a holistic view of the elements that contribute to successful investment outcomes. A significant portion of the study is dedicated to contemporary issues in personal finance. Economic factors like inflation and interest rates, behavioral factors such as risk tolerance and cognitive biases, and technological advancements, including robo-advisors and fintech, are scrutinized to understand their impact on financial planning and investment performance. This analysis is crucial in highlighting the challenges and opportunities faced by modern investors. One of the study's key findings is the positive correlation between financial goal setting and improved investment performance. This relationship is supported by both theoretical perspectives and empirical evidence. The study presents case studies of successful financial goal setting, illustrating how individuals and families can achieve their financial objectives through disciplined planning and execution. Conversely, it also examines instances of investment failures, providing lessons on the pitfalls to avoid. The study's implications are twofold. Theoretically, it contributes to the existing body of knowledge on financial goal setting and investment performance, offering insights into the underlying psychological and behavioral mechanisms. Practically, it provides actionable recommendations for individual investors, financial advisors, and policymakers. For individual investors, the study underscores the importance of setting clear, achievable financial goals and regularly reviewing and adjusting these goals in response to changing circumstances. For financial advisors, the findings highlight the need for personalized financial planning services that cater to the unique needs and goals of each client. Advisors are encouraged to leverage technological tools and behavioral insights to enhance their advisory services. For
Financial goal setting is rooted in various psychological and economic theories, each highlighting different aspects of human behavior and decision-making. One of the foundational theories is Goal Setting Theory by Locke and Latham (2002), which posits that specific and challenging goals, along with appropriate feedback, enhance performance. This theory underscores the importance of having clear, well-defined financial goals to steer investment decisions effectively. Empirical studies, such as those by Deci and Ryan (2000) on self-determination theory, further accentuate the role of intrinsic motivation in achieving financial goals. These studies suggest that individuals who set personal, self-concordant financial goals are more likely to exhibit disciplined and proactive investment behaviors. In examining the broader implications of financial goal setting, Bandura's (1991) Social Cognitive Theory of Self-Regulation highlights the role of self-efficacy and cognitive processes in goal achievement. This theory suggests that individuals who believe in their capability to manage their investments are more likely to set and achieve ambitious financial goals. Additionally, Kahneman and Tversky's (1979) Prospect Theory provides insights into how individuals evaluate potential gains and losses, influencing their goal-setting processes and investment strategies. These theoretical frameworks collectively provide a robust foundation for understanding the mechanisms through which financial goal setting impacts investment performance. To achieve financial goals and enhance investment performance, individuals should adopt a structured approach to financial goal setting. This involves setting specific, measurable, achievable, relevant, and time-bound (SMART) goals, regularly reviewing and adjusting these goals, and leveraging technological tools for tracking and feedback. Financial education initiatives should also be prioritized to equip individuals with the knowledge and skills needed to set and achieve financial goals effectively. Policymakers and financial institutions should work together to create supportive environments that encourage prudent financial behavior and goal-oriented investment practices. In summary, financial goal setting is a powerful tool for achieving personal investment success. By integrating theoretical insights and empirical evidence, this study provides a comprehensive understanding of how financial goals influence investment performance, highlighting the importance of continued research, practice, and policy support in this critical area of personal financial planning.
Said, J., Alam, M. M., and Johari, R. J. (2018) emphasize the critical role of management commitment in achieving organizational objectives in the Malaysian public sector. Their study highlights that a committed management can significantly influence the effectiveness of internal controls and overall performance outcomes. Similarly, in personal finance, the commitment to financial goals is crucial. When individuals commit to their financial objectives, they are more likely to engage in disciplined saving and investing behaviors, which can lead to better investment performance. The principles of management commitment and accountability, as discussed in the public sector, can be analogously applied to personal financial planning.Harjito, D. A., Alam, M. M., and Dewi, R. A. K. (2021) explore the impacts of external events, such as international sports events, on stock market performance. Their findings indicate that significant events can influence investor sentiment and market dynamics. This concept is relevant to personal investment performance, as external economic and social factors can impact individual investment decisions and outcomes. By setting financial goals, investors can develop strategies that are resilient to external shocks, thereby enhancing their ability to navigate volatile markets and achieve their investment targets.Aziz, M. A. A., Said, J., and Alam, M. M. (2015) assess the practices of internal control systems in the Malaysian public sector, highlighting the importance of robust controls in achieving organizational objectives. For individual investors, a strong internal control system translates to disciplined financial practices and regular monitoring of financial progress. This ensures that individuals stay on track with their financial goals, make informed investment decisions, and adjust their strategies as needed to achieve optimal performance.Atan, R., Alam, M. M., and Said, J. (2017) discuss corporate integrity and accountability in non-profit organizations, underscoring the significance of ethical practices and transparency. In the context of personal finance, maintaining integrity and accountability is paramount. Individuals who adhere to ethical investment practices and hold themselves accountable to their financial goals are more likely to achieve sustainable investment success. This involves honest assessment of financial capabilities, realistic goal setting, and adherence to ethical investment principles.Alam, M. M., Said, J., and Aziz, M. A. A. (2019) highlight the role of integrity systems, internal control systems, and leadership practices in promoting accountability in the Malaysian public sector. These principles are equally applicable to personal finance. Establishing a personal integrity system involves setting clear financial goals, regularly reviewing financial progress, and making adjustments to stay aligned with long-term objectives. Leadership practices, such as taking proactive steps to enhance financial literacy and seeking expert advice, can further reinforce accountability and drive better investment outcomes.In conclusion, the practice of financial goal setting is integral to improving personal investment performance. Drawing from various studies on management commitment, internal control systems, integrity, and risk management, this abstract underscores the multifaceted benefits of setting and adhering to clear financial goals. By applying these principles, individuals can enhance their investment performance, achieve their financial aspirations, and secure their financial future.
Pavlovian” or “motivational” biases describe the phenomenon that the valence of prospective outcomes modulates action invigoration: Reward prospect invigorates action, whereas punishment prospect suppresses it. The adaptive role of these biases in decision-making is still unclear. One idea is that they constitute a fast-and-frugal decision strategy in situations characterized by high arousal, e.g., in presence of a predator, which demand a quick response. In this pre-registered study ( N = 35), we tested whether such a situation—induced via subliminally presented angry versus neutral faces—leads to increased reliance on Pavlovian biases. We measured trial-by-trial arousal by tracking pupil diameter while participants performed an orthogonalized Motivational Go/NoGo Task. Pavlovian biases were present in responses, reaction times, and even gaze, with lower gaze dispersion under aversive cues reflecting “freezing of gaze.” The subliminally presented faces did not affect responses, reaction times, or pupil diameter, suggesting that the arousal manipulation was ineffective. However, pupil dilations reflected facets of bias suppression, specifically the physical (but not cognitive) effort needed to overcome aversive inhibition: Particularly strong and sustained dilations occurred when participants managed to perform Go responses to aversive cues. Conversely, no such dilations occurred when they managed to inhibit responses to Win cues. These results suggest that pupil diameter does not reflect response conflict per se nor the inhibition of prepotent responses, but specifically effortful action invigoration as needed to overcome aversive inhibition. We discuss our results in the context of the “value of work” theory of striatal dopamine.
This chapter presents the argument that moving from disembodied rationality to embodied reason to study economic life requires connecting perception, cognition, and action; coupling organism and environment; and overcoming the opposition between rationality and emotion. This links the theoretical and empirical literature on embodiment to economists such as Smith and Keynes. The role of metaphor, conceptual blending, language, artifacts, and habitus in the making of the self and economic life is highlighted. In doing so, the “Hayek paradox” is resolved by showing that abstraction is not opposed to embodiment but enabled by it, and, in contrast to behavioral and experimental economics, embodiment is not portrayed as a source of disturbances to (market-based) rationality posited by a disembodied normative standard. The chapter proposes the dialectic of inward and outward embodiment as a fundamental principle of embodied reason, and traces it back to Hegelian philosophy to ground the theory of economic agency and institutional action.
We often forego a larger future reward in order to obtain a smaller reward immediately, known as impatient intertemporal choice. The current study investigated the role of Pavlovian-to-instrumental transfer (PIT) as a mechanism contributing to impatient intertemporal choice, following a theoretical framework proposing that cues associated with immediate gratification trigger a Pavlovian approach response, interfering with goal-directed (instrumental) inhibitory behavior. We developed a paradigm in which participants first learned to make instrumental go/no-go responses in order to win rewards and avoid punishments. Next, they learned the associations between Pavlovian cues and rewards varying in amount and delay. Finally, we tested whether these (task-irrelevant) cues exerted transfer effects by influencing instrumental actions while participants again completed the go/no-go task. Across two experiments, Pavlovian cues associated with larger (versus smaller) and immediate (versus delayed) rewards were evaluated more positively, reflecting the successful acquisition of Pavlovian cue–outcome associations. These findings replicated the previously reported classical transfer effect of reward amount on instrumental behavior, as large (versus smaller) cues increased instrumental approach. In contrast, we found no evidence for the hypothesized transfer effects for reward delay, contrary to the proposed role of PIT in impatient intertemporal choice. These results suggest that although both reward amount and delay were important in the evaluation of cues, only the amount associated with cues influenced instrumental choice. We provide concrete suggestions for future studies, addressing instrumental outcome identity, competition between cue–amount and cue–delay associations, and individual differences in response to Pavlovian cues.
Different types of green products require different marketing approaches to promote individual green purchasing behaviors. Previous studies have focused only on the effects of message framing on the promotion of different types of green products; however, little is known about the role of underlying emotions. Using event-related potentials (ERPs), this study investigated the neural responses to message framings and anticipated pride in green product types to assess their level of influence on green consumption. Participants in this study were randomly assigned to the anticipated pride versus control groups, and asked to make green consumption decisions involving different types (self- vs. other-interested) of green products, utilizing both gain and loss framing. The behavioral results demonstrated that participants in the anticipated pride group made more green product purchase choices than those in the control group. The ERP results showed that within the loss framing of the control group, other-interested green products induced larger N400 and smaller late positive potential (LPP) amplitudes than self-interested green products, whereas the results showed the opposite trend for the anticipated pride group. These results indicate that although individuals might have biases in their motivation that lead them to focus on self-interested green products, anticipating pride reduces cognitive conflicts and increases their motivation to focus on other-interested green products in the context of loss.
Introduction
One approach to bridging the gap between consumer intentions and behavior is persuasive communication to reinforce their intentions and thereby support their behavior change. Message framing has proven to be a useful, persuasive communication tool. However, message framing is considered more complicated than other types of framing because, in addition to concept-specific elements, it is also strongly influenced by and, in turn, influences emotions. Therefore, it is almost impossible for consumers to verbally express their attitudes, so the challenge is to explain and measure its impact. This research aims to help in this regard by suggesting a theoretical model to understand how message framing is processed from a consumer neuroscience perspective. More precisely, the factors that constitute message framing are systematized and built on a reflective-impulsive model and a neural emotion-cognition framework interpreted to explain the persuasive effects of message framing.
Method
A functional magnetic resonance imaging (fMRI) experiment is used to examine the effects of message framing for four different frame types that are hypothesized to affect consumer information processing differently.
Result
The results suggest that communication strategies should take into account the valence of the objects and the frame used. The behavioral results partially confirm the assumption that two types of information processing could take place, as suggested by the reflective-impulsive model. At the neural level, using the network perspective, the results show that certain brain regions primarily associated with emotional and cognitive interaction processes are active during processing, depending on the framing of the message.
Discussion
In cases of indirect avoidance value-consistent framing, it may be good to communicate the bad in the appropriate frame to influence information processing.
Introduction:
Feedback on human choices is important because it can affect risk-taking and rationality in subsequent decisions. In daily life, choices are not always followed by immediate outcomes nor are they always followed by simple, single-dimensional feedback. Here, we seek to extend previous studies on the effects of feedback on subsequent risk-taking in three experiments.
Methods:
We examine whether (1) the effect of feedback immediacy on participants' risk-taking exists in tasks containing explicit probabilistic outcome values; (2) increasing feedback dimensionality from one dimension (only about the outcome) to include a second dimension (also about the "rationality" of prior choices) increases feedback effects on risk-taking; and (3) cognitive reflection ability moderates feedback effects on risk-taking.
Results:
Results showed that feedback reduced risk-taking in tasks containing explicit probabilistic outcomes (Studies 1 and 2). They further showed that two-dimensional feedback produces a stronger reduction in risk-taking compared to single-dimensional feedback (Study 3). Lastly, results suggested that cognitive reflection ability moderates the effects of feedback on risk-taking (Study 4).
Conclusion:
Taken together, the findings extended the understanding of risk-taking and mitigating mechanisms and pave the way for intervention studies aimed at changing risky behaviors.
The aim of the article is to study the features of different models of consumer behavior in order to model their purchasing response and the formation of long-term consumer loyalty to a particular brand. The model of consumer behavior is defined as a description of the relationship between the actions of the consumer of goods and the motives behind these actions, the characteristics of the consumer and the state of the environment in which these actions are carried out. The process of purchasing a product is considered as an action. The study analyzes foreign and domestic models of consumer behavior, approaches to modeling consumer behavior. The motives of product choice, the degree of awareness and independence of choice, the degree of consumer satisfaction with the product, directions and possibilities of influencing consumer choice are studied. Most models of consumer behavior are based on the study of lifestyles of different social strata. Three components of a person's way of life are considered: actions, interests and thoughts. Modeling of consumer behavior is based on the concept of «7 Os»: market participants, their goals; market items; companies present in the market; market operating processes; acquisition opportunities; channels that form methodological approaches to modeling consumer behavior. It has been proven that one of the main factors influencing the purchase decision is consumer loyalty – a system of long-term relationship between supplier and buyer, in which each party refuses to maximize its profits in favor of maintaining this relationship. The greatest contribution to the formation of consumer loyalty have a positive experience of consumption, rational evaluation associations with the brand and the overall strength of all associations with the brand, which sets it apart from alternatives. The formation of consumer loyalty is possible due to the integration into the model of factors of consumer motivation and situational opportunities, taking into account which will achieve greater predictability in predicting customer behavior. The paper proposes an algorithm for consumer loyalty management, which includes the implementation of the following steps: organization of a continuous system of customer service; providing continuous feedback from customers; involvement of customers in regular communication with the brand; creation of a personalized scenario of the client's needs development and formation of a narrowly segmented scenario of his development; encouraging customers to recommend a brand and building a community around the brand among customers who share the business idea. Thus, modeling consumer behavior allows us to understand how, on the one hand, consumers react to the motivating factors of marketing, and on the other – what is a significant competitive advantage for the company.
In the past decades, affective science has overwhelmingly demonstrated the unique properties of affective information to bias our attention, memory, and decisions. At the same time, accumulating evidence suggests that neutral and affective representations rely on the same working memory substrates for the selection and computation of information and that they are therefore restricted by the same capacity limitations that these substrates impose. Here, we integrate these insights into a working memory model of affective processing (WMAP). Drawing on competitive access models of working memory, we discuss its role in the various stages of affective processing, from attentional selection to maintenance and memory storage, and resulting feelings and actions. We end our overview with some open questions and future directions.
В основу учебного пособия легли материалы лекций по имитационному
моделированию и управлению сложными системами, прочитанные автором в ИБДА РАНХиГС и МГУ им. М.В. Ломоносова. В пособии рассматриваются основы принятия управленческих решений в динамически сложной среде, феномены контр-интуитивного и «возникающего» поведения систем.
Последовательно е изучение материала позволяет сформировать навыки
системного мышления. В работе предлагается современный инструментарий, необходимый сегодняшним специалистам по управлению для понимания сложных систем: причинно-следственные диаграммы, системно-динамические и агентные
имитационные модели. Автор приводит множество актуальных примеров
из практики государственного и делового управления.
Для студентов экономических и управленческих специальностей, а также для широкого круга читателей, желающих расширить свои познания в области системного мышления и познакомиться с основами поведения и имитационного моделирования сложных систем.
Ключевые слова: cистемная динамика, агентное моделирование, системное
мышление, cложные системы, управление сложностью, имитационное мо�делирование, имитационные игры, возникающее поведение, зависимость
от предыдущей траектории развития, акселераторы роста.
Although consumer stockpiling is a prevalent phenomenon under the threat of a disaster, little is known about its underlying mechanisms. Leveraging consumer interviews, we build a theoretical framework that identifies two major motives for stockpiling: fear and expectations of a supply shortage. Using the COVID-19 pandemic as a viable context, through a global survey across 31 countries and search datasets from Google in the United States and 6 additional countries, we find that: (1) both fear and expectations of a supply shortage lead to stockpiling; (2) the relative prevalence of these motives evolves over the progression of the disaster, with the boost and subsequent reduction in fear being more pronounced than for expectations of a supply shortage; and (3) the impact of a disaster on fear is attenuated when consumers have high trust in the government. These findings can help retail managers and public policymakers to make more informed decisions.
Los modelos tradicionales de decisión en economía no incorporan los mecanismos participantes en el proceso de formación de la elección. En ciertos problemas las emociones juegan un rol fundamental. En particular, a partir del desarrollo de la neuroeconomía, se ha descubierto que las elecciones individuales intertemporalmente inconsistentes surgen como el resultado de la interacción de dos sistemas evaluativos, uno afectivo y otro deliberativo. En este artículo se presentan algunos modelos que analizan esta representación desde el enfoque de la psicología cognitiva, la neurobiología y la ciencia económica. Finalmente se presentan algunos desarrollos de modelos neuroeconómicos que buscan determinar cuáles modelos económicos de conducta individual poseen más respaldo por los principios cognitivos del comportamiento humano.
We report two studies investigating the role of self-control in risky financial decision-making, operationalized as incentivized lottery task decisions. Study 1 (N = 529) investigated the link between propensity to take financial risks and trait self-control. Study 2 (N = 321) examined whether reflecting on one’s prior successes and failures in exercising self-control has an impact on subsequent risky financial decision-making. Study 1 identified a negative link between self-control and financial risk-taking, and Study 2 found that reflecting on self-control successes lowered people’s propensity to take financial risks, while reflecting on self-control failures made people more prone to take financial risks.
We develop a new experimental paradigm to study how emotions affect decision-making. We use it to investigate the impact of short-term fluctuations in incidental happiness on economic decisions. Experimental subjects watch an NFL football game in a sports bar. At various commercial breaks, we measure subjects’ happiness and observe their decisions regarding charitable giving, willingness to pay for a consumer good, risk taking, and trust. We find that events in the game impact the incidental happiness of our subjects, and these changes lead to predictable changes in choices. We provide a simple model that rationalizes how subjects’ behavior varies with incidental happiness and provides insight into how mood can be tractably included in economics models. Our experimental paradigm can be leveraged by other researchers interested in exploring the impact of emotions on behavior.
The increased availability of alcohol may harm individuals who have present-focused preferences and consume more than initially planned. Using a nationwide experiment in Sweden, we study the credit behavior of low-income households around the expansion of liquor stores’ operating hours on Saturdays. Consistent with store closures serving as commitment devices, the policy led to higher credit demand, more default, increased dependence on welfare, and higher crime on Saturdays. The effects are concentrated on the young population due to higher alcohol consumption combined with tight liquidity constraints. The policy’s impact on indebtedness is estimated at 4.5 times the expenditure on alcohol.
In seeking a nuanced grasp of affective “animal spirits” that shape micro-political
management behaviours viscerally, while locating their emergence within broad sociocultural
contexts, the present paper draws on the “lion” and “fox” animal spirits, whose
inspiration for Pareto’s psychologistic sociological project we clarify from Chapter XVIII
of Machiavelli’s The Prince. Our corresponding managerial ideal-types are initially explored
for their heuristic allegorical potential, considering also how particular organisational
risk conditions may inculcate and challenge them. These contextualised psycho-affective
tendencies are then refined and grounded within recent behavioural-psychology
research, through which their suitability for various socio-organisational risk contexts
is further elaborated. The resulting framework, connecting emotional dispositions of
leaders to longer term contexts, is held up as viable for focusing academic management
and organisational research towards practice-related interventions, while also highlighting
the Machiavellian-Paretian realist tradition as a source of living theory for social science.
A Two-Stage Decision Making Process: A Proposal
This study tested the prediction that introspecting about the reasons for one's preferences would reduce satisfaction with a consumer choice. Subjects evaluated two types of posters and then chose one to take home. Those instructed to think about their reasons chose a different type of poster than control subjects and, when contacted 3 weeks later, were less satisfied with their choice. When people think about reasons, they appear to focus on attributes of the stimulus that are easy to verbalize and seem like plausible reasons but may not be important causes of their initial evaluations. When these attributes imply a new evaluation of the stimulus, people change their attitudes and base their choices on these new attitudes. Over time, however, people's initial evaluation of the stimulus seems to return, and they come to regret choices based on the new attitudes.
Human society emerged over 6 million years of hominid evolution. During this time group size steadily increased, and to maintain group cohesion human beings gradually evolved a well-developed social intelligence based on the differentiation and refinement of emotions. The neurologi- cal structures for emotional expression are part of the primitive brain and developed long before the cognitive equipment for rational intelligence evolved. Indeed, full rationality came rather late in human evolution, and it has only been within the last 100 years that the social conditions emerged for a mass culture based on rationality. A review of the evolution of human society and human cognition illustrates the creation and workings of the human emotional brain and show how it operates independently of and strongly influences the rational brain. If sociology is to advance, research and theory must grapple with both rational and emotional intelligence and focus particularly on the interplay between them.
Describes 3 experiments with a total of 92 3-5 yr. olds. Exp. I compared the effects of external and cognitive distraction from reward objects on the length of time which Ss waited for a preferred delayed reward before forfeiting it for a less preferred immediate one. In accord with predictions from an extension of frustrative nonreward theory, Ss waited much longer for a preferred reward when they were distracted from the rewards. Exp. II demonstrated that only certain cognitive events (thinking "fun things") served as effective ideational distractors. Thinking "sad thoughts" produced short delay times, as did thinking about the rewards themselves. In Exp. III the delayed rewards were not physically available for direct attention during the delay period, and Ss' cognitive attention was manipulated by prior instructions. While Ss waited, cognitions about the rewards significantly reduced, rather than enhanced, the length of their delay of gratification. Overall, attentional and cognitive mechanisms which enhanced the salience of rewards shortened the length of voluntary delay, while distractions from the rewards, overtly or cognitively, facilitated delay. Results permit a reinterpretation of basic mechanisms in voluntary delay of gratification and self-control. (16 ref.) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
explore a few of the general processes whereby integral and incidental affect impinge upon social judgments of the members of outgroups / endeavor to go beyond the global distinction between positive and negative affect and consider how qualitatively different emotional states (specifically, happiness, sadness, anger, and anxiety) are related to stereotyping / describe a heuristic model of the stereotyping process that is compatible with several more specific theoretical accounts / summarize evidence bearing on some of the ways that different emotional states might affect each stage of processing / consider several of the most interesting issues that remain for future research (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Four experiments examined the effects of happiness on the tendency to use stereotypes in social judgment. In each experiment, individuals who had been induced to feel happy rendered more stereotypic judgments than did those in a neutral mood. Exp 1 demonstrated this phenomenon with a mood induction procedure that involved recalling life experiences. Exps 2 and 3 suggested that the greater reliance on stereotypes evident in the judgments of happy individuals was not attributable to cognitive capacity deficits created by intrusive happy thoughts or by cognitively disruptive excitement or energetic arousal that may accompany the experience of happiness. In Exp 4, happy individuals again were found to render more stereotypic judgments, except under conditions in which they had been told that they would be held accountable for their judgments. These results suggest that although happy people's tendency to engage in stereotypic thinking may be pervasive, they are quite capable of avoiding the influence of stereotypes in their judgments when situational factors provide a motivational impetus for such effort. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
The overwhelming majority of research on affect and social information processing has focused on the judgments and memories of people in good or bad moods rather than examining more specific kinds of emotional experience within the broad categories of positive and negative affect. Are all varieties of negative affect alike in their impact on social perception? Three experiments were conducted to examine the possibility that different kinds of negative affect (in this case, anger and sadness) can have very different kinds of effects on social information processing. Experiment I showed that angry subjects rendered more stereotypic judgments in a social perception task than did sad subjects, who did not differ from neutral mood subjects. Experiments 2 and 3 similarly revealed a greater reliance upon heuristic cues in a persuasion situation among angry subjects. Specifically, their level of agreement with unpopular positions was guided more by the credibility of the person advocating the position. These findings are discussed in terms of the impact of emotional experience on social information-processing strategies.
An attempt is made to evaluate the performance of several distribution mechanisms, using experimental data on ethical judgements. Among the mechanisms examined are the competitive equilibrium with equal incomes, utilitarianism, the maximin, and several mechanisms based on bargaining. Also studied is the extent to which differences in needs, in tastes, and in beliefs may account for unequal distribution.
We show that Gul and Pesendorfer’s [Econometrica 69 (2001) 1403] representation result for preferences with temptation and self-control can be reexpressed in terms of a costly intrapersonal conflict between a Planner and Doer, as in Thaler and Shefrin [J. Political Econ. 89 (1981) 392] and psychologists’ standard view of self-control problems.
Willingness to accept (WTA) is usually substantially higher than willingness to pay (WTP). These constructs have been studied for roughly 30 years and with a wide variety of goods. This paper reviews those studies. We find that the less the good is like an “ordinary market good,” the higher is the ratio. The ratio is highest for non-market goods, next highest for ordinary private goods, and lowest for experiments involving forms of money. A generalization of this pattern holds even when we account for differences in survey design: ordinary goods have lower ratios than non-ordinary ones. We also find that ratios in real experiments are not significantly different from hypothetical experiments and that incentive-compatible elicitation yields higher ratios.
Affect is considered by most contemporary theories to be postcognitive,
that is, to occur only after considerable cognitive operations have
been accomplished. Yet a number of experimental results on preferences,
attitudes, impression formation, and decision making, as well as
some clinical phenomena, suggest that affective judgments may be
fairly independent of, and precede in time, the sorts of perceptual
and cognitive operations commonly assumed to be the basis of these
affective judgments. Affective reactions to stimuli are often the
very first reactions of the organism, and for lower organisms they
are the dominant reactions. Affective reactions can occur without
extensive perceptual and cognitive encoding, are made with greater
confidence than cognitive judgments, and can be made sooner. Experimental
evidence is presented demonstrating that reliable affective discriminations
(likedislike ratings) can be made in the total absence of recognition
memory (oldnew judgments). Various differences between judgments
based on affect and those based on perceptual and cognitive processes
are examined. It is concluded that affect and cognition are under
the control of separate and partially independent systems that can
influence each other in a variety of ways, and that both constitute
independent sources of effects in information processing. (139 ref)
(PsycINFO Database Record (c) 2009 APA, all rights reserved)
Discusses R. S. Lazarus's (see PA, Vols 69:11728 and 25:2812) challenge
of the view that there are circumstances under which affect precedes
cognition and that affective arousal that does not entail prior cognitive
appraisal exists. His argument, however, is based entirely on an
arbitrary definition of emotion that requires cognitive appraisal
as a necessary precondition. To satisfy this concept of emotion,
Lazarus has broadened the definition of cognitive appraisal to include
even the most primitive forms of sensory excitation, thus obliterating
all distinction among cognition, sensation, and perception. No empirical
evidence is offered to document the principle of cognitive appraisal
as a necessary precondition for emotional arousal. It is concluded
that the contrasting view of an affective primacy and independence
is derived from a series of findings and phenomena, including the
existence of neuroanatomical structures allowing for independent
affective process. (56 ref) (PsycINFO Database Record (c) 2008
APA, all rights reserved)
This article examines how consumer decision making is influenced by automatically evoked task-induced affect and by cognitions that are generated in a more controlled manner on exposure to alternatives in a choice task. Across two experiments respondents chose between two alternatives: one (chocolate cake) associated with more intense positive affect but less favorable cognitions, compared to a second (fruit salad) associated with less favorable affect but more favorable cognitions. Findings from the two experiments suggest that if processing resources are limited, spontaneously evoked affective reactions rather than cognitions tend to have a greater impact on choice. As a result, the consumer is more likely to choose the alternative that is superior on the affective dimension but inferior on the cognitive dimension (e.g., chocolate cake). In contrast, when the availability of processing resources is high, cognitions related to the consequences of choosing the alternatives tend to have a bigger impact on choice compared to when the availability of these resources is low. As a result, the consumer is more likely to choose the alternative that is inferior on the affective dimension but superior on the cognitive dimension (e.g., fruit salad). The moderating roles of the mode of presentation of the alternatives and of a personality variable related to impulsivity are also reported. Copyright 1999 by the University of Chicago.
Psychological experiments demonstrate that repeated pairings of a cue and a consumption good eventually create cue-based complementarities:
the presence of the cue raises the marginal utility derived from consumption. In this paper, such dynamic preferences are
embedded in a rational choice model. Behavior that arises from this model is characterized by endogenous cue sensitivities,
costly cue-management, commitment, and cue-based spikes in impatience. The model is used to understand addictive/habit-forming
behaviors and marketing. The model explains why preferences change rapidly from moment to moment, why temptations should sometimes
be avoided, and how firms package and position goods.
Hyperbolic discount functions induce dynamically inconsistent preferences, implying a motive for consumers to constrain their
own future choices. This paper analyzes the decisions of a hyperbolic consumer who has access to an imperfect commitment technology:
an illiquid asset whose sale must be initiated one period before the sale proceeds are received. The model predicts that consumption
tracks income, and the model explains why consumers have asset-specific marginal propensities to consume. The model suggests
that financial innovation may have caused the ongoing decline in U. S. savings rates, since financial innovation increases
liquidity, eliminating commitment opportunities. Finally, the model implies that financial market innovation may reduce welfare
by providing “too much” liquidity.
In this book we are trying to illuminate the persistent and nag ging questions of how mind, life, and the essence of being relate to brain mechanisms. We do that not because we have a commit ment to bear witness to the boring issue of reductionism but be cause we want to know more about what it's all about. How, in deed, does the brain work? How does it allow us to love, hate, see, cry, suffer, and ultimately understand Kepler's laws? We try to uncover clues to these staggering questions by con sidering the results of our studies on the bisected brain. Several years back, one of us wrote a book with that title, and the ap proach was to describe how brain and behavior are affected when one takes the brain apart. In the present book, we are ready to put it back together, and go beyond, for we feel that split-brain studies are now at the point of contributing to an understanding of the workings of the integrated mind. We are grateful to Dr. Donald Wilson of the Dartmouth Medi cal School for allowing us to test his patients. We would also like to thank our past and present colleagues, including Richard Naka mura, Gail Risse, Pamela Greenwood, Andy Francis, Andrea El berger, Nick Brecha, Lynn Bengston, and Sally Springer, who have been involved in various facets of the experimental studies on the bisected brain described in this book.
How do people decide whether to sacrifice now for a future reward or to enjoy themselves in the present? Do the future gains of putting money in a pension fund outweigh going to Hawaii for New Year's Eve? Why does a person's self-discipline one day often give way to impulsive behavior the next? Time and Decision takes up these questions with a comprehensive collection of new research on intertemporal choice, examining how people face the problem of deciding over time. Economists approach intertemporal choice by means of a model in which people discount the value of future events at a constant rate. A vacation two years from now is worth less to most people than a vacation next week. Psychologists, on the other hand, have focused on the cognitive and emotional underpinnings of intertemporal choice. Time and Decision draws from both disciplinary approaches to provide a comprehensive picture of the various layers of choice involved. Shane Frederick, George Loewenstein, and Ted O'Donoghue introduce the volume with an overview of the research on time discounting and focus on how people actually discount the future compared to the standard economic model. Alex Kacelnik discusses the crucial role that the ability to delay gratification must have played in evolution. Walter Mischel and colleagues review classic research showing that four year olds who are able to delay gratification subsequently grow up to perform better in college than their counterparts who chose instant gratification. The book also delves into the neurobiology of patience, examining the brain structures involved in the ability to withstand an impulse. Turning to the issue of self-control, Klaus Wertenbroch examines the relationship between consumption and available resources, showing, for example, how a high credit limit can lead people to overspend. Ted O'Donoghue and Matthew Rabin show how people's awareness of their self-control problems affects their decision-making. The final section of the book examines intertemporal choice with regard to health, drug addiction, dieting, marketing, savings, and public policy. All of us make important decisions every day-many of which profoundly affect the quality of our lives. Time and Decision provides a fascinating look at the complex factors involved in how and why we make our choices, so many of them short-sighted, and helps us understand more precisely this crucial human frailty.
Departures from pure self-interest in economic experiments have recently inspired models of “social preferences”. We conduct experiments on simple games that test these theories more directly than the array of games conventionally considered. Our experiments show support for the prevalence of “quasi-maximin ” preferences: People are self interested, but also sacrifice to increase the payoffs for all recipients, especially low-payoff recipients. We show that quasimaximin preferences better capture behavior than recently proposed models that posit an aversion to differences in payoffs. People are also motivated by reciprocity: While there is little evidence of sacrifice to reciprocate good behavior beyond what they would sacrifice for neutral parties, they withdraw willingness to sacrifice to achieve a fair outcome when others are themselves unwilling to sacrifice, and sometimes punish unfair behavior. We propose some simple models based on our
ABSTRACT—We examined,the impact,of specific emotions,on the endowment effect, the tendency for selling prices to exceed buying,or ‘‘choice’’ prices for the same,object. As predicted by appraisal-tendency theory, disgust induced by a prior, irrele- vant situation carried over to normatively,unrelated,economic decisions, reducing selling and choice prices and eliminating the endowment effect. Sadness also carried over, reducing selling prices but increasing choice prices—producing,a ‘‘reverse en- dowment,effect’’ in which,choice prices exceeded,selling prices. The results demonstrate,that incidental emotions,can influence decisions even when real money is at stake, and that emotions of the same,valence can have opposing,effects on such decisions. Two decades of research document,the tendency for incidental emo-
People tend to value objects more highly simply because they own them. Prior research indicates that people underestimate the impact of this endowment effect on both their own and other people's preferences. We show that underestimation of the endowment effect can lead to suboptimal behavior in settings with economic consequences. Subjects acting as a "buyer's agent" made suboptimally low offers for an owner's commodity. Although buyer's agents learned to make increasingly optimal (i.e., higher) offers over repeated interactions with an initial commodity, this learning did not generalize to a new commodity.
In this paper we examine the functional anatomy of volition, as revealed by modern brain imaging techniques, in conjunction with neuropsychological data derived from human and non-human primates using other methodologies. A number of brain regions contribute to the performance of consciously chosen, or willed', actions. Of particular importance is dorsolateral prefrontal cortex (DLPFC), together with those brain regions with which it is connected, via cortico-subcortical and cortico-cortical circuits. That aspect of free will which is concerned with the voluntary selection of one action rather than another critically depends upon the normal functioning of DLPFC and associated brain regions. Disease, or dysfunction, of these circuits may be associated with a variety of disorders of volition: Parkinson's disease, utilization behaviour, alien and phantom limbs, and delusions of alien control (the passivity phenomena of schizophrenia). Brain imaging has allowed us to gain some access to the pathophysiology of these conditions in living patients. At a philosophical level, the distinction between intentions to act', and intentions in action may prove particularly helpful when addressing these complex disturbances of human cognition and conscious experience. The exercise and experience of free will depends upon neural mechanisms located in prefrontal cortex and associated brain systems.
People who expect to exert self-control in the future perform more poorly on tests of self-regulation. People appear to have a desire to conserve a limited self-regulatory strength. The motivation to conserve strength may contribute to self-control breakdowns. Previous research has found that subsequent attempts at self-control are worse following an initial act of self-control. A prior act of self-control may deplete a person's strength. People low in strength (depleted people) may be especially motivated to conserve strength. Expecting to engage in self-regulation in the future should also increase the motivation to conserve strength. In two experiments, depleted people who expected to exert self-control in the future exhibited less self-control than depleted people who did not expect to engage in self-regulation in the future. People are motivated to conserve resources. The motivation to conserve resources is stronger in depleted people than in people who are not depleted. In a third experiment, people were paid based on their performance on the dependent measure. Depleted people paid well performed better on a self-regulatory task than depleted people paid poorly. Depleted people paid well exerted as much self-control as non-depleted people. People may be able to overcome the motivation to conserve resources if rewarded. Depletion only affects tasks that require self-regulation; tasks that do not require self-regulation are not affect by prior self-regulatory efforts. People anticipate self-control demands and alter their behavior to conserve strength. The motivation to conserve strength may help to explain self-regulatory failures. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
appraisal theory will be considered in the general context of scientific explanation in psychology
intentional systems / computer metaphor: mentation as software / emotional memory and emotional expression / imagery and fear
simple phobia, social anxiety, and agoraphobia: differences in memory organization (PsycINFO Database Record (c) 2012 APA, all rights reserved)
In contrast to logical criteria of rationality, which can be assessed entirely by reference to the system of preferences, substantive criteria of rational choice refer to an independent evaluation of the outcomes of decisions. One of these substantive criteria is the experienced hedonic utility of outcomes. Research indicates that people are myopic in their decisions, may lack skill in predicting their future tastes, and can be led to erroneous choices by fallible memory and incorrect evaluation of past experiences. Theoretical and practical implications of these challenges to the assumption of economic rationality are discussed.
Subjects are reluctant to vaccinate a (hypothetical) child when the vaccination itself can cause death, even when this is much less likely than death from the disease prevented. This effect is even greater when there is a ‘risk group’ for death (with its overall probability held constant), even though the test for membership in the risk group is unavailable. This effect cannot be explained in terms of a tendency to assume that the child is in the risk group. A risk group for death from the disease has no effect on reluctance to vaccinate. The reluctance is an example of omission bias (Spranca, Minsk & Baron, in press), an overgeneralization of a distinction between commissions and omissions to a case in which it is irrelevant. Likewise, it would ordinarily be prudent to find out whether a child is in a risk group before acting, but in this case it is impossible, so knowledge of the existence of the risk group is irrelevant. The risk-group effect is consistent with Frisch & Baron's (1988) interpretation of ambiguity.
When strong emotions are triggered by a risk, people show a remarkable tendency to neglect a small probability that the risk will actually come to fruition. Experimental evidence, involving electric shocks and arsenic, supports this claim, as does real-world evidence, involving responses to abandoned hazardous waste dumps, the pesticide Alar, and anthrax. The resulting "probability neglect" has many implications for law and policy. It suggests the need for institutional constraints on policies based on ungrounded fears; it also shows how government might effectively draw attention to risks that warrant special concern. Probability neglect helps to explain the enactment of certain legislation, in which government, no less than ordinary people, suffers from that form of neglect. When people are neglecting the fact that the probability of harm is small, government should generally attempt to inform people, rather than cater to their excessive fear. But when information will not help, government should respond, at least if analysis suggest that the benefits outweigh the costs. The reason is that fear, even if it is excessive, is itself a significant problem, and can create additional significant problems.
In Experiment I,Ss in each of four groups were given 8 shocks in either 8, 11, 16, or 32 trials, confounding probability with number of trials. Each trial was a countdown period of 30 sec, with an ITI of 30 sec. There were no shock probability effects using either heart rate (HR) or skin conductance (SC), with respect either to average within trial changes or to average pre-shock levels relative to rest. In every group after a large acceleration in Trial 1, HR subsided and stabilized; SC rose steadily throughout the session. In Experiment II, Ss in each of four groups were given either 5, 10, 15, or 20 shocks in 20 trials, confounding probability with number of shocks. In addition to the large HR acceleration in the first trial, there were in this case between-group differences in HR, which were a direct function of number and probability of shocks. Skin conductance did not discriminate the groups, though it rose in all groups both within and across trials. Experiment III, a partial replication of Experiment II, showed that the HR differences in Experiment II failed to repeat when the shock intensity was reduced; and SC no longer increased over trials.
Heretofore, no research has shown that meaningful variability on the Implicit Association Test (IAT) relates to intergroup discrimination or to explicit measures of prejudice. In the current study, White undergraduates interacted separately with White and Black experimenters, and their behavior during these social interactions was assessed by trained judges and by the experimenters themselves. The participants also completed explicit measures of racial prejudice and a race IAT. As predicted, those who revealed stronger negative attitudes toward Blacks (vs Whites) on the IAT had more negative social interactions with a Black (vs a White) experimenter and reported relatively more negative Black prejudices on explicit measures. The implications of these results for the IAT and its relations to intergroup discrimination and to explicit measures of attitudes are discussed.
The economic theory of the consumer is a combination of positive and normative theories. Since it is based on a rational maximizing model it describes how consumers should choose, but it is alleged to also describe how they do choose. This paper argues that in certain well-defined situations many consumers act in a manner that is inconsistent with economic theory. In these situations economic theory will make systematic errors in predicting behavior. Kanneman and Tversey's prospect theory is proposed as the basis for an alternative descriptive theory. Topics discussed are: undeweighting of opportunity costs, failure to ignore sunk costs, scarch behavior choosing not to choose and regret, and precommitment and self-control.
We extend expected utility theory to situations in which agents experience feelings of anticipation prior to the resolution
of uncertainty. We show how these anticipatory feelings may result in time inconsistency. We provide an example from portfolio
theory to illustrate the potential impact of anticipation on asset prices.
Much experimental evidence indicates that choice depends on the status quo or reference level: changes of reference point often lead to reversals of preference. The authors present a reference-dependent theory of consumer choice, which explains such effects by a deformation of indifference curves about the reference point. The central assumption of the theory is that losses and disadvantages have greater impact on preferences than gains and advantages. Implications of loss aversion for economic behavior are considered. Copyright 1991, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.