- Amount and time exert independent influences on inter temporal choice
D.R. Amasino, N.J. Sullivan, R.E. Kranton and S.A. Huettel.
Nature Human Behaviour, 2019.
Choices often involve trade-offs between smaller, sooner and larger, later outcomes. Canonical intertemporal choice models assume that reward amount and time until delivery are integrated within each option prior to comparison. We use a novel multi-attribute drift diffusion modeling (DDM) approach to show that attribute-wise comparison, in which amounts and times are compared separately rather than integrated, better represents the choice process. We find that accumulation rates for amount and time information are uncorrelated, but the difference between those rates strongly predicts individual differences in patience. Moreover, patient individuals incorporate amount earlier than time information into the decision process. Using eye tracking measures, we link these modeling results to attention, showing that patience results from a rapid, attribute-wise process that prioritizes amount over time information. Thus, we find evidence that intertemporal choice reflects the interaction of two distinct processes – one for amount, the other for time – whose combination determines choice.
- Deception and Self-Deception
P. Schwardmann and J.J. van der Weele.
Nature Human Behaviour, 2019, forthcoming, Data, Codes, Materials.
Author blog posts at Psychology Today and Nature Research.
Media: ABC News, FAZ, Folia, FehrAdvice.
There is ample evidence that the average person thinks he or she is more skilful, more beautiful and kinder than others and that such overconfidence may result in substantial personal and social costs. To explain the prevalence of overconfidence, social scientists usually point to its affective benefits, such as those stemming from a good self-image or reduced anxiety about an uncertain future. An alternative theory, first advanced by evolutionary biologist Robert Trivers, posits that people self-deceive into higher confidence to more effectively persuade or deceive others. Here we conduct two experiments (combined n = 688) to test this strategic self-deception hypothesis. After performing a cognitively challenging task, half of our subjects are informed that they can earn money if, during a short face-to-face interaction, they convince others of their superior performance. We find that the privately elicited beliefs of the group that was informed of the profitable deception opportunity exhibit significantly more overconfidence than the beliefs of the control group. To test whether higher confidence ultimately pays off, we experimentally manipulate the confidence of the subjects by means of a noisy feedback signal. We find that this exogenous shift in confidence makes subjects more persuasive in subsequent face-to-face interactions. Overconfidence emerges from these results as the product of an adaptive cognitive technology with important social benefits, rather than some deficiency or bias.
- Peer effects and risk sharing in experimental asset markets
P.J. Gortner and J.J. van der Weele.
European Economic Review, 2019, 116, 129-147.
We investigate the effect of introducing information about peer portfolios in an experimental Arrow-Debreu economy. Confirming the prediction of a general equilibrium model with inequality averse preferences, we find that peer information leads to reduced variation in payoffs within peer groups. Information also improves risk sharing, as the data suggests that experiencing earnings deviations from peers induces a shift to more balanced portfolios. In a treatment where we highlight the highest earner, we observe a reduction in risk sharing, while highlighting the lowest earner has no effects compared to providing neutral information. Our results indicate that the presence of social information and its framing is an important determinant of equilibrium in financial markets.
- Responsiveness to feedback as a personal trait
T. Buser, L. Gerhards and J.J. van der Weele.
Journal of Risk and Uncertainty, 2018, 56:2, 165-192.
We investigate individual heterogeneity in the tendency to under-respondto feedback (“conservatism”) and to respond more strongly to positive compared tonegative feedback (“asymmetry”). We elicit beliefs about relative performance afterrepeated rounds of feedback across a series of cognitive tests. Relative to a Bayesianbenchmark, we find that subjects update on average conservatively but not asym-metrically. We define individual measures of conservatism and asymmetry relativeto the average subject, and show that these measures explain an important part ofthe variation in beliefs and competition entry decisions. Relative conservatism iscorrelated across tasks and predicts competition entry both independently of beliefsand by influencing beliefs, suggesting it can be considered a personal trait. Relativeasymmetry is less stable across tasks, but predicts competition entry by increasingself-confidence. Ego-relevance of the task correlates with relative conservatism butnot relative asymmetry.
- Self-image and willful ignorance in social decisions
Z. Grossman and J.J. van der Weele.
Journal of the European Economic Association, 2017, 15:1, 173-217.
Summary blogpost at Oxford University Press.
Avoiding information about adverse welfare consequences of self-interested decisions, or willful ignorance, is an important source of socially harmful behavior. To understand this issue, we analyze a Bayesian signaling model of an agent who cares about self-image and has the opportunity to learn the social benefits of a personally costly action. We show that willful ignorance can serve as an excuse for selfish behavior by obfuscating the signal about the decision-maker’s preferences, and help maintain the idea that the agent would have acted virtuously under full information. We derive several behavioral predictions that are inconsistent with either outcome-based preferences or social- image concern and conduct experiments to test them. Our findings, as well as a number of previous experimental results, offer support for these predictions and thus, the broader theory of self-signaling.