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on Cognitive and Behavioural Economics |
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Issue of 2023‒09‒25
seven papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Joanna Rachubik (University of Warsaw, Faculty of Economic Sciences) |
| Abstract: | In this study, we investigated how performance in a number of puzzles (decisions under risk) depended on the framing. The puzzles, drawn and adapted from existing literature, were designed to expose well-established cognitive biases could lead respondents to select intuitive yet incorrect answer. Subjects were randomly assigned to one of three treatments: a third of the sample saw puzzles framed in terms of COVID-19, another third about a common cold, and the remaining group about unemployment. Across five continents, we collected over 8, 000 observations. We found that framing of the puzzles affected performance, prompting questions regarding the external validity of these puzzles. Treatments associated with more severe threats, such as COVID and Unemployment, elicited stronger (negative) emotions compared to the common cold. Moreover, these emotional reactions were also linked to performance, and their levels correlated negatively with the number of correctly solved puzzles. |
| Keywords: | decision-making under risk, framing, emotions, cognitive biases, cognitive tasks, COVID-19 |
| JEL: | C91 C99 D01 D81 D91 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2023-22&r=cbe |
| By: | Michalis Drouvelis; Nobuyuki Hanaki; Natsumi Shimada; Yuta Shimodaira |
| Abstract: | Extending the power-to-take game, we explore the impact of two forces that may shape retaliation. In our 2x2 design, i) in addition to taking, the proposers can give part of their endowment to the responders, and ii) in addition to destroying their own endowment in retaliation, the responders can destroy the proposer’s endowment. Although these added options lead the responders to retaliate more severely, they do not significantly influence the proposers’ behavior. It is only when the proposers can give, and the responders can concurrently destroy the endowment of the proposers that the proposers take significantly less from the responders. |
| Keywords: | power-to-take, giving, emotions, retaliation, experiment |
| JEL: | A12 C72 C91 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10607&r=cbe |
| By: | Brice Corgnet (emlyon business school, GATE UMR 5824, F-69130 Ecully, France); Roberto Hernán González (CEREN EA 7477, Burgundy School of Business, Université Bourgogne Franche-Comté, Dijon, France) |
| Abstract: | Recent works have emphasized the role of complexity as a critical constraint on human behavior following Herbert Simon’s original proposal (complexity-cost hypothesis). By contrast, we propose, in line with recent neuroscience models, that complexity can often be appealing (complexity-value hypothesis). Complexity can attract decision makers because it is associated with a large diversity of outcomes, thus offering many opportunities for the resolution of uncertainty, which is inherently appealing to humans. Using incentivized experiments, we show that, in the absence of immediate feedback on lottery outcomes, decision makers prefer lotteries with less outcomes (low-entropy) in line with the complexity-cost hypothesis. However, when feedback is provided and opportunities for resolving uncertainty are thus offered, this effect disappears in line with the complexity-value hypothesis. We discuss various implications of these findings in human resource management, marketing, and finance. |
| Keywords: | Complexity, entropy, experiments |
| JEL: | C91 D01 D81 D87 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:2312&r=cbe |
| By: | Marine Hainguerlot (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Thibault Gajdos (LPC - Laboratoire de psychologie cognitive - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique); Jean-Christophe Vergnaud (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Vincent de Gardelle (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | In perceptual decision making, it is often found that human observers combine sensory information and prior knowledge suboptimally. Typically, in detection tasks, when an alternative is a priori more likely to occur, observers choose it more frequently to account for the unequal base rate but not to the extent they should, a phenomenon referred to as "conservative decision bias" (i.e., observers do not shift their decision criterion enough). One theoretical explanation of this phenomenon is that observers are overconfident in their ability to interpret sensory information, resulting in overweighting the sensory information relative to prior knowledge. Here, we derived formally this candidate model, and we tested it in a visual discrimination task in which we manipulated the prior probabilities of occurrence of the stimuli. We measured confidence in decisions and decision criterion placement in two separate experimental sessions for the same participants (N = 69). Both overconfidence bias and conservative decision bias were found in our data, but critically the link that was predicted between these two quantities was absent. Our data suggested instead that when informed about the a priori probability, overconfident participants put less effort into processing sensory information. These findings offer new perspectives on the role of overconfidence bias to explain suboptimal decisions. |
| Keywords: | overconfidence bias, perceptual decision making, suboptimality, signal detection theory, conservative decision bias, sensitivity |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-04197403&r=cbe |
| By: | Marine Hainguerlot (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Thibault Gajdos (LPC - Laboratoire de psychologie cognitive - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique); Jean-Christophe Vergnaud (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Vincent de Gardelle (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | In perceptual decision making, it is often found that human observers combine sensory information and prior knowledge suboptimally. Typically, in detection tasks, when an alternative is a priori more likely to occur, observers choose it more frequently to account for the unequal base rate but not to the extent they should, a phenomenon referred to as "conservative decision bias" (i.e., observers do not shift their decision criterion enough). One theoretical explanation of this phenomenon is that observers are overconfident in their ability to interpret sensory information, resulting in overweighting the sensory information relative to prior knowledge. Here, we derived formally this candidate model, and we tested it in a visual discrimination task in which we manipulated the prior probabilities of occurrence of the stimuli. We measured confidence in decisions and decision criterion placement in two separate experimental sessions for the same participants (N = 69). Both overconfidence bias and conservative decision bias were found in our data, but critically the link that was predicted between these two quantities was absent. Our data suggested instead that when informed about the a priori probability, overconfident participants put less effort into processing sensory information. These findings offer new perspectives on the role of overconfidence bias to explain suboptimal decisions. |
| Keywords: | overconfidence bias, perceptual decision making, suboptimality, signal detection theory, conservative decision bias, sensitivity |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:hal-04197403&r=cbe |
| By: | Fasolo, Barbara; Misuraca, Raffaella; Reutskaja, Elena |
| Abstract: | Consumer satisfaction and customer experience are key predictors of an organization’s future market growth, long-term customer loyalty, and profitability but are hard to maintain in marketplaces with abundance of choice. Building on self-determination theory, we experimentally test a novel intervention that leverages consumer need for autonomy. The intervention is a message called a “freedom cue” (FC) which makes it salient that consumers can “choose as much as they wish.” A 4-week field experiment in a sporting gear store establishes that FCs lead to greater consumer satisfaction compared to when the store displays no FC. A large (N = 669) preregistered process-tracing experiment run with a consumer panel and a global e-commerce company shows that FCs at point-of-sale improve consumer satisfaction and customer experience compared to an equivalent message that does not make freedom to choose any amount salient. Perceived freedom mediates the effect. FCs do not change the time spent or clicks on the website overall but do change the focus of the choice process. FCs lead to greater focus on what is chosen than on what is not chosen. We discuss practical implications for organizations and future research in consumer choice. (PsycInfo Database Record (c) 2023 APA, all rights reserved) |
| Keywords: | freedom cue; customer experience; consumer satisfaction; field study; process tracing; IESE Business School; American Psychological Association deal |
| JEL: | J50 |
| Date: | 2023–07–27 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:118780&r=cbe |
| By: | Brice Corgnet (emlyon business school, GATE UMR 5824, F-69130 Ecully, France); Roberto Hernán González (CEREN EA 7477, Burgundy School of Business, Université Bourgogne Franche-Comté, Dijon, France) |
| Abstract: | Scholars have long emphasized the importance of setting specific goals and providing clear expectations as a key driver of work performance. Yet, a casual observation of actual compensation practices suggests otherwise. Using both lab and field experiments, we show that randomization of bonus targets and piece rates can lead to higher performance than the best-available deterministic scheme. Furthermore, this effect can be sustained over time. We show that part of this effect is explained by regret motives, which lead workers to exert extra effort to avoid missing out on potential pay. |
| Keywords: | Randomized incentives, bonuses and piece rates, regret, experiments |
| JEL: | C91 C93 D86 D91 M52 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:2314&r=cbe |