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on Cognitive and Behavioural Economics |
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Issue of 2026–05–25
four papers chosen by Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Zarema Khon (Nazarbayev University, Graduate School of Business); Julian De Freitas (Harvard Business School); Samuel G. B. Johnson (University of Waterloo) |
| Abstract: | People hold negative views of companies. Yet, in ten studies (N=4, 219), we document an apparent paradox: Despite these negative stereotypes, people believe that at their core, companies are comprised of morally good traits. We explain this apparent contradiction by distinguishing between company behavior versus identity: while people expect companies to behave badly, they view them as essentially good. We document this effect in the context of behavior change - we find that people believe a company's identity is lost more after morally deteriorating (going from good to bad) than after morally improving (going from bad to good). This moral asymmetry is resilient to different types of company industries and company sizes, and is rooted in psychological essentialism rather than loss aversion or social desirability bias. In short, companies are villains-but only in flesh, not bone. |
| Keywords: | psychological essentialism, corporate identity, moral judgment, lay theories of organizations, ethical change, stakeholder perceptions |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:asx:nugsbw:2026-07 |
| By: | van den Berg, Anthony; Doroc, Karlo; Fu, Changfa; Grossmann, Max R.P.; Miller, Joshua B.; Pavlovic, Lana |
| Abstract: | Xiang et al. (2025) investigate whether the gambler's fallacy-the false belief that a random event is less likely to occur if it has occurred recently-is robust to using probabilistic (versus point) predictions and independently and identically distributed (versus non-IID) sequences. In five experiments with 150 participants each observing 18 sequences of colored balls, the authors find strong evidence of the gambler's fallacy when eliciting point predictions or using non-IID sequences, but fail to observe a robust gambler's fallacy when eliciting probabilistic predictions over IID sequences. We successfully reproduce all main results from the processed data and analysis code. The absence of raw data precludes robustness checks incorporating response times, attention checks, or demographic controls. We conduct two main robustness analyses that both validate the main finding that point predictions are fundamentally different from probabilistic predictions, but also findstrong evidence of the gambler's fallacy for probabilistic predictions. First, we investigate the simplest form of the gambler's fallacy, finding that participants do expect negative autocorrelation based solely on the outcome of the final draw, which applies to both probabilistic and point predictions. Second, we find that this expectation of negative autocorrelation strengthens as the streak gets longer, and that this also applies to both probabilistic and point predictions. |
| Keywords: | Gambler's fallacy, replication, probabilistic prediction, decision making, cognitive bias |
| JEL: | D91 C90 D83 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:i4rdps:295 |
| By: | Sudeep Ghosh (The Hong Kong Polytechnic University); Piet Sercu (KU Leuven); Tom Vinaimont (Nazarbayev University, Graduate School of Business) |
| Abstract: | In our experimental order-driven stock market, company news can be either high-quality and fact-based ('expert' news) or low-validity and survey-based ('social' news).Further, such messages can be provided in either a compact/matter-of-fact versus a florid/vivid form. We expect the latter to elicit a stronger interest and to boost volumes and prices. In the experiment, we find that the impact of vividness on order-submission activity is statistically and economically important. Across the experimental sessions, we also observe that the behavioral reluctance to sell exerts a powerful influence, with sell-side orders being fewer than buy-side ones, and less affected by vividness. Unexpectedly, the impact of expert news is not more marked than social news, and a confirmation bias in survey-based news does not provide the explanation. However, our result provide little cause for concern regarding market efficiency. The overlap between the buy and sell sides grows roughly proportionally with the total book size, implying there is no tangible net effect on executed order volume as a fraction of total book volume. Similarly, there is no statistically distinct effect on pricing. The main effect is on order volumes and traded volumes - the brokers' main objective as newsmongers, plausibly. |
| Keywords: | Vividness, Financial Information, Trading Behavior, Laboratory Experiment |
| JEL: | C91 C92 G41 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:asx:nugsbw:2025-09 |
| By: | Zarema Khon (Nazarbayev University, Graduate School of Business); Yi-Ju Chen (University of Bath); Yvetta Simonyan (University of Bath); Haiming Hang (University of Bath); Samuel G. B. Johnson (University of Waterloo) |
| Abstract: | Existing research shows that persuasion is very hard. Then why are many people still determined that they can be easily and effectively manipulated by persuaders, such as marketers or politicians? Across five studies, we show that the beliefs about manipulation have deep psychological roots and might be an evolutionary adaptation against trickery. Thus, people higher in general motivations to make sense of their environments tend to not only see persuasion where it exists, but also where it doesn't. Such beliefs can be weakened when people think of themselves (vs. other people) in persuasion situations (Study 4) and read concrete (vs. abstract) descriptions of these situations (Study 5). However, these effects occur only in individuals with low (vs. high) sense-making motivation because they are naturally less attuned to threats, including manipulation. Furthermore, whereas higher sense-making motives manifest in greater false-positive beliefs about manipulation effectiveness (where there is no persuasion), sense-making abilities negatively affect false-positives and result in more accurate beliefs about persuasion (Study 3). Practical implications, other exploratory factors driving manipulation beliefs, and strategies for attenuating false-positive manipulation detection are discussed. |
| Keywords: | lay theories, beliefs, influence, persuasion knowledge, sense-making |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:asx:nugsbw:2026-08 |