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Judgment and Decision Making

  • It is known that presentation of a meaningful label (e.g., "The Teamwork Game") can influence decisions in economic games. A common view is that such labels cue associations to preexisting mental models of situations, a process here called frame selection. In the absence of such cues, participants may still spontaneously associate a game with a preexisting frame. We used the public goods game to compare the effect of such spontaneous frame selection with the effect of label framing. Participants in a condition where the public goods game was labeled "The Teamwork Game" tended to contribute at the same level as participants who spontaneously associated the unlabeled game with teamwork, whereas those who did not associate the the unlabeled game with teamwork tended to make lower contributions. We conclude that neutrally described games may be subject to spontaneous frame selection effects comparable in size to the effects of label framing. 2014/09/27 - 09:53
  • It is often the case that one can choose a mix of alternative options rather than have to select one option only. Such an opportunity to diversify may blunt the risk involved in all-or-none choice. Here we investigate repeated investment decisions in two-valued options that differ in their riskiness, looking for the effects of recent decisions and their outcomes on upcoming decisions. We compare these effects to those evident in all-or-none choice between the same risky options. The ``state of the world'', namely, the likelihood of the high versus the low outcomes of the options, is manipulated. We find that aggregate allocation diverges from uniformity (i.e., from 1/n), and is sensitive to outcome probabilities, with the pattern of results indicating reactivity to the outcome of the previous decision. Round-to-round dynamics reveal that the outcome of the previous decision has an effect on the subsequent decision, on top of inertia; the aspects of the outcome that influence the next decision indicate an effect of a missed opportunity, if there was one, in the previous decision. Importantly, recent outcomes have a similar effect in diversification decisions and in all-or-none choice. 2014/09/27 - 09:53
  • This paper provides a novel interpretation of focal point responses (0, 50, 100 percent) in terms of ambiguous beliefs dynamics that arise in new developments of decision theory such as Choquet expected utility theory. In particular, focal point responses that have been updated from nonfocal responses can be interpreted as non-additive beliefs that account for psychological bias. A focal point response of 100 that has been updated from a nonfocal response can be represented by a non-additive belief that has been updated according to the Overestimating Update Rule. A focal point response of zero that has been updated from a nonfocal response can be represented by a non-additive belief that has been updated according to the Underestimating Update Rule. Focal point responses given consistently over time are not subject to psychological bias, and can be represented by additive probability distributions. Estimation results show such a model to be a very good fit to the data. 2014/09/27 - 09:53
  • In optimal stopping problems, decision makers are assumed to search randomly to learn the utility of alternatives; in contrast, in one-shot multi-attribute utility optimization, decision makers are assumed to have perfect knowledge of utilities. We point out that these two contexts represent the boundaries of a continuum, of which the middle remains uncharted: How should people search intelligently when they possess imperfect information about the alternatives? We assume that decision makers first estimate the utility of each available alternative and then search the alternatives in order of their estimated utility until expected benefits are outweighed by search costs. We considered three well-known models for estimating utility: (i) a linear multi-attribute model, (ii) equal weighting of attributes, and (iii) a single-attribute heuristic. We used 12 real-world decision problems, ranging from consumer choice to industrial experimentation, to measure the performance of the three models. The full model (i) performed best on average but its simplifications (ii and iii) also had regions of superior performance. We explain the results by analyzing the impact of the models' utility order and estimation error. 2014/09/27 - 09:53
  • The influence of numeracy on information processing of two risk communication formats (percentage and pictograph) was examined using an eye tracker. A sample from the general population (N = 159) was used. In intuitive and deliberative decision conditions, the participants were presented with a hypothetical scenario presenting a test result. The participants indicated their feelings and their perceived risk, evoked by a 17\% risk level. In the intuitive decision condition, a significant correlation (r = .30) between numeracy and the order of information processing was found: the higher the numeracy, the earlier the processing of the percentage, and the lower the numeracy, the earlier the processing of the pictograph. This intuitive, initial focus on a format prevailed over the first half of the intuitive decision-making process. In the deliberative decision condition, the correlation between numeracy and order of information processing was not significant. In both decision conditions, high and low numerates processed pictograph and percentage formats with similar depths and derived similar meanings from them in terms of feelings and perceived risk. In both conditions numeracy had no effects on the degree of attention on the percentage or the pictograph (number of fixations on formats and transitions between them). The results suggest that pictographs attract low numerates' attention, and percentages attract high numerates' attention in the first, intuitive, phase of numeric information processing. Pictographs thus ensure low numerates' further elaboration on numeric risk information, which is an important precondition of risk understanding and decision making. 2014/09/27 - 09:53
  • Past research has shown that people consistently believe that others are more easily manipulated by external influences than they themselves are---a phenomenon called the ``third-person effect'' (Davison, 1983). The present research investigates whether support for public policies aimed at changing behavior using incentives and other decision ``nudges'' is affected by this bias. Across two studies, we phrased justification for public policy initiatives using either the second- or third-person plural. In Study 1, we found that support for policies is higher when their justification points to people in general rather than the general ``you'', and in Study 2 we found that this former phrasing also improves support compared to a no-justification control condition. Policy support is mediated by beliefs about the likelihood of success of the policies (as opposed to beliefs about the policies' unintended consequences), and, in the second-person condition, is inversely related to a sense of personal agency. These effects suggest that the third-person effect holds true for nudge-type and incentive-based public policies, with implications for their popular support. 2014/09/27 - 09:53
  • This paper explored how frames influence people's evaluation of others' probabilistic predictions in light of the outcomes of binary events. Most probabilistic predictions (e.g., ``there is a 75\% chance that Denver will win the Super Bowl'') can be partitioned into two components: A qualitative component that describes the predicted outcome (``Denver will win the Super Bowl''), and a quantitative component that represents the chance of the outcome occurring (``75\% chance''). Various logically equivalent variations of a single prediction can be created through different combinations of these components and their logical or numerical complements (e.g., ``25\% chance that Denver will lose the Super Bowl'', ``75\% chance that Seattle will lose the Super Bowl''). Based on the outcome of the predicted event, these logically equivalent predictions can be categorized into two classes: Congruently framed predictions, in which the qualitative component matches the outcome, and incongruently framed predictions, in which it does not. Although the two classes of predictions are logically equivalent, we hypothesize that people would judge congruently framed predictions to be more accurate. The paper tested this hypothesis in seven experiments and found supporting evidence across a number of domains and experimental manipulations, and even when the congruently framed prediction was logically inferior. It also found that this effect held even for subjects who saw both congruently framed and incongruently framed versions of a prediction and judged the two to be logically equivalent. 2014/09/27 - 09:53
  • Svenson (2011) showed that choices of one of two alternative productivity increases to save production resources (e.g., man-months) were biased. Judgments of resource savings following a speed increase from a low production speed line were underestimated and following an increase of a high production speed line overestimated. The objective formula for computing savings includes differences between inverse speeds and this is intuitively very problematic for most people. The purpose of the present studies was to explore ways of ameliorating or eliminating the bias. Study 1 was a control study asking participants to increase the production speed of one production line to save the same amount of production resources (man-months) as was saved by a speed increase in a reference line. The increases judged to match the reference alternatives showed the same bias as in the earlier research on choices. In Study 2 the same task and problems were used as in Study 1, but the participants were asked first to judge the resource saving of the reference alternative in a pair of alternatives before they proceeded to the matching task. This weakened the average bias only slightly. In Study 3, the participants were asked to judge the resources saved from each of two successive increases of the same single production line (other than those of the matching task) before they continued to the matching problems. In this way a participant could realize that a second production speed increase from a higher speed (e.g., from 40 to 60 items /man-month) gives less resource savings than the same speed increase from a first lower speed (e.g., from 20 to 40 items/man-month. Following this, the judgments of the same problems as in the other studies improved and the bias decreased significantly but it did not disappear. To be able to make optimal decisions about productivity increases, people need information about the bias and/or reformulations of the problems. 2014/09/27 - 09:53
  • \vspace{-1ex} The letter of the law is its literal meaning. Here, the spirit of the law is its perceived intention. We tested the hypothesis that violating the spirit of the law accounts for culpability above and beyond breaking the mere letter. We find that one can incur culpability even when the letter of the law is not technically broken. We examine this effect across various legal contexts and discuss the implications for future research directions. 2014/09/27 - 09:53
  • I report a new judgment task designed to investigate the subjective weights allotted to experience and description when integrating information from the two sources. Subjects estimated the percentage of red balls in a bag containing red and blue balls based on two samples from the bag. They experienced one sample by observing a sequence of draws and received a description of the other sample in terms of summary statistics.
    The results of two experiments show that judgments were more sensitive to the experienced sample compared to the described one for most subjects, although others showed the opposite bias. The bias toward experience varied as a function of the presentation order of the two samples in Experiment 1 and the presentation format of the description in Experiment 2.
    The integration of description and experience exemplifies tasks that require integration of information obtained from different sources and in different formats. Informed by the findings reported in this study, I identify some directions for future research on human information integration. 2014/09/27 - 09:53
  • Maximizers attempt to find the best solution in decision-making, while satisficers feel comfortable with a good enough solution. Recent results pointed out some critical aspects of this decision-making approach and some concerns about its measurement and dimensional structure. In addition to the analysis of these aspects, we tested the possible mediational role of regret in this psychological process. The Maximization Inventory (MI; satisficing, decision difficulty, and alternative search), regret, and Satisfaction with Life Scale (SWLS) were translated and adapted to Spanish in order to answer these issues with a Chilean sample. Validity and reliability analysis of the MI reports that only two dimensions of the MI have enough dimensional support (decision difficulty, alternative search). The tested structural model shows good fit of partial mediation effect of regret between decision difficulty and SWLS. At the same time, alternative search has a positive relation with SWLS. These results suggest that Regret becomes crucial for prescribing behavior to decision makers. 2014/09/27 - 09:53
  • People tend to prefer smaller and sooner (SS) rewards over larger
    and later (LL) ones even when the latter are much larger. Previous
    research have identified several ways to enhance people's
    patience. Adding to this literature, the current paper demonstrates
    that introduction of upfront losses as well as gains to both SS and
    LL rewards can decrease people's impatience. This effect is
    incompatible with both the normative exponential and descriptive
    hyperbolic discounting models, which agree on the additive
    assumption and the independence assumption. We also exculde the
    integration explanation which assumes subjects integrate upfront
    money with final rewards and make a decision with bottom line at the
    end. We consider several possible explanations, including the
    salience hypothesis, which states that introducing upfront money
    makes the money dimension more salient than not and thus increases
    the attractiveness of LL options. 2014/07/30 - 02:00
  • We describe the ``evaluability bias'': the
    tendency to weight the importance of an attribute in proportion to its
    ease of evaluation. We propose that the evaluability bias influences
    decision making in the context of charitable giving: people tend to
    have a strong preference for charities with low overhead ratios (lower
    administrative expenses) but not for charities with high
    cost-effectiveness (greater number of saved lives per dollar), because
    the former attribute is easier to evaluate than the latter. In line
    with this hypothesis, we report the results of four studies showing
    that, when presented with a single charity, people are willing to
    donate more to a charity with low overhead ratio, regardless of
    cost-effectiveness. However, when people are presented with two
    charities simultaneously---thereby enabling comparative
    evaluation---they base their donation behavior on cost-effectiveness
    (Study 1). This suggests that people primarily value cost-effectiveness
    but manifest the evaluability bias in cases where they find it
    difficult to evaluate. However, people seem also to value a low
    overhead ratio for its own sake (Study 2). The evaluability bias effect
    applies to charities of different domains (Study 3). We also show that
    overhead ratio is easier to evaluate when its presentation format is a
    ratio, suggesting an inherent reference point that allows meaningful
    interpretation (Study 4). 2014/07/30 - 02:00
  • Interventions to increase cooperation in social dilemmas depend on
    understanding decision makers' motivations for cooperation or
    defection. We examined these in five real-world social dilemmas:
    situations where private interests are at odds with collective
    ones. An online survey (N = 929) asked respondents whether or not
    they cooperated in each social dilemma and then elicited both
    open-ended reports of reasons for their choices and endorsements of
    a provided list of reasons. The dilemmas chosen were ones that
    permit individual action rather than voting or advocacy: (1)
    conserving energy, (2) donating blood, (3) getting a flu
    vaccination, (4) donating to National Public Radio (NPR), and (5)
    buying green electricity. Self-reported cooperation is weakly but
    positively correlated across these dilemmas. Cooperation in each
    dilemma correlates fairly strongly with self-reported altruism and
    with punitive attitudes toward defectors. Some strong
    domain-specific behaviors and beliefs also correlate with
    cooperation. The strongest example is frequency of listening to NPR,
    which predicts donation. Socio-demographic variables relate only
    weakly to cooperation. Respondents who self-report cooperation
    usually cite social reasons (including reciprocity) for their
    choice. Defectors often give self-interest reasons but there are
    also some domain-specific reasons---some report that they are not
    eligible to donate blood; some cannot buy green electricity because
    they do not pay their own electric bills. Cooperators generally
    report that several of the provided reasons match their actual
    reasons fairly well, but most defectors endorse none or at most one
    of the provided reasons for defection. In particular, defectors
    often view cooperation as costly but do not endorse free riding as a
    reason for defection. We tentatively conclude that cooperation in
    these settings is based mostly on pro-social norms and defection on
    a mixture of self-interest and the possibly motivated perception
    that situational circumstances prevent cooperation in the given
    situation. 2014/07/30 - 02:00
  • We report two studies on the perceived responsibility of opponents
    competing for a goal that can be attained by only one of
    them. Responsibility judgments were collected in seven samples of
    lay people and experts before, during, and after the World Chess
    Championship in 2013. Participants assessed the responsibility of
    the two players, their supporting teams, local conditions, and
    chance factors for four hypothetical outcomes (large and small
    loss/win for each player), along with probabilities for these
    outcomes, demonstrating subadditivity (sums exceeding 100%) in all
    samples, even among chess experts. The winner was consistently
    perceived to be more responsible than the loser, and more for
    outcomes with large than small margins. There was also an effect of
    focal player, as Carlsen was given more responsibility both for
    losses and wins than Anand, by the present (Norwegian) pro-Carlsen
    samples. However, this effect could be modified by describing the
    outcomes as Anand's (rather than Carlsen's) wins and losses. Thus
    the study adds to the valence framing literature by showing how
    responsibility judgments are affected by the way outcomes are
    % edits in abstract 2014/07/30 - 02:00
  • Three studies tested whether people use cues about the
    way other people think---for example, whether others respond fast
    vs. slow---to infer what responses other people might give to
    reasoning problems. People who solve reasoning problems using
    deliberative thinking have better insight than intuitive
    problem-solvers into the responses that other people might give to
    the same problems. Presumably because deliberative responders think
    of intuitive responses before they think of deliberative responses,
    they are aware that others might respond intuitively, particularly
    in circumstances that hinder deliberative thinking (e.g., fast
    responding). Intuitive responders, on the other hand, are less aware
    of alternative responses to theirs, so they infer that other people
    respond as they do, regardless of the way others respond. 2014/07/30 - 02:00
  • Two studies examined the relationship between individual differences in
    cognitive reflection (CRT) and the tendency to accord genuinely moral
    (non-conventional) status to a range of counter-normative acts --- that
    is, to treat such acts as wrong regardless of existing social opinion
    or norms. We contrasted social violations that are
    intrinsically harmful to others (e.g., fraud, thievery) with
    those that are not (e.g., wearing pajamas to work and engaging in
    consensual acts of sexual intimacy with an adult sibling). Our key
    hypothesis was that more reflective (higher CRT) individuals would tend
    to moralize selectively --- treating only intrinsically harmful acts as
    genuinely morally wrong --- whereas less reflective (lower CRT)
    individuals would moralize more indiscriminately. We found clear
    support for this hypothesis in a large and ideologically diverse sample
    of American adults. The predicted associations were not fully accounted
    for by the subjects' political orientation, sensitivity
    to gut feelings, gender, age, educational attainment, or their
    placement on a sexual morals-specific measure of social conservatism.
    Our studies are the first to demonstrate that, in addition to
    modulating the intensity of moral condemnation, reflection may also
    play a key role in setting the boundaries of the moral domain as such. 2014/05/28 - 06:28
  • The economic literature on negotiation shows that strategic concerns
    can be a barrier to agreement, even when the buyer values the good
    more than the seller. Yet behavioral research demonstrates that
    human interaction can overcome these strategic concerns through
    communication. We show that there is also a downside of this human
    interaction: cynicism. Across two studies we focus on a
    seller-buyer interaction in which the buyer has uncertain knowledge
    about the goods for sale, but has a positive expected payoff from
    saying ``yes'' to the available transaction. Study 1 shows that
    most buyers accept offers made by computers, but that acceptance
    rates drop significantly when offers are made by human sellers who
    communicate directly with buyers. Study 2 clarifies that this
    effect results from allowing human sellers to communicate with
    buyers, and shows that such communication focuses the buyers'
    attention on the seller's trustworthiness. The mere situation of
    negotiated interaction increases buyers' attention to the sellers'
    self-serving motives and, consequently, buyers' cynicism. Unaware
    of this downside of interaction, sellers actually prefer to have the
    opportunity to communicate with buyers. 2014/05/28 - 06:28
  • The current study tested the boundary conditions of ethical
    decision-making by increasing cognitive load. This manipulation is
    believed to hinder deliberation, and, as we argue, reduces the
    cognitive capacity needed for a self-serving bias to occur. As telling
    a lie is believed to be more cognitively taxing than telling the truth,
    we hypothesized that participants would be more honest under high
    cognitive load than low cognitive load. 173 participants anonymously
    rolled a die three times and reported their outcomes --- of which one of
    the rolls would be paid out --- while either under high or low cognitive
    load. For the roll that determined pay, participants under low
    cognitive load, but not under high cognitive load, reported die rolls
    that were significantly different from a uniform (honest) distribution.
    The reported outcome of this roll was also significantly higher in the
    low load condition than in the high load condition, suggesting that
    participants in the low load condition lied to get higher pay. This
    pattern was not observed for the second and third roll where
    participants knew the rolls were not going to be paid out and where
    therefore lying would not serve self-interest. Results thus indicate
    that having limited cognitive capacity will unveil a tendency to be
    honest in a situation where having more cognitive capacity would have
    enabled one to serve self-interest by lying. 2014/05/28 - 06:28
  • When people predict their future behavior, they tend to place too much
    weight on their current intentions, which produces an optimistic bias
    for behaviors associated with currently strong intentions. More
    realistic self-predictions require greater sensitivity to situational
    barriers, such as obstacles or competing demands, that may interfere
    with the translation of current intentions into future behavior. We
    consider three reasons why people may not adjust sufficiently for such
    barriers. First, self-predictions may focus exclusively on current
    intentions, ignoring potential barriers altogether. We test this
    possibility, in three studies, with manipulations that draw greater
    attention to barriers. Second, barriers may be discounted in the
    self-prediction process. We test this possibility by comparing
    prospective and retrospective ratings of the impact of barriers on the
    target behavior. Neither possibility was supported in these tests, or
    in a further test examining whether an optimally weighted statistical
    model could improve on the accuracy of self-predictions by placing
    greater weight on anticipated situational barriers. Instead, the
    evidence supports a third possibility: Even when they acknowledge that
    situational factors can affect the likelihood of carrying out an
    intended behavior, people do not adequately moderate the weight placed
    on their current intentions when predicting their future behavior. 2014/05/28 - 06:28
  • Four laboratory studies were conducted to test the hypothesis that
    correct Bayesian reasoning can be predicted by two factors of task
    complexity --- the number of mental steps required to reach
    the normative solution, and the compatibility between the
    framing of data presented and the framing of the question posed. The
    findings show that participants performed better on frequency format
    questions only when one mental step was required to solve the task
    and when the data were in a compatible frequency format. By
    contrast, participants performed more poorly on more complicated
    tasks which required more mental steps (in a compatible frequency or
    probability format) or when the data and question formats were
    incompatible (Studies 1 and 2). Incompatibility between data and
    question formats was also associated with higher reaction times
    (Study 2b). Furthermore, on problems that incorporated
    incompatibility between the data sample size and the target
    (question) sample size, participants performed better on the
    probability question than the frequency question, regardless of data
    format (Study 3). The latter findings highlight the ecological
    advantage of translating data into probability terms, which are
    normalized in a range between 0 and 1, and thus can be transferred
    from one situation to another. 2014/05/28 - 06:28
  • Decisions that consumers make often rest on evaluations of attributes,
    such as how large, expensive, good, or fattening an option seems.
    Extant research has demonstrated that these evaluations in turn depend
    upon the recently experienced distribution of attribute values (e.g.,
    positively or negatively skewed). In many situations decisions rely on
    recalling the attribute values of each option, a process that has been
    neglected in much of the previous literature. In two experiments,
    participants learned attribute information for labeled stimuli
    presented within either a positively or negatively skewed distribution
    and then they recalled values from labels after approximately one
    minute. The results demonstrated effects that are inconsistent with
    predictions of the category-adjustment model (Duffy, Huttenlocher,
    Hedges & Crawford, 2010) that recalled values would shift toward the
    mean of the distribution of values presented. Instead, results were
    consistent with predictions of the comparison-induced distortion model
    (Choplin & Hummel, 2002) that remembered values would depend on the
    density of stimuli within the attribute range. Reasons for these results,
    alternative models, and implications for decision-making are discussed.
    % changed with to within 2014/05/28 - 06:28
  • We demonstrate the usefulness of cognitive models for combining
    human estimates of probabilities in two experiments. The first
    experiment involves people's estimates of probabilities for general
    knowledge questions such as ``What percentage of the world's
    population speaks English as a first language?'' The second
    experiment involves people's estimates of probabilities in football
    (soccer) games, such as ``What is the probability a team leading
    1--0 at half time will win the game?'', with ground truths based on
    analysis of large corpus of games played in the past decade. In both
    experiments, we collect people's probability estimates, and develop
    a cognitive model of the estimation process, including assumptions
    about the calibration of probabilities and individual
    differences. We show that the cognitive model approach outperforms
    standard statistical aggregation methods like the mean and the
    median for both experiments and, unlike most previous related work,
    is able to make good predictions in a fully unsupervised setting. We
    also show that the parameters inferred as part of the cognitive
    modeling, involving calibration and expertise, provide useful
    measures of the cognitive characteristics of individuals. We argue
    that the cognitive approach has the advantage of aggregating over
    latent human knowledge rather than observed estimates, and emphasize
    that it can be applied in predictive settings where answers are not
    yet available. 2014/05/28 - 06:28
  • It is important to understand the impact of individual differences in
    decision making from childhood to adulthood. This cohort-based study
    extends our knowledge by comparing decision making of children across
    the age range of 8 to 17 years and their parents. Based on prior
    research and theory focusing on different types of framing effects, we
    uncover several key differences across ages, including levels of risk
    taking and sensitivity to expected value differences between risky and
    riskless choices. Furthermore, we find that measures such as Numeracy
    and Surgency help explain both age-related and individual differences
    on our tasks, especially for decisions involving risk. We discuss the
    role of diverse task measures in understanding how individual
    difference factors affect different aspects of decision making,
    including the ability and effort to process numerical information and
    the ability to suppress affective reactions to stimulus labels. 2014/05/28 - 06:28
  • Affective states can change how people react to measures aimed at
    influencing their decisions such as providing a default option.
    Previous research has shown that when defaults maintain the status quo
    positive mood increases reliance on the default and negative mood
    decreases it. Similarly, it has been demonstrated that positive mood
    enhances the preference for inaction. We extend this
    research by investigating how mood states influence reliance on the
    default if the default leads to a change, thus pitting preference for
    status quo against a preference for inaction. Specifically, we tested
    in an online study how happiness and sadness influenced reliance on two
    types of default (1) a default maintaining status quo and (2) a default
    inducing change. Our results suggest that the effect of emotions
    depends on the type of default: people in a happy mood were more likely
    than sad people to follow a default when it maintained status quo but
    less likely to follow a default when it introduced change. These
    results are in line with mood maintenance theory. 2014/05/28 - 06:28
  • Rational trust decisions depend on potential outcomes and expectations
    of reciprocity. In the trust game, outcomes and expectations correspond
    to the structural factors of risk and temptation. Two experiments
    investigated how risk and temptation influenced information search and
    final decisions in the trust game. The central finding was that
    trustors underemphasized temptation relative to its effects on the
    expected value of trust. Instead, trustors made decisions
    egocentrically, focusing on potential outcomes. In Experiment 1,
    information search data revealed that trustors often made decisions
    without learning about the payoffs related to temptation. Experiment 2
    investigated whether trustors were able to use temptation to form
    accurate expectations of reciprocity. Trustors understood, but
    underestimated, the relationship between temptation and the probability
    of reciprocity. Moreover, they did not fully consider expectations in
    their final trust decisions. Changes in potential outcomes had larger
    effects on trust than comparable changes in expectations. These results
    suggest that levels of trust are too high when the probability of
    reciprocity is low and too low when that probability is high. 2014/03/28 - 20:32
  • The expression of emotion can play a significant role in strategic decision-making. In this study, we hypothesized that emotion expression alters behavior in morally charged negotiation. We investigated the impact of facial displays of discrete emotions, specifically anger and sadness, in a morally charged multi-issue negotiation task. Our results indicate that if a negotiator associated moral significance to the object of the negotiation, displays of anger resulted in reduced concession making whereas displays of sadness increased concession making. Moral significance of the issues fostered an emotional matching mechanism of sorrow, where a sorrow expression from one party elicited a sorrow expression from the other. Taken together, the results indicate that emotional expressions can affect morally charged negotiation in ways that can inhibit as well as promote cooperation. 2014/03/28 - 20:32
  • Signal detection theory (SDT) was developed to analyze the behavior of a
    single judge but also can be used to analyze decisions made by
    organizations or other social systems. SDT quantifies the ability to
    distinguish between signal and noise by separating accuracy of the
    detection system from response bias - the propensity to over-warn (too
    many false positives) or under-warn (too many misses). We apply SDT
    techniques to national and state-level data sets to analyze the ability
    of the child welfare services systems to detect instances of child
    maltreatment. Blacks have higher rates of referral and the system is
    less accurate for them than for Whites or Hispanics. The incidence of
    false positives - referrals leading to unsubstantiated findings - is
    higher for Blacks than for other groups, as is the incidence of false
    negatives - children for whom no referral was made but who are in fact
    neglected or abused. The rate of true positives - children for whom a
    referral was made and for whom the allegation was substantiated - is
    higher for Blacks. Values of d' (signal strength) are roughly the same
    for Whites, Blacks, and Hispanics but there are pronounced group
    differences in C (a measure of the location of the decision
    threshold). Analyses show that the child welfare services system treats
    Blacks differently from Hispanics and Whites in ways that cannot be
    justified readily in terms of objective measures of group differences.
    This study illustrates the potential for JDM techniques such as SDT to
    contribute to understanding of system-level decision making processes. 2014/03/28 - 20:32
  • In a highly uncertain world, individuals often have to make decisions in situations with incomplete information. We investigated in three experiments how partial cue information is treated in complex probabilistic inference tasks. Specifically, we test a mechanism to infer missing cue values that is based on the discrimination rate of cues (i.e., how often a cue makes distinct predictions for choice options). We show analytically that inferring missing cue values based on discrimination rate maximizes the probability for a correct inference in many decision environments and that it is therefore adaptive to use it. Results from three experiments show that individuals are sensitive to the discrimination rate and use it when it is a valid inference mechanism but rely on other inference mechanisms, such as the cues' base-rate of positive information, when it is not. We find adaptive inferences for incomplete information in environments in which participants are explicitly provided with information concerning the base-rate and discrimination rate of cues (Exp. 1) as well as in environments in which they learn these properties by experience (Exp. 2). Results also hold in environments of further increased complexity (Exp. 3). In all studies, participants show a high ability to adaptively infer incomplete information and to integrate this inferred information with other available cues to approximate the naive Bayesian solution. 2014/03/28 - 20:32
  • We asked whether behavioral biases are related to cognitive
    abilities of Malaysian youth. Frederick's three-item Cognitive
    Reflection Test was used to understand the role of behavioral biases
    concerning behavioral economics and finance. The sample (n = 880)
    comprised of university students from different parts of
    Malaysia. We found significant CRT differences as a function of
    gender, race and age groups. In addition, lower scores on the CRT
    are correlated positively with time preference and conservatism, but
    not with risk preference or the conjunction fallacy. 2014/03/28 - 20:32
  • A positive test result for BRCA1/2 gene mutation is a substantial
    risk factor for breast and ovarian cancer. However, testing is not
    always covered by insurance, even for high risk women. Variables
    affecting willingness to pay (WTP) have implications for
    clinic-based and direct-to-consumer testing. The relative impact of
    objective and subjective numeracy on WTP, in the context of worry,
    perceived risk (of having the mutation and developing breast cancer)
    and family history, was examined in 299 high-risk women, not
    previously tested for BRCA1/2. Objective and subjective numeracy
    correlated positively with one another, yet only subjective numeracy
    correlated (positively) with WTP. This could not be explained by
    educational level or worry. In line with the numeracy result, other
    objective factors including family history, age, and Ashkenazi
    descent were not correlated with WTP. Perceived risk of having a
    mutation was also correlated with WTP, though perceived risk of
    developing breast cancer was not, perhaps because it lacks direct
    connection with testing. Thus, subjective confidence in the ability
    to interpret test results and perceived risk of a positive test
    result are more important drivers in paying for BRCA1/2 testing than
    factors more objective and/or further removed from the testing
    itself (e.g., perceived risk of developing cancer, family
    history). Findings underscore the need for genetic counselling that
    makes probabilistic information accessible and intelligible, so as
    to build confidence and promote accurate perception of mutation risk
    and ultimately better decision-making. 2014/03/28 - 20:32
  • We report a series of experiments investigating the influence of feeling
    lucky or unlucky on people's choice of known-risk or ambiguous options
    using the traditional Ellsberg Urns decision-making task. We induced a
    state of feeling lucky or unlucky in subjects by using a rigged
    wheel-of-fortune game, which just missed either the bankrupt or the
    jackpot outcome. In the first experiment a large reversal of the usual
    ambiguity aversion effect was shown, indicating that feeling lucky made
    subjects significantly more ambiguity seeking than usual.
    However, this effect failed to replicate in five refined and larger
    follow-up experiments. Thus we conclude that there is no evidence that
    feeling lucky reliably influences ambiguity aversion. Men were less
    ambiguity averse than women when there were potential gains to be had,
    but there were no gender differences when the task was negatively
    framed in terms of losses. 2014/03/28 - 20:32
  • Emotions can shape decision processes by altering valuation signals,
    risk perception, and strategic orientation. Although multiple
    theories posit a role for affective processes in mediating the
    influence of frames on decision making, empirical studies have yet
    to demonstrate that manipulated affect modulates framing
    phenomena. The present study asked whether induced affective states
    alter gambling propensity and the influence of frames on decision
    making. In a between-subjects design, we induced mood (happy, sad,
    or neutral) in subjects (N=91) via films that were interleaved with
    the framing task. Happy mood induction increased gambling and
    apparently accentuated framing effects compared to sad mood
    induction, although the effect on framing could have resulted from
    the fact that the increased tendency to gamble made the framing
    measure more sensitive. Happy mood induction increased gambling, but
    not framing magnitude, compared to neutral mood induction. Subjects
    experiencing a sad mood induction did not exhibit behavioral
    differences from those experiencing a neutral mood. For those
    subjects who experienced the happy mood induction, both gambling
    propensity and framing magnitude were positively correlated with the
    magnitude of the change in their mood valence. We discuss the
    broader implications of mood effects on real-world economic
    % changes in abstract 2014/03/28 - 20:32
  • How accurate are laypeople's intuitions about probability distributions
    of events? The economic and psychological literatures provide opposing
    answers. A classical economic view assumes that ordinary decision
    makers consult perfect expectations, while recent psychological
    research has emphasized biases in perceptions. In this work, we test
    laypeople's intuitions about probability distributions. To establish a
    ground truth against which accuracy can be assessed, we control the
    information seen by each subject to establish
    unambiguous normative answers. We find that laypeople's statistical
    intuitions can be highly accurate, and depend strongly upon the
    elicitation method used. In particular, we find that eliciting an
    entire distribution from a respondent using a graphical interface, and
    then computing simple statistics (such as means, fractiles, and
    confidence intervals) on this distribution, leads to greater accuracy,
    on both the individual and aggregate level, than the standard method of
    asking about the same statistics directly.
    % changes here 2014/01/25 - 07:03
  • We investigated the relations between numeracy and superior judgment and
    decision making in two large community outreach studies in Holland
    (n=5408). In these very highly educated samples (e.g., 30--50%
    held graduate degrees), the Berlin Numeracy Test was a robust predictor
    of financial, medical, and metacognitive task performance (i.e.,
    lotteries, intertemporal choice, denominator neglect, and confidence
    judgments), independent of education, gender, age, and another numeracy
    assessment. Metacognitive processes partially mediated the link between
    numeracy and superior performance. More numerate participants performed
    better because they deliberated more during decision making and more
    accurately evaluated their judgments (e.g., less overconfidence).
    Results suggest that well-designed numeracy tests tend to be robust
    predictors of superior judgment and decision making because they
    simultaneously assess (1) mathematical competency and (2) metacognitive
    and self-regulated learning skills. 2014/01/25 - 07:03
  • Gloeckner and Broeder (2011) have shown that for 77.5% of their participants'
    decision making behavior in decisions involving recognition information and
    explicitly provided additional cues could be better described by
    weighted-compensatory Parallel Constraint Satisfaction (PCS) Models than by
    non-compensatory strategies such as recognition heuristic (RH) or Take the Best
    (TTB). We investigate whether this predominance of PCS models also holds in
    memory-based decisions in which information retrieval is effortful and
    cognitively demanding. Decision strategies were analyzed using a
    maximum-likelihood strategy classification method, taking into account choices,
    response times and confidence ratings simultaneously. In contrast to the
    memory-based-RH hypothesis, results show that also in memory-based decisions
    for 62% of the participants behavior is best explained by a compensatory PCS
    model. There is, however, a slight increase in participants classified as users
    of the non-compensatory strategies RH and TTB (32%) compared to the previous
    study, mirroring other studies suggesting effects of costly retrieval. 2014/01/25 - 07:03
  • One prominent model in the realm of memory-based judgments and decisions is the
    recognition heuristic. Under certain preconditions, it presumes that choices
    are based on recognition in a one-cue non-compensatory manner and that other
    information is ignored. This claim has been studied widely---and received, at
    best, mixed support---in probabilistic inferences. By contrast, only a small
    number of recent investigations have taken the RH to the realm of preferential
    decisions (i.e. consumer choice). So far, the conclusion has been that the RH
    cannot satisfactorily account for aggregate data patterns, but no fully
    specified alternative model has been demonstrated to provide a better account.
    Herein, the data from a recent consumer-choice study (Thoma & Williams, 2013)
    are re-analyzed with the outcome-based maximum-likelihood strategy
    classification method, thus testing several competing models on individual
    data. Results revealed that an alternative compensatory model (an equal weights
    strategy) accounted best for a larger number of datasets than the RH. Thereby,
    the findings further specify prior results and answer the call for comparative
    model testing on individual data that has been voiced repeatedly. 2014/01/25 - 07:03
  • Are people honest about the extent to which they engage in unethical
    behaviors? We report an experiment examining the relation between
    self-reported risky unethical tendencies and actual dishonest
    behavior. Participants' self-reported risk taking tendencies were
    assessed using the Domain-Specific Risk-Taking (DOSPERT)
    questionnaire, while actual self-serving dishonesty was assessed
    using a private coin tossing task. In this task, participants
    predicted the outcome of coin tosses, held the predictions in mind,
    and reported whether their predictions were correct. Thus, the task
    allowed participants to lie about whether their predictions were
    correct. We manipulated whether reporting higher correct scores
    increased (vs. not) participants monetary payoff. Results revealed
    a positive relation between self-reported unethical risky tendencies
    and actual dishonesty. The effect was limited to the condition in
    which dishonesty was self-serving. Our results suggest liars are
    aware of their dishonest tendencies and are potentially not ashamed
    of them.
    % changes 2014/01/25 - 07:03
  • Trolley problems have been used in the development of moral theory and the
    psychological study of moral judgments and behavior. Most of this research has
    focused on people from the West, with implicit assumptions that moral
    intuitions should generalize and that moral psychology is universal. However,
    cultural differences may be associated with differences in moral
    judgments and behavior. We operationalized a trolley problem in the laboratory,
    with economic incentives and real-life consequences, and compared British and
    Chinese samples on moral behavior and judgment. We found that Chinese
    participants were less willing to sacrifice one person to save five others, and
    less likely to consider such an action to be right. In a second study using
    three scenarios, including the standard scenario where lives are threatened by
    an on-coming train, fewer Chinese than British participants were willing to
    take action and sacrifice one to save five, and this cultural difference was
    more pronounced when the consequences were less severe than death. 2014/01/25 - 07:03
  • Previous research has demonstrated that consumers' decisions
    regarding supplementary pensions could be affected by biases.
    Bernatzi and Thaler's experiment demonstrated that menu design can
    influence pension fund enrollment decisions, in that participants
    appear to adopt a na\"ive heuristic, i.e., ``extremeness aversion''.
    Using a database of 27 occupational pension funds from 2007 to 2011,
    representing 1,732,530 employees, this study asked whether menu
    design affected Italian workers' choices regarding the supplementary
    pension system as a result of the new rules enacted by the regulator
    in 2007. Most enrolled workers opted for the median investment
    line. I discuss the possible relevance of this result to public
    policy, in particular the possibility of including these preferences
    in the regulations, with the aim of benefiting employees.
    % revised but won't show 2014/01/25 - 07:03