Calculating
Eric Schwitzgebel & Fiery Cushman
Mind & Language, April 2012, Pages 135-153
Abstract:
We examined the effects of order of presentation on the moral judgments of professional philosophers and two comparison groups. All groups showed similar-sized order effects on their judgments about hypothetical moral scenarios targeting the doctrine of the double effect, the action-omission distinction, and the principle of moral luck. Philosophers' endorsements of related general moral principles were also substantially influenced by the order in which the hypothetical scenarios had previously been presented. Thus, philosophical expertise does not appear to enhance the stability of moral judgments against this presumably unwanted source of bias, even given familiar types of cases and principles.
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The Foreign-Language Effect: Thinking in a Foreign Tongue Reduces Decision Biases
Boaz Keysar, Sayuri Hayakawa & Sun Gyu An
Psychological Science, forthcoming
Abstract:
Would you make the same decisions in a foreign language as you would in your native tongue? It may be intuitive that people would make the same choices regardless of the language they are using, or that the difficulty of using a foreign language would make decisions less systematic. We discovered, however, that the opposite is true: Using a foreign language reduces decision-making biases. Four experiments show that the framing effect disappears when choices are presented in a foreign tongue. Whereas people were risk averse for gains and risk seeking for losses when choices were presented in their native tongue, they were not influenced by this framing manipulation in a foreign language. Two additional experiments show that using a foreign language reduces loss aversion, increasing the acceptance of both hypothetical and real bets with positive expected value. We propose that these effects arise because a foreign language provides greater cognitive and emotional distance than a native tongue does.
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How Near-Miss Events Amplify or Attenuate Risky Decision Making
Catherine Tinsley, Robin Dillon & Matthew Cronin
Management Science, forthcoming
Abstract:
In the aftermath of many natural and man-made disasters, people often wonder why those affected were underprepared, especially when the disaster was the result of known or regularly occurring hazards (e.g., hurricanes). We study one contributing factor: prior near-miss experiences. Near misses are events that have some nontrivial expectation of ending in disaster but, by chance, do not. We demonstrate that when near misses are interpreted as disasters that did not occur, people illegitimately underestimate the danger of subsequent hazardous situations and make riskier decisions (e.g., choosing not to engage in mitigation activities for the potential hazard). On the other hand, if near misses can be recognized and interpreted as disasters that almost happened, this will counter the basic "near-miss" effect and encourage more mitigation. We illustrate the robustness of this pattern across populations with varying levels of real expertise with hazards and different hazard contexts (household evacuation for a hurricane, Caribbean cruises during hurricane season, and deep-water oil drilling). We conclude with ideas to help people manage and communicate about risk.
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Gordon Wright, Christopher Berry & Geoffrey Bird
Frontiers in Human Neuroscience, April 2012
Abstract:
Both the ability to deceive others, and the ability to detect deception, has long been proposed to confer an evolutionary advantage. Deception detection has been studied extensively, and the finding that typical individuals fare little better than chance in detecting deception is one of the more robust in the behavioral sciences. Surprisingly, little research has examined individual differences in lie production ability. As a consequence, as far as we are aware, no previous study has investigated whether there exists an association between the ability to lie successfully and the ability to detect lies. Furthermore, only a minority of studies have examined deception as it naturally occurs; in a social, interactive setting. The present study, therefore, explored the relationship between these two facets of deceptive behavior by employing a novel competitive interactive deception task (DeceIT). For the first time, signal detection theory (SDT) was used to measure performance in both the detection and production of deception. A significant relationship was found between the deception-related abilities; those who could accurately detect a lie were able to produce statements that others found difficult to classify as deceptive or truthful. Furthermore, neither ability was related to measures of intelligence or emotional ability. We, therefore, suggest the existence of an underlying deception-general ability that varies across individuals.
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Beliefs about the "hot hand" in basketball across the adult life span
Alan Castel, Aimee Drolet Rossi & Shannon McGillivray
Psychology and Aging, forthcoming
Abstract:
Many people believe in streaks. In basketball, belief in the "hot hand" occurs when people think a player is more likely to make a shot if they have made previous shots. However, research has shown that players' successive shots are independent events. To determine how age would impact belief in the hot hand, we examined this effect across the adult life span. Older adults were more likely to believe in the hot hand, relative to younger and middle-aged adults, suggesting that older adults use heuristics and potentially adaptive processing based on highly accessible information to predict future events.
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Brain structural complexity and life course cognitive change
Nazahah Mustafa et al.
NeuroImage, forthcoming
Abstract:
Fractal measures such as fractal dimension (FD) can quantify the structural complexity of the brain. These have been used in clinical neuroscience to investigate brain development, ageing and in studies of psychiatric and neurological disorders. Here, we examined associations between the FD of white matter and cognitive changes across the life course in the absence of detectable brain disease. The FD was calculated from segmented cerebral white matter MR images in 217 subjects aged about 68 years, in whom archived intelligence scores from age 11 years were available. Cognitive test scores of fluid and crystallised intelligence were obtained at the time of MR imaging. Significant differences were found (intracranial volume, brain volume, white matter volume and Raven's Progressive Matrices score) between men and women at age 68 years and novel associations were found between FD and measures of cognitive change over the life course from age 11 to 68 years. Those with greater FD were found to have greater than expected fluid abilities at age 68 years than predicted by their childhood intelligence and less cognitive decline from age 11 to 68 years. These results are consistent with other reports that FD measures of cortical structural complexity increase across the early life course during maturation of the cerebral cortex and add new data to support an association between FD and cognitive ageing.
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Cognitive skill and technology diffusion: An empirical test
Garett Jones
Economic Systems, forthcoming
Abstract:
Cognitive skills are robustly associated with good national economic performance. How much of this is due to high-skill countries doing a better job of absorbing total factor productivity from the world's technology leader? Following Benhabib and Spiegel (Handbook of Economic Growth, 2005), who estimated the Nelson-Phelps technology diffusion model, I...find a robust relationship between national average IQ and total factor productivity growth. Controlling for IQ, years of education is of modest statistical significance. If IQ gaps between countries persist and model parameters remain stable, TFP levels are forecasted to sharply diverge, creating a "twin peaks" result. After controlling for IQ, few other growth variables are statistically significant.
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Do Psychological Shocks Affect Financial Risk Taking Behavior? A Study of U.S. Veterans
Vicki Bogan, David Just & Brian Wansink
Contemporary Economic Policy, forthcoming
Abstract:
Traditional economic theories assume that individuals are endowed with certain risk preferences that are unaltered by experiences. However, recent evidence indicates that macroeconomic shocks do have an effect on an individual's willingness to take financial risks. In the context of investment decisions, we examine empirically whether individual's risk preferences are affected by other types of traumatic life experiences. Using a unique proprietary data set, we investigate whether personal traumatic experiences - such as the combat experiences of veterans - have long-term effects on financial risk taking behavior. We find that having experienced combat decreases the probability of investing in risky assets. Key policy implications are noted.
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Can Diversification be Learned?
Ann Marie Hibbert, Edward Lawrence & Arun Prakash
Journal of Behavioral Finance, Winter 2012, Pages 38-50
Abstract:
We investigate the role of financial education in household portfolio allocation decisions using data from a survey of 1,382 professors at universities across the United States. The results suggest that knowledge of diversification increases the likelihood that investors will efficiently allocate their investments across the major asset classes as well as invest in foreign assets. However, we find that investors with advanced knowledge of finance still tend to hold undiversified equity portfolios.
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Bettina von Helversen & Rui Mata
Psychology and Aging, forthcoming
Abstract:
We investigated the contribution of cognitive ability and affect to age differences in sequential decision making by asking younger and older adults to shop for items in a computerized sequential decision-making task. Older adults performed poorly compared to younger adults partly due to searching too few options. An analysis of the decision process with a formal model suggested that older adults set lower thresholds for accepting an option than younger participants. Further analyses suggested that positive affect, but not fluid abilities, was related to search in the sequential decision task. A second study that manipulated affect in younger adults supported the causal role of affect: Increased positive affect lowered the initial threshold for accepting an attractive option. In sum, our results suggest that positive affect is a key factor determining search in sequential decision making. Consequently, increased positive affect in older age may contribute to poorer sequential decisions by leading to insufficient search.
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The role of intuition and deliberative thinking in experts' superior tactical decision-making
Jerad Moxley et al.
Cognition, forthcoming
Abstract:
Current theories argue that human decision making is largely based on quick, automatic, and intuitive processes that are occasionally supplemented by slow controlled deliberation. Researchers, therefore, predominantly studied the heuristics of the automatic system in everyday decision making. Our study examines the role of slow deliberation for experts who exhibit superior decision-making outcomes in tactical chess problems with clear best moves. Our study uses advanced computer software to measure the objective value of actions preferred at the start versus the conclusion of decision making. It finds that both experts and less skilled individuals benefit significantly from extra deliberation regardless of whether the problem is easy or difficult. Our findings have important implications for the role of training for increasing decision making accuracy in many domains of expertise.
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Deliberation Versus Intuition: Decomposing the Role of Expertise in Judgment and Decision Making
Koen Dijkstra, Joop van der Pligt & Gerben van Kleef
Journal of Behavioral Decision Making, forthcoming
Abstract:
What produces better judgments: deliberating or relying on intuition? Past research is inconclusive. We focus on the role of expertise to increase understanding of the effects of judgment mode. We propose a framework in which expertise depends on a person's experience with and knowledge about a domain. Individuals who are relatively experienced but have modest knowledge about the subject matter ("intermediates") are expected to suffer from deliberation and to benefit from a more intuitive approach, because they lack the formal knowledge to understand the reasons underlying their preferences. Individuals who are high ("experts") or low ("novices") on both experience and knowledge are expected to do well or poorly, respectively, regardless of decision mode. We tested these predictions in the domain of art. Experiments 1 and 2 showed that intermediates performed better when relying on intuition than after deliberation. Judgments of experts and novices were unaffected. In line with previous research relating processing style to judgment mode, Experiment 3 showed that the effect of processing style (global versus local) on judgment quality is similarly moderated by expertise.
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Gambling on the Lottery: Sociodemographic Correlates Across the Lifespan
Grace Barnes et al.
Journal of Gambling Studies, December 2011, Pages 575-586
Abstract:
Two representative U.S. telephone surveys of gambling were conducted - an adult survey of adults aged 18 years and older (n = 2,631) and a youth survey of young people aged 14-21 years old (n = 2,274). Because the questions and methods were the same or similar in both surveys, the data from these two surveys were combined into a single dataset to examine the prevalence and sociodemographic correlates of gambling and problem gambling across the lifespan. The present work focused specifically on gambling on the lottery which is the most prevalent form of gambling in the U.S. The frequency of gambling on the lottery increased sharply from mid adolescence to age 18 which is the legal age to purchase lottery tickets in most states; lottery play continued to increase into the thirties when it leveled off and remained high through the sixties and then decreased among those 70 years and older. Considering multiple sociodemographic factors together in a negative binomial regression, the average number of days of lottery gambling was significantly predicted by male gender, age, neighborhood disadvantage and whether or not lottery was legal in the state where the respondent lived. These findings can be used to inform policies regarding lotteries in the U.S.
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John Beshears et al.
Journal of Economic Behavior & Organization, forthcoming
Abstract:
The daunting complexity of important financial decisions can lead to procrastination. We evaluate a low-cost intervention that substantially simplifies the retirement savings plan participation decision. Individuals received an opportunity to enroll in a retirement savings plan at a pre-selected contribution rate and asset allocation, allowing them to collapse a multidimensional problem into a binary choice between the status quo and the pre-selected alternative. The intervention increases plan enrollment rates by 10 to 20 percentage points. We find that a similar intervention can be used to increase contribution rates among employees who are already participating in a savings plan.
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Eyal Peer & Lidor Solomon
Judgment and Decision Making, March 2012, pp. 165-172
Abstract:
People make systematic and predictable mistakes regarding estimations of average speed and journey time. In addition, people have been shown to commit a time-saving bias by underestimating the time that can be saved when increasing from a low speed and overestimating the time that can be saved when increasing from a relatively high speed. These misestimations have been shown to relate to biases in judgments of the speed required to arrive at a specific time and to choosing unduly high speed. Professional drivers, such as taxi drivers, might be less susceptible to these biases due to their increased driving experience. In the current study, we interviewed taxi drivers about a journey they were currently making and examined their estimations of journey time, average speed and time savings. Compared to a group of non-professional car drivers, taxi drivers showed the same considerable misestimations of driving speed, journey time and time savings as non-professionals. However, overestimations of time savings among taxi drivers were smaller than those made by car drivers. We discuss the practical significance of these findings.
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What we say and what we do: The relationship between real and hypothetical moral choices
Oriel FeldmanHall et al.
Cognition, June 2012, Pages 434-441
Abstract:
Moral ideals are strongly ingrained within society and individuals alike, but actual moral choices are profoundly influenced by tangible rewards and consequences. Across two studies we show that real moral decisions can dramatically contradict moral choices made in hypothetical scenarios (Study 1). However, by systematically enhancing the contextual information available to subjects when addressing a hypothetical moral problem - thereby reducing the opportunity for mental simulation - we were able to incrementally bring subjects' responses in line with their moral behaviour in real situations (Study 2). These results imply that previous work relying mainly on decontextualized hypothetical scenarios may not accurately reflect moral decisions in everyday life. The findings also shed light on contextual factors that can alter how moral decisions are made, such as the salience of a personal gain.
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Ilan Yaniv & Shoham Choshen-Hillel
Journal of Experimental Social Psychology, forthcoming
Abstract:
We investigated how perspective-taking might be used to overcome bias and improve advice-based judgments. Decision makers often tend to underweight the opinions of others relative to their own, and thus fail to exploit the wisdom of others. We tested the idea that decision makers taking the perspective of another person engage a less egocentric mode of processing of advisory opinions and thereby improve their accuracy. In Studies 1-2, participants gave their initial opinions and then considered a sample of advisory opinions in two conditions. In one condition (self-perspective), they were asked to give their best advice-based estimates. In the second (other-perspective), they were asked to give advice-based estimates from the perspective of another judge. The dependent variables were the participants' accuracy and indices that traced their judgmental policy. In the self-perspective condition participants adhered to their initial opinions, whereas in the other-perspective condition they were far less egocentric, weighted the available opinions more equally and produced more accurate estimates. In Study 3, initial estimates were not elicited, yet the data patterns were consistent with these conclusions. All studies suggest that switching perspectives allows decision makers to generate advice-based judgments that are superior to those they would otherwise have produced. We discuss the merits of perspective-taking as a procedure for correcting bias, suggesting that it is theoretically justifiable, practicable, and effective.
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Improving the Past and the Future: A Temporal Asymmetry in Hypothetical Thinking
Donatella Ferrante et al.
Journal of Experimental Psychology: General, forthcoming
Abstract:
Current views of hypothetical thinking implicitly assume that the content of imaginary thoughts about the past and future should be the same. Two experiments show that, given the same experienced facts of reality, future imagination may differ from past reconstruction. When participants failed a task, their counterfactual thoughts focused on uncontrollable features of their attempt (e.g., "Things would have been better if the allocated time were longer/if I had better logic skills"). But their prefactual thoughts focused on controllable features of their ensuing endeavor (e.g., "Things will be better next time if I concentrate more/if I use another strategy"). This finding suggests that compared with prefactual thinking, counterfactual thinking may be less subject to reality checks and less likely to serve preparatory goals.
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Quentin Huys et al.
PLoS Computational Biology, March 2012, e1002410
Abstract:
When planning a series of actions, it is usually infeasible to consider all potential future sequences; instead, one must prune the decision tree. Provably optimal pruning is, however, still computationally ruinous and the specific approximations humans employ remain unknown. We designed a new sequential reinforcement-based task and showed that human subjects adopted a simple pruning strategy: during mental evaluation of a sequence of choices, they curtailed any further evaluation of a sequence as soon as they encountered a large loss. This pruning strategy was Pavlovian: it was reflexively evoked by large losses and persisted even when overwhelmingly counterproductive. It was also evident above and beyond loss aversion. We found that the tendency towards Pavlovian pruning was selectively predicted by the degree to which subjects exhibited sub-clinical mood disturbance, in accordance with theories that ascribe Pavlovian behavioural inhibition, via serotonin, a role in mood disorders. We conclude that Pavlovian behavioural inhibition shapes highly flexible, goal-directed choices in a manner that may be important for theories of decision-making in mood disorders.
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Somatic markers mediate the effect of serotonin transporter gene polymorphisms on Iowa Gambling Task
Andrei Miu et al.
Genes, Brain and Behavior, forthcoming
Abstract:
This study investigated whether somatic markers mediate the effect of serotonin transporter genotype on Iowa Gambling Task (IGT) performance. Participants (N = 135) were genotyped for the insertion/deletion and single-nucleotide (rs25531) polymorphisms in the promoter region of the serotonin transporter gene (5-HTTLPR). The results of mediation analyses indicated that skin conductance responses that anticipated IGT card selections partially (i.e., 42% of the total effect) mediated the effect of genotype on IGT performance. In comparison to high-functioning 5-HTTLPR genotypes, the low-functioning genotypes were associated with higher total IGT scores. This suggests that the higher synaptic availability of serotonin, associated with the low-functioning 5-HTTLPR genotypes, may confer differential susceptibility to decision making under risk, and that almost half of this effect is explained by facilitated somatic markers during IGT.
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The Impact of Visiting Team Travel on Game Outcome and Biases in NFL Betting Markets
Mark Nichols
Journal of Sports Economics, forthcoming
Abstract:
Using data on regular season National Football League games from 1981-2004, this study examines the impact that travel has on game outcome and whether betting markets fully incorporate this information. A visiting team travelling west to east and crossing at least one time zone is shown to significantly increase the probability of the home team winning. This impact increases with distance, but at a decreasing rate. Evidence on whether betting markets fully account for this travel effect is mixed. While there is evidence that markets do not fully account for the impact of travel and that bettors underestimate the home team's score whenever the visitor crosses a time zone, the model does not provide a profitable betting strategy out of sample. Thus, any bias is likely too small to profitably exploit.
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Decision theory as an aid to private choice
Rex Brown
Judgment and Decision Making, March 2012, Pages 207-223
Abstract:
A wise decider D uses the contents of his mind fully, accurately and efficiently. D's ideal decisions, i.e., those that best serve his interests, would be embedded in a comprehensive set of totally coherent judgments lodged in his mind. They would conform to the norms of statistical decision theory, which extracts quantitative judgments of fact and value from D's mind contents and checks them for coherence. However, the most practical way for D to approximate his ideal may not be with models that embody those norms, i.e., with applied decision theory (ADT). In practice, ADT can represent only some of D's judgments and those imperfectly. Quite different decision aid, including intuition, pattern recognition and cognitive vigilance (especially combined), typically outperform feasible ADT models - with some notable exceptions. However, decision theory training benefits D's informal decisions. ADT, both formal and informal, should become increasingly useful and widespread, as technical, cultural and institutional impediments are overcome.
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Baler Bilgin
Organizational Behavior and Human Decision Processes, forthcoming
Abstract:
Losses loom larger than gains. The typical interpretation of loss aversion involves a subjective value-based asymmetry between gains and losses, with individuals expecting losses to be more painful than gains of equal size to be pleasurable. This paper reveals a novel, subjective probability-based asymmetry between gains and losses that may contribute to loss aversion in risky choice. Results from five experiments suggest that losses may loom not only larger, but also more likely than gains. The propensity of losses to attract attention and to be subsequently imagined appears to underlie the proposed asymmetry. The effect translates into changes in predicted behavior, with subjective probability mediating the impact of imagination on the predicted likelihood to accept to play an equal-probability gamble. The implications of our findings for loss aversion, the negativity bias, and the imagination literature are discussed.