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Increasing Role of Pscyhology in Law

Posted by The Situationist Staff on January 24, 2014

From the latest edition of Observer, an article by David Halpern:Halpern_David

When governments want advice on the likely impact of their policies, they traditionally turn to economists. Psychologists have been less in demand. The reasons are understandable: Economists have seemed to offer relatively clear and well developed models for predicting behavior, notably “expected utility theory.”  In contrast, the lessons from psychology have often seemed less clear-cut, no matter how interesting or suggestive they may have been.

This situation is now changing. Officials are recognizing that their policies may stand or fall on social, cognitive, and emotional factors that economists have traditionally neglected. Given their position at the top table, it is perhaps unsurprising — if ironic — that economists themselves have communicated this point. Behavioral economics, essentially a combination of economics and psychology, has provided a new bridge between policymakers and psychological findings.

Read more here.

Posted in Behavioral Economics, Law, Public Policy | Leave a Comment »

The Psychological Situation of Markets

Posted by The Situationist Staff on July 8, 2013

Caltec Image

From Caltec News (by Marcus Woo):

When it comes to economics versus psychology, score one for psychology.

Economists argue that markets usually reflect rational behavior—that is, the dominant players in a market, such as the hedge-fund managers who make billions of dollars’ worth of trades, almost always make well-informed and objective decisions. Psychologists, on the other hand, say that markets are not immune from human irrationality, whether that irrationality is due to optimism, fear, greed, or other forces.

Now, a new analysis published the week of July 1 in the online issue of the Proceedings of the National Academy of Sciences (PNAS) supports the latter case, showing that markets are indeed susceptible to psychological phenomena. “There’s this tug-of-war between economics and psychology, and in this round, psychology wins,” says Colin Camerer, the Robert Kirby Professor of Behavioral Economics at the California Institute of Technology (Caltech) and the corresponding author of the paper.

Indeed, it is difficult to claim that markets are immune to apparent irrationality in human behavior. “The recent financial crisis really has shaken a lot of people’s faith,” Camerer says. Despite the faith of many that markets would organize allocations of capital in ways that are efficient, he notes, the government still had to bail out banks, and millions of people lost their homes.

In their analysis, the researchers studied an effect called partition dependence, in which breaking down—or partitioning—the possible outcomes of an event in great detail makes people think that those outcomes are more likely to happen. The reason, psychologists say, is that providing specific scenarios makes them more explicit in people’s minds. “Whatever we’re thinking about, seems more likely,” Camerer explains.

For example, if you are asked to predict the next presidential election, you may say that a Democrat has a 50/50 chance of winning and a Republican has a 50/50 chance of winning. But if you are asked about the odds that a particular candidate from each party might win—for example, Hillary Clinton versus Chris Christie—you are likely to envision one of them in the White House, causing you to overestimate his or her odds.

The researchers looked for this bias in a variety of prediction markets, in which people bet on future events. In these markets, participants buy and sell claims on specific outcomes, and the prices of those claims—as set by the market—reflect people’s beliefs about how likely it is that each of those outcomes will happen. Say, for example, that the price for a claim that the Miami Heat will win 16 games during the NBA playoffs is $6.50 for a $10 return. That means that, in the collective judgment of the traders, Miami has a 65 percent chance of winning 16 games.

The researchers created two prediction markets via laboratory experiments and studied two others in the real world. In one lab experiment, which took place in 2006, volunteers traded claims on how many games an NBA team would win during the 2006 playoffs and how many goals a team would score in the 2006 World Cup. The volunteers traded claims on 16 teams each for the NBA playoffs and the World Cup.

In the basketball case, one group of volunteers was asked to bet on whether the Miami Heat would win 4–7 playoff games, 8–11 games, or some other range. Another group was given a range of 4–11 games, which combined the two intervals offered to the first group. Then, the volunteers traded claims on each of the intervals within their respective groups. As with all prediction markets, the price of a traded claim reflected the traders’ estimations of whether the total number of games won by the Heat would fall within a particular range.

Economic theory says that the first group’s perceived probability of the Heat winning 4–7 games and its perceived probability of winning 8–11 games should add up to a total close to the second group’s perceived probability of the team winning 4–11 games. But when they added the numbers up, the researchers found instead that the first group thought the likelihood of the team winning 4–7 or 8–11 games higher than did the second group, which was asked about the probability of them winning 4–11 games. All of this suggests that framing the possible outcomes in terms of more specific intervals caused people to think that those outcomes were more likely.

The researchers observed similar results in a second, similar lab experiment, and in two studies of natural markets—one involving a series of 153 prediction markets run by Deutsche Bank and Goldman Sachs, and another involving long-shot horses in horse races.

People tend to bet more money on a long-shot horse, because of its higher potential payoff, and they also tend to overestimate the chance that such a horse will win. Statistically, however, a horse’s chance of winning a particular race is the same regardless of how many other horses it’s racing against—a horse who habitually wins just five percent of the time will continue to do so whether it is racing against fields of 5 or of 11. But when the researchers looked at horse-race data from 1992 through 2001—a total of 6.3 million starts—they found that bettors were subject to the partition bias, believing that long-shot horses had higher odds of winning when they were racing against fewer horses.

While partition dependence has been looked at in the past in specific lab experiments, it hadn’t been studied in prediction markets, Camerer says. What makes this particular analysis powerful is that the researchers observed evidence for this phenomenon in a wide range of studies—short, well-controlled laboratory experiments; markets involving intelligent, well-informed traders at major financial institutions; and nine years of horse-racing data.

The title of the PNAS paper is “How psychological framing affects economic market prices in the lab and field.” In addition to Camerer, the other authors are Ulrich Sonnemann and Thomas Langer at the University of Münster, Germany, and Craig Fox at UCLA. Their research was supported by the German Research Foundation, the National Science Foundation, the Gordon and Betty Moore Foundation, and the Human Frontier Science Program.

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Social Media and Behavioral Economics Conference

Posted by The Situationist Staff on February 5, 2013

HLS

On Wednesday, Feb. 6, scholars from across Harvard University will join social media experts from Facebook, Twitter, Socialflow and Microsoft Research, for a conference on social media, theory and practice, and its potential effects on voting behavior, electricity consumption, pro-social behavior and privacy.

The event, “Social Media and Behavioral Economics Conference,” sponsored by Harvard Law School’s new Program on Behavioral Economics and Public Policy, will be held at Harvard Law School’s Wasserstein Hall.

The event is free and open to the public and will also be webcast live, beginning at 9 a.m. on the day of the conference.


Social Media and Behavioral Economics Conference

Wednesday, February 6, 9 a.m. to 1 p.m.
Wasserstein Hall 2019 (Milstein West AB)
1585 Massachusetts Avenue
Harvard Law School

Introductions (9 a.m.)

Cass Sunstein, Professor, Harvard Law School

Panel 1: Theory and Practice (9:15-10:20 a.m.)

Moderator: Yochai Benkler, Professor, Harvard Law School, and Faculty Co-Director, Berkman Center for Internet and Society

Eytan Bakshy, Data Scientist, Facebook
Sendhil Mullainathan, Professor of Economics, Harvard University
Sharad Goel, Senior Researcher, Microsoft Research
Gilad Lotan, VP of Research and Development, Socialflow

Panel 2: Behavioral Economics, Social Media, and Apps (10:30-11:40 a.m.)

Moderator: David Laibson, Professor of Economics, Harvard University

Sarah Feinberg, Director of Corporate Communications, Facebook
Andy Cameron, Associate Professor of Surgery and Surgical Director of Liver Transplantation, Johns Hopkins University
Michael Sachse, Vice President of Regulatory Affairs and General Counsel, Opower

Panel 3: The Role of Institutions (11:50-1 p.m.)

Moderator: Cass Sunstein, Professor, Harvard Law School

Jonathan Zittrain, Professor, Harvard Law School, and Faculty Co-Director, Berkman Center for Internet and Society
Mike Luca, Assistant Professor, Harvard Business School
Elliot Schrage, Vice President, Communications and Public Policy, Facebook
Alex Macgillivray, General Counsel, Twitter

Follow HLS on Facebook and Twitter.

Behavioral Economics Poster

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Dan Ariely on the Situation of Dishonesty

Posted by The Situationist Staff on August 18, 2012

From

Dan Ariely visits the RSA to examine the mechanisms at work behind dishonest behaviour, and the implications this has for all aspects of our social and political lives.

Listen to the podcast of the full event including audience Q&A here.

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Posted in Behavioral Economics, Morality, Social Psychology, Video | 1 Comment »

The Historical Situation of Situationism at Harvard Law

Posted by The Situationist Staff on July 24, 2012

Tito Rendas has just posted his terrific paper, “Mind Sciences in the Harvard Law School Curriculum: Tracing the History, Proposing the Proliferation” on SSRN.  We hope to post excerpts from the paper in time.  Here’s the abstract.

This paper explores the contours of the relationship between the mind sciences and the Harvard Law School curriculum, in particular, and the law curriculum more generally. Rather than using a conceptual definition of “mind sciences”, the paper will be based on an illustrative and fairly loose definition thereof. Any discipline that delves into the mechanisms that explain the functioning of the human mind and the reasons behind human behavior is considered a mind science for purposes of this study. Psychology, psychiatry, cognitive science, and neuroscience are examples of the disciplines that fit under the scope of this definition. The paper is divided into three parts.

Part I discusses the ideological sources of the relatively recent law and mind sciences movement at Harvard. Particular consideration will be given to the role played by the legal realists in questioning assumptions that would otherwise prevent the mind sciences from permeating law and policy-making.

Part II conducts an extensive historical review of the law and mind sciences courses in the HLS curriculum from 1957 to 2013. Six trends, and a predicted future trend, were identified.

Part III is normative in its essence, making the case for the expansion of the law and mind sciences curriculum. This argument is predicated on the answers to two other questions: Who should decide whether this expansion should be carried out? And, assuming its desirability, how should we go about it?

You can download the paper for free here.

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Posted in Abstracts, Behavioral Economics, Education, History, Law, Legal Theory, Social Psychology | Tagged: , , , , , | Leave a Comment »

The Situation of Chicago School “Law and Economics”

Posted by The Situationist Staff on June 10, 2012

From Business Week (an article, by Peter Coy, including several quotations from Situationist Editor, Jon Hanson):

Q: How many Chicago School economists does it take to change a light bulb?
A: None. If the light bulb needed changing, the market would have done it by now.

Chicago-style free-market economics is an easy target for satire, but the movement that flourished at the University of Chicago’s economics department in the 1960s, ’70s, and ’80s really did change the world. Giants such as Milton Friedman, Gary Becker, Robert Lucas, and Eugene Fama provided the intellectual foundation for the political philosophy of President Ronald Reagan and British Prime Minister Margaret Thatcher. In his approach to tax cuts and deregulation, Republican presidential candidate Mitt Romney is an heir to that tradition.

It wasn’t just economics that Chicago revolutionized. Across campus at the University of Chicago Law School, scholars such as Ronald Coase, George Stigler, and Richard Posner were inspired to apply economic analysis to laws and regulations, developing a field that came to be called “law and economics.” It was law and economics types who promoted the now-conventional idea that the benefits of a regulation must be weighed against its costs. Placing a dollar figure on society’s valuation of a human life went from appalling to standard.

They rethought antitrust law, junking simplistic big-is-bad formulations to focus on whether a giant like IBM (IBM) or Microsoft (MSFT) could actually raise prices with impunity. In tort law, they questioned punitive damages that seemed to them motivated by righteous indignation rather than a cool calibration of how to discourage future wrongs. At the apogee of the Reagan-Thatcher era, Chicago Law drew enthusiastic support from businesses and foundations that embraced its small-government message. “Chicago can rightly claim to have been extraordinarily influential in the growth of the field,” says Jon Hanson, a Harvard Law School professor and specialist in psychology and law.

Now Chicago’s law and economics program is coping with problems born of its success. Its intellectual dominance has triggered a pushback from other social scientists who say it’s bloodless—treating people as if they are, or ought to be, perfectly rational calculators of their own self-interest. Even some true believers complain that the field has become too technical. Posner, a federal appellate judge in Chicago, wrote last year in the alumni magazine of the risk that “economic analysis of the law may lose influence by becoming too esoteric, too narrow, too hermetic, too out of touch with the practices and institutions that it studies.” Finally, so many other law schools have launched law and economics programs, and so many judges have learned the lingo, that today law and economics “is like the air you breathe. It’s just pervasive,” says David Weisbach, a Chicago Law professor. That ubiquity has made Chicago less distinctive.

Chicago Law doesn’t take such matters lightly. Last October, Dean Michael Schill announced a major initiative to deal with the challenges, to capitalize on the school’s place in history, and to keep law and economics relevant for the 21st century. He called it, predictably, Law and Economics 2.0. “Just as Chicago was at the forefront of the first wave of law and economics, so it shall be in the future,” he wrote to alumni.

Schill’s big idea is to open new frontiers, both intellectual and geographic. This summer the school will play host to 75 Chinese legal scholars, who will get to meet stars like professor emeritus Ronald Coase—still writing in the field at the age of 101. “Coase is a god in China,” says Omri Ben-Shahar, who is directing a newly created University of Chicago Institute for Law and Economics.

Meanwhile, Chicago Law professors are lobbing new bombs into the arena—fresh ideas for injecting economic thinking into law and regulation. Chicago Law professor Todd Henderson proposes paying bank examiners in part with “phantom” securities linked to the banking companies they regulate. The phantom bonds, essentially derivatives, would rise and fall in concert with a bank’s debt. If banks took too much risk, regulators would feel a hit to their own wealth. To keep regulators from getting so cautious that they ban legitimate transactions, Henderson would throw some phantom stock into their pay packages as well. “There is no reason we can think of why bank regulators should not be paid for performance,” he wrote in the spring 2012 issue of Regulation, a magazine published by the libertarian Cato Institute.

Chicago Law isn’t all about law and economics. President Barack Obama, after all, taught there from 1992 to 2004. So did Supreme Court Justice Antonin Scalia, from 1977 to 1982. (If only they’d overlapped!) Scalia’s brand of constitutional “originalism,” which deeply respects the intent of the Founding Fathers, is an alien idea to the law and economics crowd, who view law as something more useful than sacred.

Even within law and economics there’s ideological diversity. “I don’t think it lines up to any political agenda,” says Lee Ann Fennell, a specialist in property law. Fennell, daring to challenge a central tenet of law and economics, has written that sometimes property rights can be too strong—say, allowing irrational homeowners to block worthy projects even when accommodating them somehow would be better for all. Her solution: Create an exchange where property owners could surrender certain veto powers over land use for a price before conflicts ever arose. That would help new projects sail through.

Still, there is something to the critique that economics can blind legal scholars to other perspectives. The first generation of law and economics scholars reduced people to stick-figure profit-maximizers who would make rational choices every time. “They came into law schools saying, ‘We are social scientists and you are not,’” says Harvard Law’s Hanson. Their authority was undermined when a new wave of social scientists, including Daniel Kahneman, Amos Tversky, and Chicago’s Richard Thaler, presented evidence that people can be irrational, lack willpower, and have shifting, inconsistent senses of what’s in their own best interest.

The human actor in some of the newest law and economics writing is truer to life. Henderson, for example, acknowledges that for some people money isn’t the motivation: “Once diligence has been priced, perhaps some regulators will slack,” he wrote in Regulation.

But Hanson wonders whether law and economics scholars on the whole have gone far enough in incorporating humanity. A case in point: Should the question of motivation matter in assessing damages? A dispassionate law and economics analysis still might say no, while an ordinary juror would say unequivocally yes. As the great jurist Oliver Wendell Holmes Jr. once wrote, “Even a dog distinguishes between being stumbled over and being kicked.”

Defenders of Chicago-style law and economics want to be seen not as ideologues, but as realists. Posner again: “We ask not whether the economic approach to law is adequately grounded” in any particular ethical system, “but whether it is the best approach for the contemporary American legal system to follow.” That’s an appeal to an older Chicago intellectual tradition—pragmatism.

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Posted in Behavioral Economics, Choice Myth, Deep Capture, Ideology, Legal Theory | Tagged: , , | Leave a Comment »

How Much Choice Would You Choose?

Posted by The Situationist Staff on April 30, 2012

From Harvard Gazette:

Undergraduates packed Science Center E on Monday to hear two of Harvard’s leading social scientists discuss the way that humans make decisions, and whether having more choices really makes us happier.

The event, “What is Your N? A Personality Test for 4 AM Philosophers,” featured a conversation between social psychologist Dan Gilbert and economist N. Gregory Mankiw, and was sponsored by the Harvard University Initiative on the Foundations of Human Behavior. The discussion was moderated by professors Nicholas Christakis of Harvard Medical School and the Department of Sociology and David Laibson of the Department of Economics.

Laibson began the debate with the following thought experiment:

“We have pre-selected 100 different bottles of alcohol, covering all popular categories — beer, wine, rum, gin, vodka, whiskey, etc. Another person (who remains anonymous) is going to take one (regular-sized) drink, poured from one of the 100 bottles. Call him/her the recipient.

You will pick the number of bottles that the recipient will be able to choose among. To give the recipient complete choice, you would pick N = 100. To simplify the recipient’s decision, you would pick N < 100. You can pick any N value from 1 to 100.

If you pick N < 100, a robot will randomly determine which of the original 100 bottles the recipient will receive (with no repeats). You don’t get to pre-select the specific bottles the robot will choose. The N bottles will be presented to the recipient in categories (like whiskeys or vodkas), so the recipient can easily sort through them.

Your job is to pick N so as to maximize the happiness of the recipient.”

Next, Laibson asked the group to choose the number of bottles that they would send to the recipient under two different scenarios. In the first, the recipient would never know that there were 100 bottles to begin with. In the second scenario, he or she would.

As the students tapped on their laptops to submit their responses to the question online, Mankiw and Gilbert had at it. Mankiw kicked off the discussion by saying that the answer was easy for him and, he hoped, for anyone who had taken his introductory economics class. He would send the anonymous stranger all 100 bottles. Without any knowledge of the recipient’s tastes, it made sense to send as many bottles as possible in order to increase the chance that the stranger would get a drink that they would like.

“My wife and I [recently] went to a bar and had a drink and dinner,” he explained. “The bar had a big selection. I had no trouble at all. I said ‘I want a Tanqueray martini on the rocks with a twist.’ If the bartender had said ‘We randomly reduced the number of selections, so we don’t have Tanqueray tonight. We have Bombay Sapphire,’ I would have been a little disappointed. If they had said ‘We only have Gordon’s gin tonight,’ I would have been really upset. And if they had said ‘All we have is Kahlua, and crème de menthe,’ I would have walked out. So it was very clear to me that more selection is good.”

Gilbert said that Mankiw’s answer was not surprising. Americans like choices; the more the better. We want to choose what we want, even if the options are so great that our decision becomes essentially random. But Gilbert said there is more to choice than simply matching selection with preferences, and that there are costs associated with decision making, particularly when the options are too great. To illustrate his point, Gilbert described a study by Princeton psychologist Eldar Shafir.

Shafir presented doctors with a pink pill that was said to treat osteoarthritis. The physicians learned about the drug, and then were asked whether or not they would be likely to prescribe it. Most said that they would.

Shafir then went to another group of physicians, this time with a pink and blue pill. He told the group that both would treat osteoarthritis and that the drugs were similar in their effects, aside from their color. He asked this group of doctors whether they would prescribe the pink pill, the blue pill, or neither. Fewer doctors said that they would give patients a pill — either pink or blue — than the group that had been presented with only one pill.

“You should get at least the same number prescribing one of the pills,” said Gilbert. “Or even more, because some will only like blue pills. However, the actual number goes down. Why? Because the physicians say ‘Well, I could do nothing, or choose between one of these two similar pills and I really can’t decide between them, so I’ll do nothing, because nothing looks really different than the pill.”

In terms of Laibson’s thought exercise, Gilbert noted that more bottles and more types of liquor could make the decision more difficult for the recipient. If you offer the drinker wine or beer, and the drinker likes wine, the choice is easy. But if the drinker likes wine and gets four different bottles to choose from versus one type of beer, they might actually choose the beer, even though they prefer wine.

“Because I’ve given you extra choices, you have now gone to the thing you like less, because you can’t think of a good reason to pick among the wines that are so similar,” Gilbert said.

After some waffling, Gilbert, half seriously, gave the number of bottles he would send to the stranger: two.

“Then you have only Kahlua and crème de menthe!” laughed Mankiw.

After Gilbert and Mankiw held forth, Laibson revealed the results of the online poll. Under conditions where the recipient would not be informed if their choices were narrowed, there was a barbell-shaped distribution. A large group of the 220 student respondents said that they would send between zero and 30 bottles to the drinker, with another group up at 100 bottles. In the second scenario, however, where the recipient would know if the selection had been pared, undergraduates overwhelmingly voted to send all 100 bottles to the drinker.

The results were fascinating to Laibson, who has studied employee participation in retirement plans and discovered that enrollment increases dramatically when workers are automatically enrolled and must voluntarily opt out. Given that the criticism for making auto enrollment the default in business is often that the policy is paternalistic, the results of the survey shed light on when people are OK with “Big Brother” and when they are not.

“The message here seems to be ‘Be a paternalist, but keep it a secret,’” Laibson said, eliciting laughter from the students. “The minute the recipient knows [his or her choices have been narrowed], this community gives a different answer [to the thought experiment]. Paternalism is bad when the recipient understands that paternalistic motives organize what happens to them.”

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Posted in Behavioral Economics, Choice Myth, Events, Food and Drug Law, Ideology, Social Psychology | Tagged: , , , | Comments Off

The Situation of Choice

Posted by The Situationist Staff on January 23, 2012

From the APS Monitor (excerpts from a terrific primer on “The Mechanics of Choice”):

* * *

The prediction of social behavior significantly involves the way people make decisions about resources and wealth, so the science of decision making historically was the province of economists. And the basic assumption of economists was always that, when it comes to money, people are essentially rational. It was largely inconceivable that people would make decisions that go against their own interests. Although successive refinements of expected-utility theory made room for individual differences in how probabilities were estimated, the on-the-surface irrational economic behavior of groups and individuals could always be forced to fit some rigid, rational calculation.The problem is — and everything from fluctuations in the stock market to decisions between saving for retirement or purchasing a lottery ticket or a shirt on the sale rack shows it — people just aren’t rational. They systematically make choices that go against what an economist would predict or advocate.Enter a pair of psychological scientists — Daniel Kahneman (currently a professor emeritus at Princeton) and Amos Tversky — who in the 1970s turned the economists’ rational theories on their heads. Kahneman and Tversky’s research on heuristics and biases and their Nobel Prize winning contribution, prospect theory, poured real, irrational, only-human behavior into the calculations, enabling much more powerful prediction of how individuals really choose between risky options.

* * *

Univ. of Toronto psychologist Keith E. Stanovich and James Madison Univ. psychologist Richard F. West refer to these experiential and analytical modes as “System 1” and “System 2,” respectively. Both systems may be involved in making any particular choice — the second system may monitor the quality of the snap, System-1 judgment and adjust a decision accordingly.7 But System 1 will win out when the decider is under time pressure or when his or her System-2 processes are already taxed.

This is not to entirely disparage System-1 thinking, however. Rules of thumb are handy, after all, and for experts in high-stakes domains, it may be the quicker form of risk processing that leads to better real-world choices. In a study by Cornell University psychologist Valerie Reyna and Mayo Clinic physician Farrell J. Lloyd, expert cardiologists took less relevant information into account than younger doctors and medical students did when making decisions to admit or not admit patients with chest pain to the hospital. Experts also tended to process that information in an all-or-none fashion (a patient was either at risk of a heart attack or not) rather than expending time and effort dealing with shades of gray. In other words, the more expertise a doctor has, the more that his or her intuitive sense of the gist of a situation was used as a guide.8

In Reyna’s variant of the dual-system account, fuzzy-trace theory, the quick-decision system focuses on the gist or overall meaning of a problem instead of rationally deliberating on facts and odds of alternative outcomes.9 Because it relies on the late-developing ventromedial and dorsolateral parts of the frontal lobe, this intuitive (but informed) system is the more mature of the two systems used to make decisions involving risks.

A 2004 study by Vassar biopsychologist Abigail A. Baird and Univ. of Waterloo cognitive psychologist Jonathan A. Fugelsang showed that this gist-based system matures later than do other systems. People of different ages were asked to respond quickly to easy, risk-related questions such as “Is it a good idea to set your hair on fire?”, “Is it a good idea to drink Drano?”, and “Is it a good idea to swim with sharks?” They found that young people took about a sixth of a second longer than adults to arrive at the obvious answers (it’s “no” in all three cases, in case you were having trouble deciding).10 The fact that our gist-processing centers don’t fully mature until the 20s in most people may help explain the poor, risky choices younger, less experienced decision makers commonly make.

Adolescents decide to drive fast, have unprotected sex, use drugs, drink, or smoke not simply on impulse but also because their young brains get bogged down in calculating odds. Youth are bombarded by warning statistics intended to set them straight, yet risks of undesirable outcomes from risky activities remain objectively small — smaller than teens may have initially estimated, even — and this may actually encourage young people to take those risks rather than avoid them. Adults, in contrast, make their choices more like expert doctors: going with their guts and making an immediate black/white judgment. They just say no to risky activities because, however objectively unlikely the risks are, there’s too much at stake to warrant even considering them.11

Making Better Choices

The gist of the matter is, though, that none of us, no matter how grown up our frontal lobes, make optimal decisions; if we did, the world would be a better place. So the future of decision science is to take what we’ve learned about heuristics, biases, and System-1 versus System-2 thinking and apply it to the problem of actually improving people’s real-world choices.

One obvious approach is to get people to increase their use of System 2 to temper their emotional, snap judgments. Giving people more time to make decisions and reducing taxing demands on deliberative processing are obvious ways of bringing System 2 more into the act. Katherine L. Milkman (U. Penn.), Dolly Chugh (NYU), and Max H. Bazerman (Harvard) identify several other ways of facilitating System-2 thinking.12 One example is encouraging decision makers to replace their intuitions with formal analysis — taking into account data on all known variables, providing weights to variables, and quantifying the different choices. This method has been shown to significantly improve decisions in contexts like school admissions and hiring.

Having decision makers take an outsider’s perspective on a decision can reduce overconfidence in their knowledge, in their odds of success, and in their time to complete tasks. Encouraging decision makers to consider the opposite of their preferred choice can reduce judgment errors and biases, as can training them in statistical reasoning. Considering multiple options simultaneously rather than separately can optimize outcomes and increase an individual’s willpower in carrying out a choice. Analogical reasoning can reduce System-1 errors by highlighting how a particular task shares underlying principles with another unrelated one, thereby helping people to see past distracting surface details to more fully understand a problem. And decision making by committee rather than individually can improve decisions in group contexts, as can making individuals more accountable for their decisions.13

In some domains, however, a better approach may be to work with, rather than against, our tendency to make decisions based on visceral reactions. In the health arena, this may involve appealing to people’s gist-based thinking. Doctors and the media bombard health consumers with numerical facts and data, yet according to Reyna, patients — like teenagers — tend initially to overestimate their risks; when they learn their risk for a particular disease is actually objectively lower than they thought, they become more complacent — for instance by forgoing screening. Instead, communicating the gist, “You’re at (some) risk, you should get screened because it detects disease early” may be a more powerful motivator to make the right decision than the raw numbers. And when statistics are presented, doing so in easy-to-grasp graphic formats rather than numerically can help patients (as well as physicians, who can be as statistically challenged as most laypeople) extract their own gists from the facts.14

Complacency is a problem when decisions involve issues that feel more remote from our daily lives — problems like global warming. The biggest obstacle to changing people’s individual behavior and collectively changing environmental policy, according to Columbia University decision scientist Elke Weber, is that people just aren’t scared of climate change. Being bombarded by facts and data about perils to come is not the same as having it affect us directly and immediately; in the absence of direct personal experience, our visceral decision system does not kick in to spur us to make better environmental choices such as buying more fuel-efficient vehicles.15

How should scientists and policymakers make climate change more immediate to people? Partly, it involves shifting from facts and data to experiential button-pressing. Powerful images of global warming and its effects can help. Unfortunately, according to research conducted by Yale environmental scientist Anthony A. Leisurowitz, the dominant images of global warming in Americans’ current consciousness are of melting ice and effects on nonhuman nature, not consequences that hit closer to home; as a result, people still think of global warming as only a moderate concern.16

Reframing options in terms that connect tangibly with people’s more immediate priorities, such as the social rules and norms they want to follow, is a way to encourage environmentally sound choices even in the absence of fear.17 For example, a study by Noah J. Goldstein (Univ. of Chicago), Robert B. Cialdini (Arizona State), and Vladas Griskevicius (Univ. of Minnesota) compared the effectiveness of different types of messages in getting hotel guests to reuse their towels rather than send them to the laundry. Messages framed in terms of social norms — “the majority of guests in this room reuse their towels” — were more effective than messages simply emphasizing the environmental benefits of reuse.18

Yet another approach to getting us to make the most beneficial decisions is to appeal to our natural laziness. If there is a default option, most people will accept it because it is easiest to do so — and because they may assume that the default is the best. University of Chicago economist Richard H. Thaler suggests using policy changes to shift default choices in areas like retirement planning. Because it is expressed as normal, most people begin claiming their Social Security benefits as soon as they are eligible, in their early to mid 60s — a symbolic retirement age but not the age at which most people these days are actually retiring. Moving up the “normal” retirement age to 70 — a higher anchor — would encourage people to let their money grow longer untouched.19

* * *

Making Decisions About the Environment

APS Fellow Elke Weber recently had the opportunity to discuss her research with others who share her concern about climate change, including scientists, activists, and the Dalai Lama. Weber . . . shared her research on why people fail to act on environmental problems. According to her, both cognitive and emotional barriers prevent us from acting on environmental problems. Cognitively, for example, a person’s attention is naturally focused on the present to allow for their immediate survival in dangerous surroundings. This present-focused attitude can discourage someone from taking action on long-term challenges such as climate change. Similarly, emotions such as fear can motivate people to act, but fear is more effective for responding to immediate threats. In spite of these challenges, Weber said that there are ways to encourage people to change their behavior. Because people often fail to act when they feel powerless, it’s important to share good as well as bad environmental news and to set measurable goals for the public to pursue. Also, said Weber, simply portraying reduced consumption as a gain rather than a loss in pleasure could inspire people to act.

References and Further Reading:

  • 7. Stanovich, K.E., & West, R.F. (2000). Individual differences in reasoning: Implications for the rationality debate.
  • Behavioral & Brain Sciences, 23, 645–665.
  • 8. Reyna, V.F., & Lloyd, F. (2006). Physician decision making and cardiac risk: Effects of knowledge, risk perception, risk
  • tolerance, and fuzzy processing. Journal of Experimental Psychology: Applied, 12, 179–195.
  • 9. Reyna, V.F. (2004). How people make decisions that involve risk: A dual-processes approach. Current Directions in
  • Psychological Science, 13, 60–66.
  • 10. Baird, A.A., & Fugelsang, J.A. (2004). The emergence of consequential thought: Evidence from neuroscience.
  • Philosophical Transactions of the Royal Society of London, Series B: Biological Sciences, 359, 1797–1804.
  • 11. Reyna, VF., & Farley, F. (2006). Risk and rationality in adolescent decision making. Psychological Science in the Public
  • Interest, 7, 1–44.
  • 12. Milkman, K.L., Chugh, D., & Bazerman, M.H. (2009). How can decision making be improved? Perspectives on
  • Psychological Science, 4, 379–383.
  • 13. Ibid.
  • 14. See Wargo, E. (2007). More than just the facts: Helping patients make informed choices. Cornell University Department
  • of Human Development: Outreach & Extension. Downloaded from http://www.human.cornell.edu/hd/outreach-extension/loader.cfm?csModule=security/getfile&PageID=43508
  • 15. Weber, E.U. (2006). Experience-based and description-based perceptions of long-term risk: Why global warming does
  • not scare us (yet). Climatic Change, 77, 103–120.
  • 16. Leisurowitz, A. (2006). Climate change risk perception and policy preferences: The role of affect, imagery, and values.
  • Climatic Change, 77, 45–72.
  • 17. Weber, E.U. (2010). What shapes perceptions of climate change? Wiley Interdisciplinary Reviews: Climate Change, 1,
  • 332–342.
  • 18. Goldstein, N.J., Cialdini, R.B., & Griskevicius, V. (2008). A room with a viewpoint: Using social norms to motivate
  • environmental conservation in hotels. Journal of Consumer Research, 35. Downloaded from http://www.csom.umn.edu/assets/118359.pdf
  • 19. Thaler, R.H. (2011, July 16). Getting the Most Out of Social Security. The New York Times. Downloaded from
  • http://www.nytimes.com/2011/07/17/business/economy/when-the-wait-for-social-security-checks-is-worth-it.html?_r=1&adxnnl=1&adxnnlx=1322835490-9f6qOJ9Sp2jSw4LKDjmYgw

More.

Related Situationist posts:

You can review hundreds of Situationist posts related to the topic of “choice myth” here.

Posted in Behavioral Economics, Choice Myth, History, Ideology, Neuroscience, Public Policy | Tagged: , , , | 1 Comment »

The Risky Situation of In-House Lawyers

Posted by The Situationist Staff on December 19, 2011

Donald Langevoort recently posted his worthwhile paper, “Getting (Too) Comfortable: In-House Lawyers, Enterprise Risk and the Financial Crisis” on SSRN.  Here’s the abstract.

In-house lawyers are under considerable pressure to “get comfortable” with the legality and legitimacy of client goals. This paper explores the psychological forces at work when inside lawyers confront such pressure by reference to the recent financial crisis, looking at problems arising from informational ambiguity, imperceptible change, and motivated inference. It also considers the pathways to power in-house, i.e., what kinds of cognitive styles are best suited to rise in highly competitive organizations such as financial services firms. The paper concludes with a research agenda for better understanding in-house lawyers, including exploration of the extent to which the diffusion of language and norms has reversed direction in recent years: that outside lawyers are taking cognitive and behavioral cues from the insiders, rather than establishing the standards and vocabulary for in-house lawyers.

Download the paper for free here.

Related Situationist posts:

Posted in Abstracts, Behavioral Economics, Law, Morality, Social Psychology | Tagged: , , , , , | Leave a Comment »

A Neuroscience Perspective on the Financial Crises

Posted by The Situationist Staff on October 28, 2011

Andrew Lo recently posted his paper “Fear, Greed, and Financial Crises: A Cognitive Neurosciences Perspective” on SSRN.  Here’s the abstract.

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Historical accounts of financial crises suggest that fear and greed are the common denominators of these disruptive events: periods of unchecked greed eventually lead to excessive leverage and unsustainable asset-price levels, and the inevitable collapse results in unbridled fear, which must subside before any recovery is possible. The cognitive neurosciences may provide some new insights into this boom/bust pattern through a deeper understanding of the dynamics of emotion and human behavior. In this chapter, I describe some recent research from the neurosciences literature on fear and reward learning, mirror neurons, theory of mind, and the link between emotion and rational behavior. By exploring the neuroscientific basis of cognition and behavior, we may be able to identify more fundamental drivers of financial crises, and improve our models and methods for dealing with them.

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Download the paper for free here.

Related Situationist posts:

Posted in Abstracts, Behavioral Economics, Emotions, Neuroscience | Tagged: , , | Leave a Comment »

The Situation of the Inequality Getting Inequalitier

Posted by The Situationist Staff on September 1, 2011

From

Financial gains over the last decade in the United States have been mostly made at the “tippy-top” of the economic food chain as more people fall out of the middle class. The top 20 percent of Americans now holds 84 percent of U.S. wealth, as Paul Solman found out as part of a Making Sen$e series on economic inequality.

Posted in Behavioral Economics, Distribution, Ideology, Video | Tagged: , , , | Leave a Comment »

The Situation of Antitrust Law

Posted by The Situationist Staff on August 9, 2011

Maurice E. Stucke recently posted his thoughtful paper, “Reconsidering Antitrust’s Goals” on SSRN.  Here’s the abstract.

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Antitrust policy today is an anomaly. On the one hand, antitrust is thriving internationally. On the other hand, antitrust’s influence has diminished domestically. Over the past thirty years, there have been fewer antitrust investigations and private actions. Today the Supreme Court complains about antitrust suits, and places greater faith in the antitrust function being subsumed in a regulatory framework. So what happened to the antitrust movement in the United States?

Two import factors contributed to antitrust policy’s domestic decline. The first is salience, especially the salience of the U.S. antitrust goals. In the past thirty years, enforcers and courts abandoned antitrust’s political, social, and moral goals, in their quest for a single economic goal. Second antitrust policy increasingly relied on an incomplete, distorted conception of competition. Adopting the Chicago School’s simplifying assumptions of self-correcting markets composed of rational, self-interested market participants, the courts and enforcers sacrificed important political, social, and moral values to promote certain economic beliefs.

With the anger over taxpayer bailouts for firms deemed too-big-and-integral-to-fail, the wealth inequality that accelerated over the past thirty years, and the current budget cuts and austerity measures, the United States is ripe for a new antitrust policy cycle.

This Article first summarizes the quest during the past 30 years for a single economic goal. It discusses why this quest failed. Four oft-cited economic goals (ensuring an effective competitive process, promoting consumer welfare, maximizing efficiency, and ensuring economic freedom) never unified antitrust analysis. After discussing why it is unrealistic to believe that a single well-defined antitrust objective exists, the Article proposes how to account antitrust’s multiple policy objectives into the legal framework. It outlines a blended goal approach, and the benefits of this approach in providing better legal standards and reviving antitrust’s relevance.

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Download the paper for free here.

Sample of related Situationist posts.

Posted in Abstracts, Behavioral Economics, Distribution, History, Law | Tagged: , , , , , , , | Leave a Comment »

Drazen Prelect at Harvard Law

Posted by The Situationist Staff on October 11, 2010

On Tuesday, October 12th, the HLS Student Association for Law and Mind Sciences (SALMS) is hosting a talk by MIT professor Drazen Prelec entitled Neuroeconomics.

Professor Prelec works in the departments of Economics and Brain and Cognitive Sciences at MIT.  His research and publications have explored the insights that cognitive science can offer into the ways that the human mind makes economic decisions.  His influential work has helped to found the nascent field of neuroeconomics.

Professor Drelec will be speaking in Pound 107. Free snacks will be provided!

For more information, e-mail salms@law.harvard.edu.

Posted in Behavioral Economics, Events, Neuroeconomics | Tagged: , | Leave a Comment »

Tamara Piety on Market Manipulation

Posted by The Situationist Staff on September 18, 2010

In response to Adam Beneforado’s terrific post this week, “Breaking Up Is Easy to Do: When Corporations Dump Consumers,” Situationist friend Tamara Piety wrote another excellent comment, a portion of which we’ve posted below.

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To me, one of most offensive examples of this type of channeling is the price discrimination practice involved in rebate/coupon schemes. Rebates and coupons are used as a way to expand the customer base by attracting a few more customers by virtue of the illusion (for most) of a lower price point. We see it in electronics all the time – “Laptop $999 [with $250 rebate]” There are several things at work here at once. One is that the seller ( or whoever actually pays the rebate) has your money for some period of time ranging from 30 days to 6 months as an interest free loan. Second is the anchoring effect that makes $999 seem some how much less than $1,000. But the principle objection for me is that they are actually creating a staggered pricing program. Again, this might not be a problem if it simply involved selling to as many customers as possible on the basis of the price that they will want to buy. The problem is that in order to do this companies make the process of obtaining the lower price (i.e. the with the rebate price), much more onerous than it appears to be through a variety of devices that are intended to take advantage of the psychological effect of the lower price and then relying on consumer inertia, lack of attention, recalculation of the efforts and so forth to avoid actually making good on that promise. Getting the rebate usually involves fair amount of time and effort (filling out the rebate form, mailing it back, waiting for the check, etc.) and uncertainty (if you fail to observe deadline, miss a requirement in the fine print, fail to send in the original, etc.) you lose. None of these difficulties are simply bureaucratic obstacles which have the ancillary effect of depressing the number of rebates redeemed. They are intended to have this effect. And sometimes the rebate is “paid” in the form of a “gift card” rather than in a cash or check which further draws out the redemption process by providing an expiration date for the card, limitations on where it can be used, or even a restriction limiting its use to other products from the same seller.

Every single step in this process is calculated to generate some failures to complete the redemption process so that the customer doesn’t actually receive the advertised price. And this is seen as a perfectly legitimate set of strategies to maximize the sales of the same good across a range of consumers – from those who don’t care about the rebate, to those who do and intend to redeem and then fail to do so, to those who intend to try redeem and try to do so but fail to successfully jump through all of the hoops of the conditions imposed, to those, finally, who intend to redeem and successfully do so. Some percentage of the last three groups are consumers who presumably wouldn’t have brought the product but for the promised (but in at least two instances) undelivered rebate. And the difference between groups 2 and 3 and group 4 are explained by the seller as being entirely attributable to some character “flaw” (lack of attention, lack of diligence, etc.) or a “choice” not to redeem when that “choice” has been structured to take advantage of consumers’ psychological vulnerabilities (or their dawning realization that the time and effort required to pursue the rebate is not really “free” and thus it might be more rational to abandon the effort.) It is disingenuous and unfair to describe these consumer “choices” as unmediated.

* * *
Bottom line all these tropes – “control,” “choice,” “information,” as they are currently used and understood by many, operate to absolve the seller of any responsibility for their role in driving these choices even as several full-blown, mature industries’ very existence (advertising, marketing, PR) is predicated on the proposition that it is possible to manipulate and channel consumer choices. It is a feat of sleight-of-hand to argue (in essence) that entire industries’ efforts are of no consequence whatsoever even as billions of dollars are spent in plain sight on those efforts.

* * *

To read Piety’s entire comment, click here. Her focus is particularly timely in light of the fact that another Situationist friend, Elizabeth Warren, accepted President Obama’s invitation this week to set up a a consumer financial watchdog and warned yesterday that the time for financial “tricks and traps” was over.

The themes of market manipulation and the “choice myth” are common on the Situationist.  In addition to the sample of related posts linked at the bottom of Adam’s post,  here are few more:  Taking Behavioralism Seriously (Part I) – Abstract and Top Ten List; Promoting Smoking through SituationThe Big Game: What Corporations Are Learning About the Human Brain,” “Warren on the Situation of Credit,” “The Financial Squeeze: Bad Choices or Bad Situations?,” “No Contract for Old Men,” The Situation of Subprime Mortgage Contracts – Abstract.”

The first scholarly article (part of  a trilogy) devoted to these issues is Taking Behavioralism Seriously: The Problem of Market Manipulation (74 N.Y.U.L. Rev. 363 (1999)) available for free download on SSRN.

Posted in Behavioral Economics, Choice Myth, Life, Marketing, Public Relations, Situationist Contributors | Tagged: , , , , , | 1 Comment »

Situationist Corruption

Posted by The Situationist Staff on September 14, 2010

Molly J. Walker Wilson recently posted her article, “Behavioral Decision Theory and Implications for the Supreme Court’s Campaign Finance Jurisprudence” (Cardozo Law Review, Vol. 31, p. 679, 2010) on SSRN.  Here’s the abstract.

* * *

America stands at a moment in history when advances in the understanding of human decision-making are increasing the strategic efficacy of political strategy. As campaign spending for the presidential race reaches hundreds of millions of dollars, the potential for harnessing the power of psychological tactics becomes considerable. Meanwhile, the Supreme Court has characterized campaign money as “speech” and has required evidence of corruption or the appearance of corruption in order to uphold restrictions on campaign expenditures. Ultimately, the Court has rejected virtually all restrictions on campaign spending on the ground that expenditures, unlike contributions, do not contribute to corruption or the appearance of corruption. However, behavioral decision research and theory provide strong support for the notion that expenditures do corrupt the political process, because there is a nexus between campaign spending, strategic manipulation, and sub-optimal voting decisions. This Article applies behavioral research and theory to advance a new definition of “corruption,” arguing that there is a vital governmental interest in regulating campaign expenditures in order to limit manipulative campaign tactics and to reduce the existing inequities in access to channels of communication and persuasion.

* * *

You can download the entire article for free here.  For a sample of related Situationist posts, see “The Situation of Corruption,” Larry Lessig’s Situationism,” The Situation of Swift-Boating,” “Deep Capture – Part VII,” “The Situation of Earmarks,” “The Deeply Captured Situation of the Economic Crisis,” and “Our Stake in Corporate Behavior.”

Posted in Abstracts, Behavioral Economics, Deep Capture, Law, Politics | Tagged: , , | Leave a Comment »

The Bagel Situation

Posted by Adam Benforado on August 29, 2010

If you order a “bagel with cream cheese,” how much cream cheese should be provided with the bagel?

That was the question my girlfriend and I pondered the other day as we drove through New Jersey futilely trying to remove half of the cream cheese on our bagels without the aid of a knife.

Why is it that nearly every bagel that we buy has considerably more cream cheese than we want?  Is it that people can somehow sense that we are from Philadelphia?

If some people prefer a little cream cheese and some people prefer a lot, doesn’t it make the most sense to provide a small amount of cream cheese unless someone speaks up and voices a preference for more?  That way, everyone gets exactly what they want (and no more than they want).  And people who don’t really have a strong impulse either way are saved from consuming needless extra calories.

A lot of recent discussion concerning combating the obesity epidemic has been around the ability of the government to ban particular unhealthy ingredients or products, like trans fats and salt.  But perhaps we should be spending more time thinking about resetting food defaults, rather than on outright prohibitions, which tend to engender a strong backlash from certain sectors of the public

Already, there is a considerable amount of valuable research being conducted on how portion sizes and ingredient lists are set and how these elements impact our waistlines, but we need to think more about how we can use this data to accomplish meaningful policy prescriptions.

What if, in addition to a light spreading default, every bagel shop served light cream cheese unless you  asked for the higher-fat / higher-calorie alternative?

What if all sodas currently referred to as “diet” were relabeled as “regular,’ and “regular” sodas became “high-calorie” sodas?

What if “lite” beer became “standard” beer, and everything else became “heavy” beer?

What if when you ordered a sandwich, the regular side was a salad and you had to ask to substitute in fries, rather than vice versa?

What if the default when you ordered a latte was skimmed milk and you had to specify if you wanted whole milk?

One of the great benefits of a “resetting defaults” strategy is that it is much harder for opponents to attack as “anti-freedom” or “paternalistic.”  In each of the above examples, free choice would be completely preserved.  All the existing food and beverage options would still be there.  Every person would be at liberty to have fries and “heavy” beers at every meal.  However, Americans would have to actively choose what they wanted to eat; they could no longer sit back and have the choice made for them.  For those who elected to operate on autopilot, the result would be a far healthier diet.

Does such a “nudging towards health” proposal really have any negative impact on individual autonomy?  Are food defaults frighteningly paternalistic?  I don’t think so, but maybe all that cream cheese has gone to my head.

* * *

To review a sample of related Situationist posts, see “Situationism’s Improving Situation,” “Dr. David Kessler Waxes Situationist,” “The Situation of Eating – Part II,” The Situation of Eating,” “The Situation of the Dreaded ‘Freshman 15′,” “Our Situation Is What We Eat,” “Social Networks,” The Situation of Fatness = Our ‘Obesogenic’ Society,” Innovative Policy: Zoning for Health,” McDonalds tastes better than McDonalds, if it’s packaged right,” and “The Situation of Repackaging.”

To access Adam Benforado’s article, entitled “Broken Scales: Obesity and Justice in America (co-written with Situationist contributors Jon Hanson and David Yosifon), on the situationist causes of the American obesity epidemic, click here.

Posted in Behavioral Economics, Choice Myth, Food and Drug Law, Marketing, Situationist Contributors | 7 Comments »

Laurie Santos on the Evolutionary Situation of Cognitive Biases

Posted by The Situationist Staff on August 25, 2010

From BigThink:

Dr. Laurie Santos is an Associate Professor of Psychology at Yale University. Her research provides an interface between evolutionary biology, developmental psychology, and cognitive neuroscience, exploring the evolutionary origins of the human mind by comparing the cognitive abilities of human and non-human primates. Her experiments focus on non-human primates (in captivity and in the field), incorporating methodologies from cognitive development, animal learning psychology, and cognitive neuroscience.

* * *

]
* * *

From TedTalks:

Laurie Santos looks for the roots of human irrationality by watching the way our primate relatives make decisions. A clever series of experiments in “monkeynomics” shows that some of the silly choices we make, monkeys make too.

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* * *

For a sample of related Situationist posts, see Michael McCullough on the Situation of Revenge and Forgiveness,” New Study Looks at the Roots of Empathy,” “The Endowment Effect in Chimpanzees – Abstract,” “The Situation of Political Animals,” and “Monkey Fairness.”

Posted in Behavioral Economics, Evolutionary Psychology, Video | Tagged: , , , | 1 Comment »

What Can a Robot Teach Us about the Situation of Trust?

Posted by The Situationist Staff on July 13, 2010

From Northeastern University:

What can a wide-eyed, talking robot teach us about trust?

A lot, according to Northeastern psychology professor David DeSteno, and his colleagues, who are conducting innovative research to determine how humans decide to trust strangers — and if those decisions are accurate.

(Read a Boston Globe article about this research.)

The interdisciplinary research project, funded by the National Science Foundation (NSF), is being conducted in collaboration with Cynthia Breazeal, director of the MIT Media Lab’s Personal Robots Group, Robert Frank, an economist, and David Pizarro, a psychologist, both from Cornell.

The researchers are examining whether nonverbal cues and gestures could affect our trustworthiness judgments. “People tend to mimic each other’s body language,” said DeSteno, “which might help them develop intuitions about what other people are feeling — intuitions about whether they’ll treat them fairly.”

This project tests their theories by having humans interact with the social robot, Nexi, in an attempt to judge her trustworthiness. Unbeknownst to participants, Nexi has been programmed to make gestures while speaking with selected participants — gestures that the team hypothesizes could determine whether or not she’s deemed trustworthy.

“Using a humanoid robot whose every expression and gesture we can control will allow us to better identify the exact cues and psychological processes that underlie humans’ ability to accurately predict if a stranger is trustworthy,” said DeSteno.

During the first part of the experiment, Nexi makes small talk with her human counterpart for 10 minutes, asking and answering questions about topics such as traveling, where they are from and what they like most about living in Boston.

“The goal was to simulate a normal conversation with accompanying movements to see what the mind would intuitively glean about the trustworthiness of another,” said DeSteno.

The participants then play an economic game called “Give Some,” which asks them to determine how much money Nexi might give them at the expense of her individual profit.  Simultaneously, they decide how much, if any, they’ll give to Nexi. The rules of the game allow for two distinct outcomes:  higher individual profit for one and loss for the other, or relatively smaller and equal profits for both partners.

“Trust might not be determined by one isolated gesture, but rather a ‘dance’ that happens between the strangers, which leads them to trust or not trust the other,” said DeSteno, who, with his colleagues, will continue testing their theories by seeing if Nexi can be taught to predict the trustworthiness of human partners.

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For a sample of related Situationist posts, see The Interior Situation of Honesty (and Dishonesty),” “The Situation of Trust,” The Situation of Lying,” “The Facial Obviousness of Lying,” “Denial,” Cheating Doesn’t Pay . . . So Why So Much of it?Unclean Hands,” The Situation of Imitation and Mimickry,”

Posted in Behavioral Economics, Emotions, Morality | Tagged: | 1 Comment »

Should Psychologists Speak More to the General Public?

Posted by Adam Benforado on May 15, 2010

I really enjoyed reading Paul Bloom’s article, The Moral Life of Babies, in the New York Times last weekend.

If you missed it, here is the intriguing opening:

Not long ago, a team of researchers watched a 1-year-old boy take justice into his own hands. The boy had just seen a puppet show in which one puppet played with a ball while interacting with two other puppets. The center puppet would slide the ball to the puppet on the right, who would pass it back. And the center puppet would slide the ball to the puppet on the left . . . who would run away with it. Then the two puppets on the ends were brought down from the stage and set before the toddler. Each was placed next to a pile of treats. At this point, the toddler was asked to take a treat away from one puppet. Like most children in this situation, the boy took it from the pile of the “naughty” one. But this punishment wasn’t enough — he then leaned over and smacked the puppet in the head.

This incident occurred in one of several psychology studies that I have been involved with at the Infant Cognition Center at Yale University in collaboration with my colleague (and wife), Karen Wynn, who runs the lab, and a graduate student, Kiley Hamlin, who is the lead author of the studies. We are one of a handful of research teams around the world exploring the moral life of babies.

The article held personal interest for me because of recent experiments in the area of moral psychology that I’ve been working on with a cognitive psychologist colleague.  However, what really got me thinking today is the creation of the article itself.  How did it come to be?

I assume that Bloom approached the New York Times (although perhaps they approached him, as he’s written for them before) with the thought that he should reach a broader audience with his current research.  I, for one, am glad that he did, but while an increasing number of psychologists, behavioral economists, and other academics seem to be having similar urges, others seem quite resistant to the idea.  After a behavioral economist friend of mine recently told me about some new studies he was working on, I urged him to write an op-ed as his work seemed to shed important light on a current news topic.  Although agreeing that his research had the potential to reframe the debate, he was very wary of the idea of speaking to the public directly.  “Why don’t I send you some things and you can write the op-ed,” he said.

What do you think?  Does summarizing one’s work for a popular magazine, or writing an op-ed or blog post exploring some of the potential implications of one’s research, stand as a threat to academia or is it something that could make academia more effective?

This is a conversation I hope we can continue on the Situationist in the coming months.

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To review a sample of related Situationist posts, see Journalists as Social Psychologists & Social Psychologists as Entertainers,” “Implicit Associations on Oprah.” and “Situationism’s Improving Situation.”

Posted in Behavioral Economics, Social Psychology | 3 Comments »

The Situation of Financial Markets

Posted by The Situationist Staff on May 7, 2010

Below the jump you can watch an outstanding and fascinating  video episode, “Mind over Money,” by PBS’s NOVA, that asks the question “Can markets be rational when humans aren’t?” and that includes significant segments describing some of the work by Situationist friend Jennifer Lerner.

(We’ve placed the (52 minute) video after the jump because it plays automatically.)

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Read the rest of this entry »

Posted in Behavioral Economics, Choice Myth, Emotions, Ideology, Neuroeconomics, Neuroscience, Video | Tagged: , , , , , , , , , , , | Leave a Comment »

 
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