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: Behavioral Economics, economics, emotion, Gary Becker, heuristics and biases, irrationality, Jennifer Lerner, law and behavioralism, markets, rational economics, rationality, Richard Thaler | Leave a Comment »
Posted by The Situationist Staff on April 17, 2010
Barbara Spellman and Simone Schnall recently posted their fascinating paper, Embodied Rationality, on SSRN. Here’s the abstract.
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In the last decade, many cognitive and social psychology researchers have been inspired by the notion of “embodied cognition” – that cognition is grounded in actual bodily states, and that cognition takes place in the service of action. Consider two examples: (1) when wearing a backpack people perceive hills to be steeper than when not wearing one; (2) when holding a cup containing a hot drink people rate another person as more warm and friendly than when holding a cup containing a cold drink.
Findings such as these suggest that behavioral law and economics’s emphasis on “irrationality” in decision making could benefit by considering work in embodied cognition. Accordingly, this paper exploits recent research and theory on embodied cognition to find lessons for behavioral law and economics and theories of rationality.
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You can download the paper for free here. For a sample of related Situationist posts, see “The Embodied Cognition Bonanza!,” “The Embodied Situation of Metaphors,” “Our Metaphorical Situation,” “The Situation of Metaphors,” “Bargh and Baumeister and the Free Will Debate — Part I & Part II” “The Situation of Body Temperature,” “Social Psychology and the Unconscious: The Automaticity of Higher Processes,” “Unclean Hands,” “The Body Has a Mind of its Own,” “Ideology Shaping Situation, or Vice Versa?,” “The Situation of Snacking,” “The Situation of Imitation and Mimickry,” and “The (Unconscious) Situation of our Consciousness – Part I, Part II, Part III, & Part IV.”
Posted in Abstracts, Embodied Cognition | Tagged: behavioral law and economics, decision making, Embodied Cognition, rationality | 5 Comments »
Posted by The Situationist Staff on November 1, 2008
Avishalom Tor has written an article, “The Methodology of the Behavioral Analysis of Law” (forthcoming 4 Haifa Law Review 237 (2008)) that will be of particular value for our readers interested in economic behavioralism. You can download the paper for free on SSRN. Here’s the abstract.
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This article examines the behavioral analysis of law, meaning the application of empirical behavioral evidence to legal analysis, which has become increasingly popular in legal scholarship in recent years. Following the introduction in Part I, this Article highlights four central propositions on the subject. The first, developed in Part II, asserts that the efficacy of the law often depends on its accounting for relevant patterns of human behavior, most notably those studied by behavioral decision scientists. This Part therefore reviews important behavioral findings, illustrating their application and relevance to a broad range of legal questions. Part III then argues that the behavioral approach is empirically driven, engaging in both the theoretical application of extant empirical findings to the law and the generation of new, legally relevant, experimental and observational evidence. As this Part shows, moreover, each of these behavioral genres possesses different methodological strengths and weaknesses, and they therefore both substitute for and complement one another, in different respects. Part IV explains that the behavioral approach encounters a series of “gaps” between the type of empirical evidence provided by behavioral decision researchers and the data required to resolve legal questions. Legal scholars should therefore be aware of these gaps, which may limit the usefulness of extant behavioral evidence for legal analysis. This Part also addresses what legal scholars may do to overcome these gaps and distinguish real gaps from imaginary ones. Part V completes the body of the Article, arguing that the behavioral analysis of law is simultaneously normatively neutral and normatively relevant. It is normatively neutral because the behavioral analysis of law is not committed to any specific legal goal or value system. This fundamental neutrality, in turn, makes the behavioral approach a versatile instrument, which can help generate important normative conclusions in the service of scholars evaluating the law based on any normative criteria – from justice to welfare and more. Part VI concludes.
Posted in Uncategorized | Tagged: behavioral, Choice, debiasing, decision making, experimental, judgment, law and economics, paternalism, rationality | Leave a Comment »
Posted by The Situationist Staff on May 14, 2008
Sarah F. Brosnan, Owen D. Jones, Susan P. Lambeth, Mary Catherine Mareno, Amanda S. Richardson, and Steven Schapiro, posted their article, “Endowment Effects in Chimpanzees” 17 Current Biology, 1704-1707 (October 9, 2007) on SSRN. Here’s the abstract.
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Human behavior is not always consistent with standard rational choice predictions. The much-investigated variety of apparent deviations from rational choice predictions provides a promising arena for the merger of economics and biology. Although little is known about the extent to which other species also exhibit these seemingly irrational patterns of human decision-making and choice behavior, similarities across species would suggest a common evolutionary root to the phenomena.
The present study investigated whether chimpanzees exhibit an endowment effect, a seemingly paradoxical behavior in which humans tend to value a good they have just come to possess more than they would have only a moment before. We show the first evidence that chimpanzees do exhibit an endowment effect, favoring items they just received more than items they prefer that could be acquired through exchange. Moreover, we demonstrate that – as predicted – the effect is far stronger for food than for less evolutionarily salient objects, perhaps due to historically greater risks associated with keeping a valuable item versus attempting to exchange it for another. These findings suggest that the larger set of seeming deviations from rational choice predictions may be common to humans and chimpanzees, and that the evaluation of these through a lens of evolutionary relevance may yield further insights in both humans and other species.
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To read about a related paper, see “A New Theory of the Endowment Effect.”
Posted in Abstracts, Behavioral Economics, Choice Myth, Uncategorized | Tagged: behavioral biology, Behavioral Economics, chimpanzees, economics, endowment effect, evolutionary analysis in law, evolutionary biology, irrationality, Law, property, prospect theory, rationality | 1 Comment »