tag:blogger.com,1999:blog-88806051031168050682024-03-13T21:01:31.843-07:00Prospect TheoryExploring the intersection of innovation and psychologyJustin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.comBlogger32125tag:blogger.com,1999:blog-8880605103116805068.post-81997314752214194462009-03-09T16:58:00.000-07:002009-03-09T17:05:59.139-07:00N-Effect Review: Part Three – Conclusion<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOXYHN8FZ2A_9tZ59M3rZyQUAHtgNNDERcKSVYm0EMR3aMIDSCd0ysadnNmA61BZQwdaL0PMww58CcTnAs_nrTQ2AwMBicC5qanyNDgd-L864KAAOcr6jUk7C7trXXTLcVgttv-KNqnsz_/s1600-h/Sumo.jpg"><img id="BLOGGER_PHOTO_ID_5311342958415429010" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 334px; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOXYHN8FZ2A_9tZ59M3rZyQUAHtgNNDERcKSVYm0EMR3aMIDSCd0ysadnNmA61BZQwdaL0PMww58CcTnAs_nrTQ2AwMBicC5qanyNDgd-L864KAAOcr6jUk7C7trXXTLcVgttv-KNqnsz_/s400/Sumo.jpg" border="0" /></a><br /><div>Over the last two postings I have been reviewing Stephen M. Garcia and Avishalom Tor’s “<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1307223">N-Effect</a>.” In this third and concluding posting I give my verdict on the N-Effect and provide some additional research ideas for further work in the social comparison space. A note to readers: This series is best read starting with <a href="http://www.prospecttheory.net/2009/02/n-effect-review-part-one.html">Part One</a>.<br /><br /><br /><strong><span style="font-size:130%;">Verdict on N-Effect</span></strong><br /><br />Despite the criticisms and alternative explanations in past postings , collectively Garcia and Tor’s studies begin to build a strong case for an N-Effect. The authors cite numerous past studies linking social comparison to competitive motivation so any failure to unequivocally prove a relationship internal to this research paper is easily forgivable. Furthermore, their early analysis that N is a ubiquitous objective factor in all competitive situations and that subjects are more likely to make social comparisons when there are few rather than may competitors due to, if nothing else, the fact that “it becomes less viable and informative to compare oneself, or anticipate comparisons, with a great multitude of Targets,” seem quite sound. The later is proven out experimentally in several of the studies. As for the appropriateness of dependent variable measures, while one can poke holes in the relationships, the simplest explanation is that actual performance and self reported motivation are measures of true competitive motivation. Study 4 goes a long way toward invalidating a ratio bias hypothesis (discussed previously) and Studies 3 and 5 are quite persuasive in arguing for an N-Effect. Study 3 incorporates a social comparison orientation (SCO) assessment of subjects, a scale that was designed and demonstrated to “reveal interpersonal differences” in subject tendencies for social comparison. Study 3 analysis demonstrates that high SCO scoring subjects are more likely to exhibit the N-Effect, a fact that is very difficult to explain with alternative theories. Study 5 measures social comparison, competitive motivation, ease of task, and N all in one place -- negating the need to rely on assumptions about the relationships between these variable formed in earlier, more limited studies. Study 5 shows that social comparison is indeed acting as a mediator of competitive motivation.<br /><br /><br /><strong><span style="font-size:130%;">Advancing the Broader Research Agenda</span></strong><br /><br />The N-Effect research prompts several questions related to the broader research agenda in social comparison and competition motivation.<br /><br /><strong>Mapping Motivation and Actual Performance:</strong> What is the relationship between motivation and actual performance? If actual performance is to be a reliable measure of competitive motivation, a more granular mapping should be done to determine if there is indeed a linear versus an inverted U relationship. (<em>It is likely that others have already established this relationship but it is not mentioned in the paper</em>)<br /><br /><strong>Revisit Past Studies:</strong> Are there previous studies on social comparison that could be reexamined in light of the N-Effect? Most likely earlier social comparison studies have neglected to specify or at least recognize group size. New insights into these past studies could be gained by revisiting the role N may have played in their results.<br /><br /><strong>Interventions:</strong> What interventions would enable subjects to view competitions in the same way for a given probability of winning?<br /><br /><strong>Other Objective Factors:</strong> What other objective factors besides N might play a role in social comparison?<br /><br /><strong>Framing Effects:</strong> If subjects were assessing their possibility of incurring a penalty instead of receiving an award would it change the nature of the N-Effect, perhaps reversing the polarity of social comparison?<br /><br /><strong>Sample v. Population:</strong> Do subjects recognize potential sample effects when considering competitive difficulty? While a randomly selected group of 100 people is likely normally distributed in ability and represent the population, a group of 10 people has the potential to be quite skewed in their abilities. Perhaps the subject in a small N group is unlucky and finds themselves up against a small but exceptionally talented group of people who are excellent at solving the assigned task. Could this factor partially explain increased need for social comparison for small N groups?</div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-47083765820902627582009-03-02T18:06:00.000-08:002009-03-09T17:06:50.587-07:00N-Effect Review: Part Two<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjsawOVIwhLvLGC3P4oQYW-no8C6SsysN1mBLz9axMkxOyQ2TeJOzVvc-0HLhNJ0w-U3S5zznb6itsn_I33agYFLZOTg_UhAQASOets_C1KsaH0fNo13yHhHFeJyzlYz7eckNJAnWOZeLJX/s1600-h/lonerunner4.jpg"><img id="BLOGGER_PHOTO_ID_5308778338502458930" style="FLOAT: right; MARGIN: 0px 0px 10px 10px; WIDTH: 200px; CURSOR: hand; HEIGHT: 133px" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjsawOVIwhLvLGC3P4oQYW-no8C6SsysN1mBLz9axMkxOyQ2TeJOzVvc-0HLhNJ0w-U3S5zznb6itsn_I33agYFLZOTg_UhAQASOets_C1KsaH0fNo13yHhHFeJyzlYz7eckNJAnWOZeLJX/s200/lonerunner4.jpg" border="0" /></a><br /><div>In this second installment of a three part series, I explore alternatives to <a href="http://www.bus.umich.edu/Academics/Departments/MO/FacultyBio.asp?id=000657601">Stephen M. Garcia</a> and <a href="http://law.haifa.ac.il/faculty/faculty_index.asp?a=1&pos=&fname=&fType=personal_page&lang=eng&lec_id=162&show=4">Avishalom Tor</a>’s “N-Effect” theory and suggest several additional studies that would help solidify the research findings.<br /><br /><strong><span style="font-size:130%;"></span></strong></div><div><strong><span style="font-size:130%;">Alternative Explanations</span><br /></strong><br /><strong>Regression:</strong> One starting point for an alternative explanation to the authors’ findings on N and motivation can be found in Study 5. As stated in the Results and Discussion section, “Participants felt it would be easier to win the cash prize in the 10 competitors condition than in the 10,000 competitors condition.” Putting aside the implications this result has on a ratio bias explanation, let us just grant that for whatever reason subjects believe it is easier to win competitions with fewer competitors. If this is true, objective social comparison around N could theoretically be completely removed from the explanation of competitive motivation and replaced by subject confidence in performing easy or difficult tasks. Past research (e.g. Moore & Cain, 2005) suggests that for easy tasks subjects believe they will be above average in their performance of the task and on difficult tasks they will perform below average. Since subjects have better access to their own abilities “their beliefs about others’ performances tend to be regressive and less extreme than their beliefs about their own performances.” This Overconfidence and Underconfidence effect has been demonstrated at low and high values for N.<br /><br />However, similar to the authors own observations in regard to ease or difficulty of achieving a payoff, high confidence could either decrease or increase motivation (“I’m going to win anyway so I do not need to work hard” or “I am confident I can win so I’m going to work very hard as I know the effort will pay off”). A clear conclusion cannot be determined using only the results of the N-Effect paper. We can assume that subjects in Study 2 would judge that task to be easy. Collectively the task in Study 5 has a mean difficulty assessment that isn’t close to either extreme. Finally, we have no way of knowing how subjects feel about the foot race and job interview imagined tasks of Studies 3 and 4. If we had a set of both inherently difficult and inherently easy tasks we could compare the low N and high N motivation rankings between tasks. If high confidence yields high motivation, we should find the motivation to complete in low N versions of easy tasks to be higher than in low N versions of difficult tasks. Factored into the analysis it may be that task difficulty plays a mediating role in competitive motivation instead of social comparison.<br /><br /><strong>Numeracy Failings:</strong> The study 4 control for subject ratio biases combined with the study 5 finding that subjects judged small N tasks as easier than large N tasks constitutes persuasive evidence against a classic ratio bias explanation for the N-Effect. However, this finding does not preclude other failures in subject numeracy from playing a role. For instance, subjects might be influence by formatting effects related to frequency (e.g. Gigerenzer, 1994; Gigerenzer & Hoffrage, 1995). This theory suggests that subjects are better able to interpret information expressed as a frequency (2 out of 10 or 20 out of 100) better than when the same information is expressed as a probability (20% chance of winning). N-Effect Studies 2, 3, 4, and 5 all use percentage probabilities instead of frequencies when presenting information to subjects. This formatting effect could cause subjects to misinterpret their probability of winning in each scenario, perhaps assuming they somehow have a better chance of winning when there are fewer competitors. Again, social comparison would not be necessary to explain competitive motivation. Note that Study 5 describes some “manipulation checks about N and the percentage of competitors that would win.” From the context it can be assumed that the checks were also formatted as percentages; however, these checks are not described in detail in the paper.<br /><br /><strong>Winner-Take-All Heuristic:</strong> Many competitions only reward the very top performing competitor or at least have special rewards for the top competitor. This situation could lead to a heuristic for subjects that competitions with more competitors are harder to win -- even when faced with information that the competitions have an equal probability of positive outcome. Instead of translating a 20% chance of winning with 50 or 500 competitors into 10/50 or 100/500 odds respectively, subjects may instead have an internal representation that is tugged toward an extreme of 1/50 and 1/500. This incorrect assumption on ease of winning could influence competitive motivation without social comparison playing a role as discussed previously.<br /><br /><strong><span style="font-size:130%;"></span></strong></div><div><strong><span style="font-size:130%;">Additional N-Effect Studies<br /></span></strong><br />Multiple additional studies could be run to more clearly demonstrate the N-Effect and rule out alternative explanations.<br /><br /><strong>N-Effect Continuum:</strong> The authors of the N-Effect admit that the effect arises only within a certain territory of N values but it is unclear where this territory lies. Starting from no competitors and adding one at a time, at what point do social facilitation improvements in motivation give way to N-Effect reductions in motivation due to reduced social comparison? Is the continuum different for various competitive arenas like poker, running, debating, etc.? </div><div><br /></div><div><strong></strong></div><div><strong></strong></div><div><strong>Direct Measures of Motivation:</strong> As mentioned in the previous posting, Studies 3, 4, and 5 would be much stronger if the authors had a more direct way of measuring competitive motivation such as effort invested in actually performing a task or perhaps willingness to make actual payments to eliminate other competitors from consideration. </div><div><br /></div><strong></strong><div><strong>Actual N:</strong> Further studies involving actual task performance in the presence of small and large N competitors groups should be run to prove the N effect is not limited to imaged N sets.</div><div><br /><strong>Ratio Bias on Stimulus:</strong> Study 4 looks at subjects’ general susceptibility to the ratio bias but it neglects to question subjects directly to see if they exhibit a ratio bias on the scenario stimulus itself. Subjects could be asked to choose which competition they would rather compete in [10, 30, 50, 100, or indifferent for Study 4] as a more direct test for the bias.</div><br /><div><strong>SCO Expansion:</strong> Rerun Studies 2, 4, and 5 including the SCO measure to make sure the same confirming results are found as in Study 3.</div><br /><div><strong>Easy v. Hard Tasks:</strong> As mentioned in the “Regression” alternative explanation above, a study designed to compare N level competitive motivation assessments for easy and hard tasks could be quite informative. If subjects rate low (high) N condition competitive motivation in easy tasks very similarly to low (high) N condition competitive motivation in difficult tasks, the N-Effect theory would be strengthened.</div><br /><div><strong>Format Effect Control:</strong> Rerun the studies using frequency numbers instead of percentages to describe the winning outcomes and thereby control for a formatting explanation. </div><div><br /><strong>Winner-Take-All Control:</strong> Remind subjects of several instances where winner take all is not the rule of competition and where all subjects who win are treated equally (passing the legal board exam for example) as an attempt to reduce any winner take all bias prior to rerunning N-Effect studies. </div><div><br /></div><div><em><span style="font-size:130%;color:#ffff33;"></span></em></div><div><em><span style="font-size:130%;color:#ffff33;">Next Installment: Conclusions and Future Directions</span></em></div><div></div><div><br /><span style="font-size:78%;">Gigerenzar, G. (1994). Why the distinction between single-event probabilities and frequencies is important for psychology (and vice versa). In G. Wright & P. Ayton (Eds.), Subjective probability (pp. 129-161). New York: Wiley --- NOTE reference found in Reyna and Brainerd’s “Numeracy, ratio bias, and denominator neglect in judgments of risk and probability,” Learning and Individual Differences, March 2007<br /><br />Gigerenzer, G., & Hoffrage, U. (1995). How to improve Bayesian reasoning without instruction: Frequency formats. Psychological Review, 102, 684-704. --- NOTE reference found in Reyna and Brainerd’s “Numeracy, ratio bias, and denominator neglect in judgments of risk and probability,” Learning and Individual Differences, March 2007<br /><br />Moore, D. A. & Cain, D. M. (2007). Overconfidence and underconfidence: When and why people underestimate (and overestimate) the competition. Organizational Behavior and Human<br />Decision Processes, 103, 197-213.<br /></div></span>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-45056538908679924942009-02-25T12:19:00.000-08:002009-03-09T17:10:10.291-07:00N-Effect Review: Part One<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKC5H2zwW5n5AUDSbkOTz4sYs5DxNaD4jJIE5sJ71NU2fj4al7s3gCsb42h5jwZaDwyGuQV5PrloMmZoi4YtY3gNwUvajmx2c7EiTGieQjdJeY9yraRTdzeWJPps2DLSSvg8EmANrfZHTY/s1600-h/marathon.jpg"><img id="BLOGGER_PHOTO_ID_5306834027909268786" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 200px; CURSOR: hand; HEIGHT: 126px" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKC5H2zwW5n5AUDSbkOTz4sYs5DxNaD4jJIE5sJ71NU2fj4al7s3gCsb42h5jwZaDwyGuQV5PrloMmZoi4YtY3gNwUvajmx2c7EiTGieQjdJeY9yraRTdzeWJPps2DLSSvg8EmANrfZHTY/s200/marathon.jpg" border="0" /></a><br /><div>Does the number of people in a competition influence competitive motivation? If so, would additional competitors likely increase or decrease motivation? Research by <a href="http://www.bus.umich.edu/Academics/Departments/MO/FacultyBio.asp?id=000657601">Stephen M. Garcia</a> and <a href="http://law.haifa.ac.il/faculty/faculty_index.asp?a=1&pos=&fname=&fType=personal_page&lang=eng&lec_id=162&show=4">Avishalom Tor</a> attempts to answer these questions. Their resulting paper in Psychological Science entitled “<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1307223">The N-Effect: More Competitors, Less Competition</a>” appears to be generating a lot of interest in the research community. In fact, as of two weeks ago it was the number two ranked paper in recent downloads on SSRN. In a three part series, I will provide a compressive analysis of this newly influential paper. This first installment includes a paper summary and an initial criticism of methods.<br /><br /><strong><span style="font-size:130%;"></span></strong></div><div><strong><span style="font-size:130%;">Summary</span></strong></div><strong></strong><div><br />Previous research suggests that social comparison leads to increased competitive motivation in subjects. While most prior work examined subjective factors in social comparison, this new study focuses on an objective factor inherent to all competitive situations, namely the number of competitors. Though the probability of winning is held constant, the authors of this study predict that, past a certain threshold, subjects facing many competitors in performing an individual task will have less competitive motivation than subjects facing few competitors. They claim this “N-Effect” occurs because, as the number of competitors (N) moves from few to many, it becomes increasingly difficult and less informative for subjects to partake in social comparisons and it is these social comparisons that fuel competitive motivation.<br /><br /><span style="font-size:130%;"><strong></strong></span></div><div><span style="font-size:130%;"><strong>Criticism</strong> </span></div><div><br />When assessed on the whole, the evidence presented by Garcia and Tor makes a good case for the existence of an N-Effect; however, many of the component parts of their supporting studies and arguments deserve discussion.</div><div><br />The authors are primarily interested in competitive motivation yet the studies contained in their paper measure a number of other dependent variables, some requiring an extended set of logical connections to support the overall N-Effect theory.<br /><br />Study number followed by dependent variable:</div><div><br />1 a & b--Actual Performance (test scores)<br />2--Actual Performance (speed)<br />3--Self Reported Motivation<br />4--Self Reported Competitive Feelings / Social Comparison<br />5--Self Reported Motivation / Comparison / Ease of winning<br /><br />For instance, SAT scores in Study 1a are a measure of actual performance on a test taking task which only has an indirect relationship to competitive motivation. Instead of the linear relationship the authors seem to imply, one could have predicted an inverted U shaped relationship between competitive motivation and actual performance. At a high enough level of motivation, performance should start to suffer as subjects become over stimulated. So in Study 2 it is possible that subjects trying to rapidly take a test are already on the far, downward sloping side of the motivation/performance curve. If that were true the 100 N condition could actually produce more competitive motivation than the 10 N condition yet fit the result of a slower completion time. This explanation may be less likely than the more intuitive one assumed by the authors but its existence begs further evidentiary support for the author’s theory to stand.<br /><br />Study 1b’s conclusion that actual performance on the CRT test is a measure of competitive motivation is even more difficult to justify. Whereas the SAT is a form of competition with material rewards for high performance relative to fellow test takers, the CRT is not competitive in nature. CRT scores remain the private knowledge of the subject (if they are even shared with the subject at all) and these scores do not impact the acquisition of material rewards such as gaining admittance to good universities. Additionally, a very high degree of competitive motivation might interfere with the suppression of “intuitive,” “System 1” responses that “spring quickly to mind,” (Frederick, 2005) lowering the scores of highly motivated subjects. This is contrary to the prediction of Garcia and Tor.<br /><br />Given the ability to make diametrically opposed predictions regarding high competitive motivation and actual performance, it is difficult to place much validity in the results of studies 1 and 2 on their own. Fortunately subsequent studies do measure motivation more directly through subject self reporting. However, self reporting has its own set of pitfalls. Subjects may not truly know their own level of motivation and/or may choose levels they believe are socially appropriate or what the researcher wants to see. Studies 3, 4, and 5 would be much stronger if the authors had a more direct way of measuring competitive motivation such as effort invested in actually performing a task or perhaps willingness to make actual payments to eliminate other competitors from consideration.<br /><br />In assessing the findings one must also remember that imagined N and actual N are not equivalent. Subjects physically running a road race in a crowd of 500 people that they can see, smell, and bump into might produce different levels of motivation than an imagined nameless and faceless hoard of 500 from Study 3. This fact may currently limit the N-Effect’s ability to extend its claims beyond imagined competition to real competition. While Studies 1 a and b do examine subjects who are physically in a room facing actual other “competitors,” as previously noted these studies measure actual performance and not motivation.<br /><br />The Facebook task used in Study 5 may be inappropriate for a controlled examination of competitive motivation derived from social comparison. Inherent to Facebook is the concept of “friending” and social display of popularity. The Facebook friending task could work as a social comparison prime, especially for undergraduate subjects. While this may affect all subject groups equally and thus be a non-factor when comparing groups to each other, it is also possible that such priming could impact the results in unexpected ways, especially if it was not recognized by the researchers at the design stage. A different task should have been chosen for this study.<br /><br /><em><strong><span style="color:#ffff33;">Next Installment: Alternative Explanations for N-Effect Results</span></strong><br /></em><br /><span style="font-size:78%;">Frederick, S. (2005). Cognitive reflection and decision making. Journal of Economic Perspectives, 19, 25-42.</span></div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-19210798070823727662009-02-18T17:58:00.000-08:002009-02-18T18:21:40.713-08:00ID the Elasticity<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeLDNBih4y8lQ2FCPwrWumeQA1rVRTZ7KdWo681aAOPZC9fd8H9kae7hzEgAcBE1dcOohVRiFwUV9FILS7r0Vd4gg_yFMfOHXALljTOhtEkNHnd7tKQ58podHpmXDM3G3pqwPSU7z3jKNy/s1600-h/funhouse+mirror.jpg"><img id="BLOGGER_PHOTO_ID_5304323230322549570" style="FLOAT: right; MARGIN: 0px 0px 10px 10px; WIDTH: 256px; CURSOR: hand; HEIGHT: 320px" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeLDNBih4y8lQ2FCPwrWumeQA1rVRTZ7KdWo681aAOPZC9fd8H9kae7hzEgAcBE1dcOohVRiFwUV9FILS7r0Vd4gg_yFMfOHXALljTOhtEkNHnd7tKQ58podHpmXDM3G3pqwPSU7z3jKNy/s320/funhouse+mirror.jpg" border="0" /></a><br /><div>Imagine that you were asked to choose between two movies recommended by Netflix. For the purposes of this exercise, also imagine that you are a cheapskate like me and have only subscribed to the “one at a time” movie rental option so you can indeed only choose one movie to watch next. In this scenario, you will not learn the title of the movie before choosing but you will learn bit by bit about three key features for each movie, one feature at a time. First you learn the names of the star actors and actresses for each film. Then, after a few seconds, you learn who directed each film. Finally you are told each movie’s genre. You do not have to make a choice until you have heard all of the information. </div><br /><div><br />Now, does the order in which the feature information is presented make any difference? For instance, if instead you were told first about the genre, then the actors, and then the director would you make a different choice of film than in the original scenario? Could you find yourself spending the weekend with The Wedding Crashers instead of Apocalypse Now simply because the order changed? Normative decision theory holds that order doesn’t matter. However, research into <a href="http://forum.johnson.cornell.edu/faculty/russo/The%20Distortion%20of%20Information.pdf">Information Distortion</a> by <a href="http://www.johnson.cornell.edu/faculty/profiles/Russo/">J. Edward Russo</a>, <a href="http://www.kellogg.northwestern.edu/Faculty/Directory/Medvec_Victoria.aspx">Victoria Medvec</a>, and others suggests that, in practice, order matters a great deal to decision makers. It has long been known that people irrationally seek out and interpret information in ways to favor a decision that has already been made. This happens for a variety of reasons including cognitive dissonance reduction. However, Information Distortion (ID) takes place much earlier, before the decision has actually been made which makes it all the more fascinating. ID theory suggests that someone just has to form an initial preference for one option over another and thereafter any new information he or she receives gets distorted to favor that initial preference. Like when standing in front of a funhouse mirror, with ID the new facts themselves look materially different. So in our movie example, if the first thing learned was the directors, David Dobkin and Francis Ford Coppola respectively, you would be more likely to interpret further information with a bias toward your initial preference based only on director (hopefully Coppola). If instead you first considered “drama or comedy” and your initial preference tilted toward comedy, then when you later learned about the directors you might suddenly have a new found respect for David Dokin and have a greater chance of watching Vince Vaughn get crushed in backyard football and tied to the bed posts.</div><br /><div><br />Why does ID happen? Russo along with collaborators <a href="http://www.fuqua.duke.edu/faculty_research/faculty_directory/carlson/">Kurt Carlson</a>, <a href="http://php.smeal.psu.edu/smeal/dirbio/displayBio.php?t_user_id=mgm16">Margaret Meloy</a>, and <a href="http://www.johnson.cornell.edu/phd/profiles/vitas/Yong_vita.pdf">Kevyn Yong</a> put forth an answer in their 2008 <a href="http://forum.johnson.cornell.edu/faculty/russo/The%20Goal%20of%20Consistency%20as%20a%20Cause%20of%20Information%20Distortion.pdf">paper</a> published in the <a href="http://www.apa.org/journals/xge/">Journal of Experimental Psychology</a>. Their research examines three possible goals as causes of ID: conserving effort, creating separation (making the choices more distinct), and maintaining consistency. Over the course of three experiments they conclude that consistency is the most likely explanation. However, it should be noted that these experiments tested a limited universe of three theories. There could be other significant factors in ID.</div><br /><div><br />Before considering additional factors it is worth making a few observations about the theories chosen for testing by Russo and colleagues. Of the theories, only consistency has a strong social element. I would guess if subjects were asked to explicitly rank their goals by importance that consistency would be ranked highest. Additionally, the goal of conserving effort would be associated with making a quick decision. Quick decisions are only made once, early in the process, and then it is over. So in this case subjects have limited opportunity to express their goal to experimenters as a "conserving effort" subject would presumably make their decision and then try to just ignore further information. On the other hand, a "consistency driven" subject must express their goal each time he or she faces new information. It may be difficult to compare this two goals using the same experimental design.</div><br /><div><br />Now, a few alternative explanations do come to mind. Perhaps subjects experience a form of “trial choice” and start “rooting” for their choice to be right. With this theory, although subject are not yet locked into a decision, they are trying it on for size and simulating the experience of having made a final choice. If this alternative theory is true then there may be very little new at all going on with ID. Instead the phenomenon would be a mere extension of the classic distortion theories to trial as well as final choices. Another, less powerful, explanation lies in subject interpretation of “authoritative intent.” Chefs creating menus, professors designing word problems, and even Netflix recommenders usually present information in an intentional order and that order often follows the rule of most important information first. Subjects may be relying too much on this typical pattern.</div><br /><div><br />A final alternative challenges not the goal but the mechanism of ID, elements of which are suggested in Christopher Hsee’s theory of <a href="http://www.prospecttheory.net/2008/09/justifying-unjustifiable.html">Elastic Justification</a>. Information Distortion in its very name implies a change in the decision maker’s interpretation of the facts themselves. Movie directors are somehow judged more tallented, when considering a prospective date five foot two is somehow a little taller, etc. However, it is possible that something else is going on. Sure subject interpretation of a new fact may change a little yet the weight given in the final decision to the importance of that fact could be altered more dramatically. You might still think Owen Wilson is brilliant but the importance of actor quality in movie selection could be reduced when you learn the names of the directors first. ID cannot be entirely ruled out because this alternative does not explain all of the results in the paper; however, Russo’s experiments do not test the weighting element possibility. <em>(Note that ID may provide an alternative explanation for Elastic Justification instead of the other way around).</em> </div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-25189403746243366972009-01-29T18:56:00.000-08:002009-02-19T13:19:06.705-08:00Choice Blindness – What are we forgetting?<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSzZA3TdcYq4_eDvXyKQF-CHG0TOgkczOW-nRRpP6mTaZkx6BtNs4s58f4ip6l-e07D66Npa9htu-XBpMW2lEwFceFPeBA5u8qqhotuRfjIdC0SCvZ_pGBbYpAcbPkVVA_ZUOwdAwY-GxB/s1600-h/choice+blind.jpg"><img id="BLOGGER_PHOTO_ID_5297101201573636930" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 200px; CURSOR: hand; HEIGHT: 300px; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSzZA3TdcYq4_eDvXyKQF-CHG0TOgkczOW-nRRpP6mTaZkx6BtNs4s58f4ip6l-e07D66Npa9htu-XBpMW2lEwFceFPeBA5u8qqhotuRfjIdC0SCvZ_pGBbYpAcbPkVVA_ZUOwdAwY-GxB/s400/choice+blind.jpg" border="0" /></a><br /><p align="center"><span style="font-size:78%;">Photographer: Mark Hanlon<br /></span></p><p>MIT is currently in its Independent Activities Period (<a href="http://web.mit.edu/iap/">IAP</a>). Each January students take a break from regular class work and experience a variety of mini courses ranging from weighty subjects like “Energy Storage Solutions” to just for fun topics like “Build Your Own Electric Guitar.” IAP is a great way to brush up on skills or try something completely new. Fortunately for me the non-credit courses are open to alumni so I’ve spent my week immersed in “Statistics and Visualization for Data Analysis and Inference” (very useful but not much fun) and “Philosophy of Cognitive Science – Choose your own adventure!” (esoteric but mind-bendingly interesting). </p><p><br />Yesterday in the cognitive philosophy course we covered research by <a href="http://www.lucs.lu.se/Petter.Johansson/">Petter Johansson</a> and his colleagues from <a href="http://www.lucs.lu.se/">Lund University</a>. In a 2005 Science paper entitled “<a href="http://www.sciencemag.org/cgi/reprint/310/5745/116.pdf">Failure to Detect Mismatches between Intention and Outcome in a Simple Decision Task</a>,” the authors present a series of experiments which lead to a construct Johansson calls <a href="http://en.wikipedia.org/wiki/Choice_blindness">Choice Blindness</a>. As stated in the paper’s introduction:</p><p><br /><em>“A fundamental assumption of theories of decision-making is that we detect mismatches between intention and outcome, adjust our behavior in the face of error, and adapt to changing circumstances. Is this always the case? We investigated the relation between intention, choice, and introspection. Participants made choices between presented face pairs on the basis of attractiveness, while we covertly manipulated the relationship between choice and outcome that they experienced. Participants failed to notice conspicuous mismatches between their intended choice and the outcome they were presented with, while nevertheless offering introspectively derived reasons for why they chose the way they did. We call this effect choice blindness.”<br /></em></p><p>It is worth taking a more detailed look at the experiment to grasp the full magnitude of this surprising result. Subjects (male and female) were presented with pictures of two different female faces at a time on two separate cards. They were then were asked to point to the picture they found the most attractive. In the manipulation condition, the experimenter performed a slight of hand card trick and presented back to the subject the card they did not pick and asked them to justify their choice. In most cases these subjects proceeded to justify why they choose this other woman as if it was the card they had intended to choose all along, completely unaware of the fact that they DID NOT choose this picture. Amazing!<br /></p><p>Why does this happen? The authors suggest that subjects fail in introspection. Johansson believes that, at the time of outcome, subjects no longer have access to their original intentions. A “fundamental assumption of theories of decision making [that] intentions and outcomes form a tight loop” is somehow broken.</p><p><br />There may be another, somewhat complementary, explanation in “motivated forgetting.” Motivated forgetting suggests that given a strong motive and suitable vehicle for belief, people are capable of forgetting information that does not suit their motive and falsely remembering alternative “facts” that do. Note that motivated forgetting involves the subject authentically forgetting the true facts and not just conveniently pretending to forget them for a social/external benefit. In the case of the card experiment, subject desire for consistency may be a strong enough motive to cause subjects to forget their original intent and remember it as it’s opposite.If motivated forgetting is playing a role one might predict that subjects faced with a different motive would not exhibit choice blindness. The following experimental idea could use some work but what if subjects were evaluating and choosing between two race horses before a race at the betting window. The experimenter would then place a bet on the behalf of a subject based on the subject’s choice. In the manipulation case experimenters would ask for a bet, making sure the subject overheard them, to be placed the opposite horse to the one the subject chose. If motivated forgetting is playing a role, I would predict that when the false choice horse won subjects would not remember that this horse was not their original choice and be able to explain the reasons they “chose” this false horse much like in the Johansson experiment. An important difference would arise when the false choice horse lost and the true choice horse won. In this case subjects may remember having actually chosen the winning horse as their motive is now different. This second result would not be predicted with choice blindness.</p>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-23032678705437036282009-01-07T08:18:00.000-08:002009-01-07T09:09:32.327-08:00Scapegoat the VisualI have a meeting with Harvard Professor <a href="http://www.people.hbs.edu/mbazerman/">Max Bazerman</a> today. As most readers will know, Professor Bazerman is world renowned for his research on negotiations and judgment in managerial decision making. He also studies bounded awareness and ethicality, societal decision making, and want/should conflicts. Along with collaborators <a href="http://public.tepper.cmu.edu/facultydirectory/FacultyDirectoryProfile.aspx?id=101">Don Moore</a>, <a href="http://www.unc.edu/~ginof/">Francesca Gino</a>, and <a href="http://www.people.hbs.edu/mbazerman/Max">Lisa Shu</a>, Professor Bazerman’s recent research dives into several aspects of “Moral Luck” discussed previously. In preparation for the meeting I created the following visual to better explain some of my thinking on the topic. I am happy to share it here on <a href="http://www.prospecttheory.net/">http://www.prospecttheory.net/</a>.<br /><div><br /><br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWfbYlVWMaTJu_x2gdQVFGMiKq3fUeVvFnBCEE3Hu8CpwvNiV12YbP16XYldmwR_vSut7WuuJVQ4_-g6u-658BvVe29ujnHp5J8ZNk87dfYP81HObf_CwAndQQzi2zHm9OMKWixSDBj718/s1600-h/Scapegoat+Visual.jpg"><img id="BLOGGER_PHOTO_ID_5288599511275711970" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 300px; TEXT-ALIGN: center" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWfbYlVWMaTJu_x2gdQVFGMiKq3fUeVvFnBCEE3Hu8CpwvNiV12YbP16XYldmwR_vSut7WuuJVQ4_-g6u-658BvVe29ujnHp5J8ZNk87dfYP81HObf_CwAndQQzi2zHm9OMKWixSDBj718/s400/Scapegoat+Visual.jpg" border="0" /></a><br /><div></div></div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-72485924888973347202009-01-03T17:21:00.000-08:002009-01-06T07:59:32.395-08:00BITH: Buying Behavior Part Two<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqz-BZj5SLXSaOH7Jwpu7XC143n-sJFDJWLQLou-mqPr2UcnRsRQTzL4R3pD4qsNfnUfLipHhr5lrrBx5oi9QhyCYdAxQUhIqpRFaolLB8-Uwj3s7O-UIbABOtn0dQBhEvpnUaDVzssuI4/s1600-h/weighingscaleii.jpg"><img id="BLOGGER_PHOTO_ID_5287243367472551154" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 194px; CURSOR: hand; HEIGHT: 200px" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqz-BZj5SLXSaOH7Jwpu7XC143n-sJFDJWLQLou-mqPr2UcnRsRQTzL4R3pD4qsNfnUfLipHhr5lrrBx5oi9QhyCYdAxQUhIqpRFaolLB8-Uwj3s7O-UIbABOtn0dQBhEvpnUaDVzssuI4/s200/weighingscaleii.jpg" border="0" /></a><br /><div>This year’s Society for Judgment and Decision Making conference featured a symposium organized by CMU’s Leslie John and Jessica Wisdom on “Behavioral Economics and Health.” One of the papers presented in this symposium (by Ms. John) just became Behavior in the Headlines (BITH). The study, “Financial Incentive–Based Approaches for Weight Loss,” was recently published in JAMA and it is starting to be picked up by the popular press including the <a href="http://post-gazette.com/pg/08345/934008-114.stm">Pittsburgh Post-Gazette</a>. The <a href="http://www.cmu.edu/homepage/society/2008/fall/dieting-for-dollars.shtml">CMU website</a> sums up the results quite nicely:<br /><br /><em>“[The study] …placed adult dieters into three groups. One group entered a daily lottery and received winnings only if they reached their targeted weight levels. A second group invested their own money, but lost it if they didn't meet their goals. The third group was given no monetary incentive at all.<br /><br />The goal: lose a pound a week over 16 weeks.<br /><br />The results were striking. The mean weight loss for both incentive groups was more than 13 pounds — with about half the participants reaching the 16-pound goal. But the mean weight loss for the control group was only 4 pounds.”</em><br /><br />Followers of this blog will note that this is <a href="http://www.prospecttheory.net/2008/10/bith-buying-behavior.html">not the first time</a> that schemes using financial rewards to elicit good behavior and their potential pitfalls have been discussed. I am curious as to how these results square with <a href="http://rady.ucsd.edu/faculty/directory/gneezy/">Uri Gneezy</a> and <a href="http://www.econ.umn.edu/faculty/arust/">Aldo Rustichini’s</a> <a href="http://rady.ucsd.edu/faculty/directory/gneezy/docs/fine.pdf">study</a> mentioned in previous posts on an undesirable practice of day care center parents. In their study, when financial incentives were used to incent good behavior it backfired in an irreversible way. <a href="http://www.fuqua.duke.edu/faculty_research/faculty_directory/ariely/">Dan Ariely’s</a> explanation claims that when incentives are taken from the domain of social exchange to the domain of economic exchange the process cannot easily be reversed. This would suggest that when the financial incentive is removed in the weight loss study, subjects should whiplash back to bad behavior, as they have no further economic motivation to continue. What happened?<br /><br />During the next seven months the subjects in all groups did gain weight back but apparently not as much weight as they had lost. To me this result is inconclusive. Logically, if a lot of weight was lost it will require that a lot of weight to be added back, which simply takes time. Perhaps seven months is not long enough. How rapid was the rate of weight regain by subject group? Are the high weight loss subjects gaining back at a faster rate? Will subjects eventually overshoot their old weight and end up heavier and worse off than they were before? The next layer of questions involves whether or not it was the financial incentive itself or the focusing/scoring/gaming process (beyond mere weigh-ins) that caused subjects to lose weight. In summary this is a great study attacking an important problem while opening up a number of good new research questions. I’m "hungry" for more papers from this world class group of collaborators.<br /><br />Co-Authors: Kevin G. Volpp, MD, PhD; Leslie K. John, MS; Andrea B. Troxel, ScD; Laurie Norton, MA; Jennifer Fassbender, MS; <a href="http://sds.hss.cmu.edu/src/faculty/loewenstein.php">George Loewenstein</a>, PhD</div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com1tag:blogger.com,1999:blog-8880605103116805068.post-89710421083908570842008-12-30T12:39:00.000-08:002008-12-30T12:45:21.769-08:00Mechanical Research<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSdM0nyiub02KE4HriMzTjvyufUJN2Q-_xtYKCfQiKyy5rFNXGmRXKXuKowceddYgIycKCoLUlDkIHYauNuzjN8wX2jAt5Eoh6mdmdh5gyvWzLIR7SOZscJ0ccNMHVi_gyiNU-NKeOqyNu/s1600-h/Turk-engraving5.jpg"><img id="BLOGGER_PHOTO_ID_5285686269491611330" style="FLOAT: right; MARGIN: 0px 0px 10px 10px; WIDTH: 200px; CURSOR: hand; HEIGHT: 171px" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSdM0nyiub02KE4HriMzTjvyufUJN2Q-_xtYKCfQiKyy5rFNXGmRXKXuKowceddYgIycKCoLUlDkIHYauNuzjN8wX2jAt5Eoh6mdmdh5gyvWzLIR7SOZscJ0ccNMHVi_gyiNU-NKeOqyNu/s200/Turk-engraving5.jpg" border="0" /></a><br /><div>If the research community at large is not already well aware of it, I recommend taking a moment to check out Amazon’s <a href="https://www.mturk.com/">Mechanical Turk</a> for its data collection potential. Like the historical chess playing “machine” <a href="http://en.wikipedia.org/wiki/The_Turk">Turk</a> of its namesake, the site works by harnessing people behind the scenes to do bite sized “Human Intelligence Tasks” or HITs. HITs are small tasks still best performed by human rather than machine intelligence and include tagging photos with the proper labels, eliminating duplicate entries from catalogs, writing reviews, and, most importantly for academic researchers, filling out surveys.<br /><br />As an example, I just executed a trial run of Mechanical Turk for a study I’m working on regarding curiosity for inherently positive or negative information and the circumstances in which subjects are better able to control the satisfaction of their curiosity. I created a HIT out of the control version of the two different curiosity questionnaires and asked that the survey be completed by up to 100 unique subjects for a reward of 25 cents. In less than four hours from submitting the HIT I have 100 responses at a cost of $27.50 (the site charges a small fee for use). Additionally, Mechanical Turk allows you to reject and not compensate any responders who did not complete their HIT satisfactorily. So, as a quality check I mixed in a question that helped ensure the responders were paying attention. A vast majority of the participants correctly answered a question very similar to the following: “If one hundred thousand and nine is greater than nine thousand enter ‘Q’ otherwise enter ‘T’.”<br /><br />Though a quick, powerful, and cheap way to collect human subject data, Mechanical Turk does appear to have some major limitations. Most importantly I have yet to figure out a way to bar past respondents from answering subsequent altered versions of surveys used in between subject study designs, though as each respondent has a unique ID it is possible for repeat participants to be eliminated after the fact. Additionally, the baseline demographics of the typical Mechanical Turk worker in the subject pool and the self-selected participant factor may require special statistical treatment. Finally, the interface for creating surveys is rather limited so HTML skills are required.<br /><br />Even with its limitations, at the very least Mechanical Turk seems like a great vehicle to do pilot studies. I plan to use it next on an outcome bias study to see if there is any merit in pursuing research on an alternative theory to <a href="http://www.prospecttheory.net/search/label/Moral%20Luck">Moral Luck</a> written about previously in this blog. </div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-88285074880803806402008-11-20T10:02:00.000-08:002008-11-20T10:08:21.006-08:00Towelie Logic<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDJYdTZ4U4VC3lmDSIx-nCrxbJm_8ftDFwUf-qP0qDVCRORQ7G6tRghKlfQHFHDrwryZc1YKKZ-fVbVTawkqlsjPbhRQ0vKMRnK8_SqpDRp0AJvC6-jIUgiRhvEjJCUidyWGA67N3mDEU9/s1600-h/towelie.jpg"><img id="BLOGGER_PHOTO_ID_5270801915281663650" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 153px; CURSOR: hand; HEIGHT: 200px" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjDJYdTZ4U4VC3lmDSIx-nCrxbJm_8ftDFwUf-qP0qDVCRORQ7G6tRghKlfQHFHDrwryZc1YKKZ-fVbVTawkqlsjPbhRQ0vKMRnK8_SqpDRp0AJvC6-jIUgiRhvEjJCUidyWGA67N3mDEU9/s200/towelie.jpg" border="0" /></a><br /><div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg04ztWWnBr_TwHABh7yQD7UV4S6aU25W3YPjMANOYQ2y0ZF6ZiL4mCG3rSUmmxc4btrBUz1ckNzCf-jPeWDBQ5KVrrh71xDaW4P3MdR8TueNvsCzKvTXtzbHRIhb9j1GZpv86nzB_Vuwfl/s1600-h/towelie.jpg"></a><br /><br /><div>The <a href="http://www.sjdm.org/">Society for Judgment and Decision Making</a> held its annual conference this past weekend in beautiful (but cold) downtown Chicago. Roughly 500 researchers from around the world gathered to discuss the latest findings in the JDM realm. This was my second conference and it did not disappoint.<br /><br />One talk that caught my attention was entitled “Will a Rose Smell as Sweet by Another Name? Specification-Seeking in Decision-Making.” The talk was presented by Christopher Hsee (University of Chicago Graduate School of Business) and Yang Yang (Shanghai Jiao Tong University) based on their <a href="http://faculty.chicagogsb.edu/christopher.hsee/vita/Papers/SpecificationSeeking.pdf">forthcoming paper</a> in Journal of Consumer Research. As described in their abstract:<br /><br /><em>“We offer a framework about when and how specifications (e.g., megapixels of a camera, number of airbags in a massage chair) influence consumer preferences and report five studies that test the framework. Studies 1-3 show that even when consumers can directly experience the relevant products and the specifications carry little or no new information, their preference is still influenced by specifications, including specifications that are self-generated and by definition spurious, and specifications that the respondents themselves deem uninformative. Studies 4 and 5 show that relative to choice, hedonic preference (liking) is more stable and less influenced by specifications.”<br /></em><br />I provide an overview of the towel study from the paper as well as my take on the findings in last night’s Hightechfever.tv broadcast. </div><div></div><div></div></div><br /><br /><br /><object height="344" width="425"><param name="movie" value="http://www.youtube.com/v/DUYx_Ce4pZw&hl=en&fs=1"><param name="allowFullScreen" value="true"><param name="allowscriptaccess" value="always"><embed src="http://www.youtube.com/v/DUYx_Ce4pZw&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com1tag:blogger.com,1999:blog-8880605103116805068.post-31605646520006796712008-11-06T08:25:00.001-08:002008-11-06T08:33:37.177-08:00Je Regrette<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhe-NlOvNlvo8nu-Q4SjwHvW3okCTg_uoNa44lGr8Byg9_NbOiWGoiqCyY4FLb0QrOUMttWxf9IHDWeN9ZfBCEHULVgBXkEQXU9HEIiuC0yqNZ89BZNs-xDOOp_R_Elhs5cxTD_K7a5yS4m/s1600-h/greyhoundracing.jpg"><img id="BLOGGER_PHOTO_ID_5265581802479929026" style="FLOAT: right; MARGIN: 0px 0px 10px 10px; WIDTH: 200px; CURSOR: hand; HEIGHT: 140px" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhe-NlOvNlvo8nu-Q4SjwHvW3okCTg_uoNa44lGr8Byg9_NbOiWGoiqCyY4FLb0QrOUMttWxf9IHDWeN9ZfBCEHULVgBXkEQXU9HEIiuC0yqNZ89BZNs-xDOOp_R_Elhs5cxTD_K7a5yS4m/s200/greyhoundracing.jpg" border="0" /></a><br /><div><span class="blsp-spelling-error" id="SPELLING_ERROR_0">ProspectTheory</span>.net<a href="http://www.prospecttheory.net/"></a> is not a political or self-help forum; however, I need to confess the regret I feel over a recent vote. Fortunately my regret is true to theme and related to judgment and decision-making.<br /><br />On November 4<span class="blsp-spelling-error" id="SPELLING_ERROR_1">th</span> I voted on a relatively minor <a href="http://www.sec.state.ma.us/Ele/elepip08/pip083.htm">ballot issue</a> here in Massachusetts to ban the practice of greyhound dog racing. I knew the issue was on the ballot along with two others of greater importance. This is unusual for me but I entirely forgot about the measure and entered the balloting booth without already having made a decision on the greyhound issue. I was in a hurry so made a snap decision to vote in favor of banning the practice.<br /><br />This was a simple yes or no question but as a <span class="blsp-spelling-error" id="SPELLING_ERROR_2">JDM</span> geek I want to understand why I voted this way. I made a quick decision in the heat of moment. Was I using my hot/emotional system and my rational side would have arrived at a different answer, hence the feeling of regret? Quite possibly. When I voted yes I was thinking of the practice of dog racing itself. I visualized caged dogs, elderly men gambling, smoking, and ticket stub litter and it all seemed primitive and sad. However, I believe the greatest contributor to the decision was my internal framing of the question and my related starting point anchor. In the voting booth the question I asked myself was “do I disapprove of this practice?” I could have formed a different question which was actually much closer to the true one, “should the freedom of others be restricted in this domain?” My baseline/default answers to these two questions are quite different, even in the abstract. Do I disapprove of a questionable practice? Yes. Do I want to restrict freedoms? No. Even if I managed to ask myself both questions, the answer to the question I started with could serve as a powerful anchor and determine the ultimate outcome of the decision.<br /><br />I am sure that politicos and partisans are well aware of this effect and use it to their advantage. Here we have another argument for a Nudge like <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=405940">Libertarian Paternalism</a> when it comes to designing our ballots. Voting only works if we are asking the right questions.</div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-27902034379964517172008-11-04T15:24:00.000-08:002008-11-06T11:25:30.086-08:00A Curious EducationI am currently reading a broad survey paper by <a href="http://sds.hss.cmu.edu/src/faculty/loewenstein.php">George Loewenstein</a> as background for a possible curiosity experiment (“The Psychology of Curiosity: A Review and Reinterpretation,” Psychological Bulletin 1994. Vol. 116, No. 1.75-98). In the paper, there is a comment that relates to my recent “<a href="http://www.prospecttheory.net/2008/10/bith-buying-behavior.html">Buying Behavior</a>” posting and provides credence to Harvard Economics Professor Roland Fryer’s idea to motivate scholastic achievement by paying students for good behavior. My previous post urged caution.<br /><br />In discussing the societal implications of his information-gap theory of curiosity, which surmises that curiosity arises in the distance between “what one knows and what one wants to know,” Loewenstein states:<br /><br /><em>“The information-gap perspective has significant implications for education. Educators know much more about educating motivated students than they do about motivating them in the first place. As Engelhard and Monsaas (1988, p. 22) stated, ‘historically, education research has focused primarily on the cognitive outcomes of schooling’ rather than on motivational factors. The theoretical framework proposed here has several implications for curiosity stimulation in educational settings. First, it implies that curiosity requires a preexisting knowledge base. Simply encouraging students to ask questions—a technique often prescribed in the pedagogical literature—will not, in this view, go very far toward stimulating curiosity. To induce curiosity about a particular topic, it may be necessary to ‘prime the pump’ to stimulate information acquisition in the initial absence of curiosity. The new research showing that extrinsic rewards do not quell intrinsic motivation suggests that such rewards may be able to serve this function without drastically negative side effects.”<br /></em><br />So there is hope that the extrinsically incented Capital Gains approach advocated by Fryer will “prime the pump” on learning and curiosity will take care of the rest without triggering the adverse effects of entering into economic verses social exchange.Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-14154127487582612492008-10-25T15:54:00.000-07:002008-11-06T11:23:53.050-08:00BITH: Buying Behavior<span style="font-size:78%;color:#ffff00;"><a href="http://carolleones.com/">(Carol Leone Childcare)</a></span> <img id="BLOGGER_PHOTO_ID_5261577837763161442" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 200px; CURSOR: hand; HEIGHT: 151px" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijDg43pQ-YoSidU9vlhcAfE1niUYc2l6TF5Rf6ALqZojDgRn2DO-Jjmgi1V7utrF50t2LOYqhIzMlnqGXBVjMOSLTxciKAlaeXMXhUzLXeNuKZejuRCYZU1iLhBMHiEOUOmOLbTCbbh5RO/s200/daycare.jpg" border="0" /><br /><div align="left"></div><div align="left">Behavior in the Headlines: Harvard Economics Professor <a href="http://www.economics.harvard.edu/faculty/fryer">Roland Fryer</a> has an idea to boost performance in our failing schools – pay the students. A new program called <a href="http://capitalgainsprogram.com/">Capital Gains</a> is being piloted in the Washington DC area and it is paying students up to $1,500 for good performance in a variety of areas including testing and attendance. The thinking behind the program is that better incentives will encourage students to exhibit better behavior, leading them eventually to academic success. There are no hard data yet on the effectiveness of the approach so the program is currently being run as an experiment. A short movie on the DC pilot can be viewed <a href="http://download.gannett.edgesuite.net/wusa/news/091608_phaschools5p_wusa.mov">here.</a><br /><br />Fryer’s motive is laudable and his approach has merit; however, the DC experiment is not without risk. By providing financial incentives, Capital Gains is moving the expectation for good scholastic performance from the domain of social exchange to the domain of economic exchange. Such a transition may produce results in the opposite direction intended and the change caused by the program may be difficult to reverse.<br /><br />Take for example <a href="http://rady.ucsd.edu/faculty/directory/gneezy/">Uri Gneezy</a> and <a href="http://www.econ.umn.edu/faculty/arust/">Aldo Rustichini</a>’s study on an undesirable practice of day care center parents. In their resulting paper, “<a href="http://rady.ucsd.edu/faculty/directory/gneezy/docs/fine.pdf">A Fine is a Price</a>,” Gneezy and Rustichini describe the over-time hours and other difficulties for day care center staff caused by late child pick-ups. Day care center management imposed a financial penalty on tardy patents to discourage the practice; however, management was in for a surprise. Late pick-ups actually increased substantially after the fine policy was imposed. Further, when the day care centers later tried to remove the fine, the occurrence of late pick-ups remained at its new, higher level. One explanation for these results, also championed by <a href="http://www.fuqua.duke.edu/faculty_research/faculty_directory/ariely/">Dan Ariely</a> in his new book <a href="http://www.amazon.com/exec/obidos/ASIN/006135323X/bookstorenow30-20">Predictably Irrational</a>, is that parents no longer felt obligated by social contract to pick-up their children on time. The guilt of imposing a social difficulty was replaced by a specific economic value. If the fine price was lower than the value parents placed on the extra effort needed to get to the day care on time, parents simply showed up late and paid the fine. Once in this economic realm it was difficult to reverse the new framing. Dropping the fine merely gave parents a new fine “price” of zero dollars.<br /><br />The study discussed was focused on a penalty verses an incentive payment so the results may not be directly applicable. However, in the case of Capital Gains, it is possible that students will not value the incentive money as much as they had previously valued the hopeful expectations of their parents or even their own sense of self respect. After students are in an economic exchange mindset they will understand the benefit of good behavior in explicit financial terms. If a student decides that the extra effort is not worth $1,500, she may decide to put in even less effort than she did prior to the program. If students remain in an economic exchange mindset, a later need to remove the financial incentive could leave students even less motivated than they were before the incentive system.<br /><br />Though there are risks, I am happy to see programs like Capital Gains attempting to improve our nation’s educational system. The current system is failing our children, especially those from disadvantaged backgrounds. It is time to try something new. Thank you Professor Fryer.</div><br /><div align="left"></div><br /><div align="left"></div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com1tag:blogger.com,1999:blog-8880605103116805068.post-45689306175389676262008-10-18T23:30:00.000-07:002008-10-19T11:41:15.655-07:00Competitions as Commitment Devices<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgG3MMsz-dl2SU9vKTd0c7ZcvehM5v2KdJDAC0J0NY-lL34zKdIhzjfos_0SO-Dmff_NykcpYKfR_KkhD3beU4ZfRkyQEUqgZm3ySTxBxo1cP3VdI6MO0Eqomx9YhG362T4TnEyAp3FWyKb/s1600-h/elevator-original.jpg"><img id="BLOGGER_PHOTO_ID_5258935306330940754" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; CURSOR: hand" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgG3MMsz-dl2SU9vKTd0c7ZcvehM5v2KdJDAC0J0NY-lL34zKdIhzjfos_0SO-Dmff_NykcpYKfR_KkhD3beU4ZfRkyQEUqgZm3ySTxBxo1cP3VdI6MO0Eqomx9YhG362T4TnEyAp3FWyKb/s200/elevator-original.jpg" border="0" /></a><br /><div>Today I had the privilege of judging the first phase of MIT’s famous <a href="http://www.mit100k.org/epc/">$100K Business Plan competition</a>. My <a href="http://www.mit100k.org/epc/judges.php">fellow judges</a> and I watched approximately 30 participants give their best 60-second elevator pitch to sell their business idea. Our contestants were all part of the “development track” which consists of businesses that address global issues such as poverty or the environment. Participants covered an impressive variety of quality ideas and technologies including low cost/non-electrical lighting, unique bio-fuels, medical diagnostics that cost 10 cents and can be mailed to the lab on a post card, solar cooking, and mesh wireless networks that overcome last mile issues in rural areas.<br /><br />I have a strong personal interest in developmental entrepreneurship. In my day job I was a founding member of the IBM World Development Initiative and the leader behind its successful <a href="http://www-03.ibm.com/industries/government/doc/content/news/pressrelease/2494966109.html">Global ThinkPlace Challenge</a> to brainstorm sustainable solutions to African poverty. I was also a development track $100K participant myself (although back then it was only the $50K). My “<a href="http://web.mit.edu/ideas/www/pastprojects_0405winners.htm#wider">Wider Reach</a>” team, consisting of fellow Sloan MBAs Brian Roughan, Armina Karapetyan, Kamal Quadir, and Joe Zeff along with MIT Media Lab PhD student Jose Espinosa, was the winner of the $2,000 IDEAS Award, the $1K development track, and a semi-finalist in the overall $50K competition. We designed a mobile phone accessible marketplace for Bangladesh. Kamal Quadir stuck with the plan and made it a reality. The company is now called <a href="http://corp.cellbazaar.com/">CellBazaar</a> and its success has been widely covered by the media including <a href="http://corp.cellbazaar.com/images/Online/WSJ_CB_080908.pdf">The Wall Street Journal</a> and <a href="http://corp.cellbazaar.com/Eco2.html">The Economist</a>.<br /><br />Kamal’s story illustrates the power of business plan competitions. Kamal went to MIT with the intent of landing a job in finance. Instead he is an entrepreneur helping thousand of impoverished farmers sell their crops more efficiently. How did this happen? While the organizers of business plan competitions may think they are creating entrepreneurs by providing a little financing and exposure, I believe that these competitions are actually serving as <a href="http://en.wikipedia.org/wiki/Robert_Cialdini">Cialdini</a> commitment devices.<br /><br />Business plan contestants, many of whom had no original intention of becoming entrepreneurs, make small but increasingly significant commitments to the competition. It is easy to put together a 60 second elevator pitch but next they are writing executive summaries and then complete business plans. At each stage contestants declare publicly both orally and in writing their intent to follow through with the business idea. Eventually, through the absolutely amazing power of <a href="http://en.wikipedia.org/wiki/Cognitive_dissonance">cognitive dissonance</a>, contestants feel pressure to make sense of their efforts and declarations and rationalize that they must truly want to start these businesses after all. In fact, the large prize money offered in these contests actually takes away from the cognitive dissonance effect as it provides an alternative justification to contestants. So, counter intuitively, if the $100K organizers really want to create more entrepreneurs they might consider dropping the prize money back down to the original $1K!</div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-75899605845591601262008-10-06T09:33:00.000-07:002008-10-13T09:39:16.947-07:00BITH: The Financial Crisis and Action AmbiguityBehavior in the Headlines: The stock market is down, credit flow is paralyzed, and Americans are expressing fervent outrage at “Wall Street fat cats and greed.” Constituents are demanding that any “bailout” package include stiff punishment for the financial insiders who “got rich on the path to getting us into this mess.” In the framework of the Moral Luck/Scapegoat discussion, we have a bad outcome along with a strong associated judgment that the actions of financial insiders were unethical and a high willingness to punish. Which of the two theories, Moral Luck or Scapegoat, does a better job of explaining the current situation? Our financial crisis has a unique attribute that may provide insight into these two effects – action ambiguity. In this case at least, it seems that Scapegoat prevails.<br /><br />While the market was going up (good outcome) Americans had very little interest in the activities of the masters of the universe in high finance. We are all rapidly learning more about our dire economic straights but I believe most still have very little knowledge of the specific actions undertaken by the financial insiders at which Americans are now so angered. This is a case of ethical acts in a black box. With a bad outcome people are willing to judge activity as unethical even before they understand who made what actions. Moral Luck suggests an action will look less ethical in light of a bad outcome. Here we have bad outcomes generating a desire to judge Wall Street actors as unethical before we have even identified what specific actions we are judging.<br /><br />The financial crisis is a messy real world example and not truly an action black box. Obviously some people, including key thought leaders, know more about the specific questionable actions of Wall Street insiders. However, perhaps a similar black box experimental design could be constructed. Introduce a bad outcome. Next ask subjects if someone should be responsible for the outcome. Then introduce an actor who can be logically associated with the outcome. Minimize the description of the action so that is has very little detail and phrase it in a statement that control subjects would find ethically neutral in a vacuum. “The chef mixed the cake.” I predict that given the right kind of bad outcome (one without culturally predetermined judgments of blame or innocence) subjects will assume that someone must be responsible and further be willing to assign some ethical responsibility to whatever logically connectable subject actor is introduced.Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-1739612931851584902008-10-03T16:17:00.000-07:002008-10-03T16:20:27.053-07:00The Blame Game: Desperately Seeking Scapegoat<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_cmc0kmPznPLh7mz74wRyVc1riA7RerY28wWj6oH0BDId_eJK7OPXvTcHBeaQ7QGTddnGmSoET436WDOCr-xDYSwmi_Pax6oGo4YIazKD2NSz4chWVNrepk1wAyz0nDbiQadY52DyJ5QK/s1600-h/goat-ears.jpg"><img id="BLOGGER_PHOTO_ID_5253071309170684706" style="FLOAT: right; MARGIN: 0px 0px 10px 10px; CURSOR: hand" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_cmc0kmPznPLh7mz74wRyVc1riA7RerY28wWj6oH0BDId_eJK7OPXvTcHBeaQ7QGTddnGmSoET436WDOCr-xDYSwmi_Pax6oGo4YIazKD2NSz4chWVNrepk1wAyz0nDbiQadY52DyJ5QK/s200/goat-ears.jpg" border="0" /></a><br /><p>Before moving on to other phenomena, let’s take the topic of moral luck for another spin. To begin with, please observe that there is an inherent assumption in the standard framing of the effect. The assumption is that subjects are judging the moral act itself. As demonstrated in experiments with this framing in mind, subject judges non-normatively rate an act as less moral when there is a negative outcome and more moral when there is a positive outcome -- as compared to control groups that judged the act “without an outcome.” Like an optical illusion, juxtaposing a moral act with different outcomes can make the act itself look different.<br /><br />As a mental exercise, let us see if we can turn the standard framing on its head. What if the effect is manifest not from subjects judging moral acts in the light of outcomes but instead from subjects compelled to assign blame for bad outcomes? Colloquially, this concept is found in the term “scapegoat” and in the phrase “someone is going to have to take the fall.” In this alternative “outcome as driver view,” the energy/motivation to blame/punish/label amoral is generated by the bad outcome not an aversion to the revisited morality of the precursor act.<br /><br />Consider bad outcomes in a vacuum. A sweet little old lady with no family or friends loses her poorly diversified retirement savings in the stock market and can no longer support herself. Or alternatively, a flood victim is left trapped on his roof for days and finally, succumbing to the elements and starvation, dies. With these outcomes, one of the very first questions we are compelled to ask ourselves is “who is to blame?” This seems a natural and productive response. We want to know how this unjust situation could possibly have been allowed to happen or even if someone purposefully caused it to happen. The reason we want to know who is to blame is so that we may be better able address a pressing need for support in the case of the old lady (who is responsible for her now?) or respond to similar situations in the future in the case of the flood. This motivation to assign blame exists even though, unlike in the moral luck experiments, there is no preceding moral antagonist identified. If we were to identify a possible antagonist (stockbroker, FEMA official) the motivation to find someone or something responsible would compel subjects to rate an available antagonist negatively to restore a sense of justice.<br /><br />This scapegoat framing could explain why subjects rate the immorality of actors when there are bad outcomes as more immoral when compared to the control which has “no outcome” but, on the surface, the theory does not explain why situations with positive outcomes are rated as less immoral than the control. Since this is a mental exercise and we are questioning assumptions, let us take things a step further and challenge the idea that the control scenarios truly represents no outcome. Perhaps there is an outcome and a negative one at that – uncertainty.<br /><br />Most people very much dislike uncertainty. Moral luck experimental control stimuli leave subjects with unresolved scenarios in which subjects can easily envision bad outcomes resulting. This uncertainty and threat of a bad outcome is in itself a negative outcome. An uncertainty outcome is likely less saliently negative than the certain loss of retirement funding or death from starvation in the earlier examples, however, it is still a negative outcome that may generate desire to assign blame.<br /><br />Finally, if we quickly assume that positive outcomes may generate motivation to assign positive credit or at least (and perhaps more likely) they do not generate motivation to assign blame, then the scapegoat theory would indeed explain the outcomes seen in the various moral luck experiments. The certain negative outcomes scenarios would have its antagonists rated the worst, the uncertainty outcomes rated negatively and next to worse, and the certain positive outcomes would rate best either as a positive act or at least a neutral one.<br /><br />For this scapegoat theory to have any value there should be additional hypothesis that could be generated which would predict results that differ from what might be predicted using the standard moral luck theory. Here are a few possible ones that pop to mind (some more merited than others):<br /><br /><strong>Negative Outcomes:<br /></strong><br />* When faced with a bad outcome in the absence of a moral antagonist, subjects will be willing and able to self generate a generic antagonist and assign blame. The worse the outcome the worse will be the morality rating.<br /><br />* When an antagonist is introduced, even one with weak ties of responsibility, subjects will assign near full blame to this antagonist (similar rating to the subject’s invented generic antagonist).<br /><br />* Subsequently, when a more clearly responsible second antagonist is introduced in the presence of first, subjects will reassign most of the blame to the second antagonist, improving the morality ratings of the first.<br /><br />* If morality is associated with an actor, each actor should generate their own rating independent of other actors. If blame is a fixed quantity based on the negativity of the outcome, introducing more antagonist actors will diffuse assigned blame across antagonists.<br /><br /><br /><strong>Positive Outcomes:</strong><br /><br />* When faced with a good outcome in the absence of a moral (pro/an)tagonist, subjects will have more difficultly self generating a moral actor and assigning credit in the form of a favorable morality rating.<br /><br />* When a moral actor is introduced, one with weak ties of responsibility, subjects will assign relatively neutral to positive morality ratings for this actor (similar rating to the subjects invented actor if they were able to generate one).<br /><br /><br />I believe the desire to assign blame in the case of bad outcomes is powerful, so powerful that people will even sometimes personify the natural world to have “a someone” to blame. However, I am under no real illusions. Remember that this is merely a thought exercise and that the simplest explanation is usually the best. The moral luck framing of this phenomenon has been the stuff of philosophy for a long time and the basis for experiments by some of most admired researchers in the field. I had to go through a lot of logic gymnastics to challenge the moral luck assumptions and in the process generated many new assumptions of my own to lay out the scapegoat theory. There are possibly some big holes in the theory and the predictions are still pretty loose. Additionally, there are very likely results generated by actual moral luck experiments that the scapegoat theory does not explain as I’ve only looked at the most basic findings here. Crafting an alternative explanation is enjoyable and it may be interesting to run a few experiments to test some of the new predictions. However, I predict that we will want to stick with the findings of the papers noted in the previous posting.</p>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-88742358172503800772008-10-01T18:53:00.000-07:002008-10-01T19:08:45.365-07:00Moral LuckIn philosophy, the term <a href="http://en.wikipedia.org/wiki/Moral_luck">moral luck</a> is used to describe the morality of an action judged in the light of its uncontrollable and unforeseeable consequences instead of in isolation. Such judgments are not normative. The morality of an action should not be different because of a lucky good outcome or an unfortunate bad end. Questions of moral luck are not new to philosophy but they seemed like fertile ground for experimental behavioral research. In fact I have been working on a rough experimental design to demonstrate the moral luck effect in collaboration with Columbia’s Leonard Lee.<br /><br />Here is the draft set up:<br /><br />--------------------------------------------------------<br /><br />A doctor is visited by a patient complaining of a stomach ache and other vague symptoms. The doctor has a “gut feeling” that the patient may be suffering from Disease X. Disease X is a serious condition and, left untreated, it can reduce the expected lifespan of a sufferer by up to 5 years. The majority of medical experts estimate there is only a 1 in 10,000 chance that a randomly selected person in the population will have Disease X. None of the symptoms of which the patient is complaining are associated with Disease X and two other doctors have already examined the patient and ruled out the disease. These other two doctors believe the patient has a mild form of a flu virus that should resolve itself in a few days.<br /><br />There is a test for Disease X that is 100% accurate in its diagnosis. Diagnosed early the disease can be cheaply treated with outstanding success; however, the test costs $5,000 to administer and in 2% of cases the test itself results in a serious infection, which also has negative effects on expected lifespan.<br /><br />The doctor decided to run the test based on his own judgment. [GOOD OUTCOME: The lab results from the test show that the patient does have Disease X which can now be cheaply and effectively treated. The patient may or may not have an infection resulting from the test (2% chance of infection). BAD OUTCOME: The lab results from the test show that the patient does not have Disease X. The patient may or may not have an infection resulting from the test (2% chance of infection).] On a scale of 1 to 5, how moral was the doctor’s decision to run the test?<br /><br />Very Immoral (1 to 7 scale) Highly Moral<br /><br /><br />Should an experienced doctor be allowed to make such a decision even if the statistical odds are not in favor of his or her decision?<br /><br />Yes / No<br /><br /><br />If you believe the patient’s family is justified in suing the doctor for medical malpractice, what is a reasonable dollar amount that the doctor’s insurance should be expected to pay in compensation? The average malpractice payment at the doctor’s hospital is $50,000.<br /><br />$__________________<br /><br /><br />--------------------------------------------------------<br /><br />There are a number of improvements that should be made to this set up before running it with real subjects but that may not be necessary. In researching the project I ran across two new papers on the subject that already provide quite solid evidence of a moral luck like effect.<br /><br />Francesca Gino, Don A. Moore, and Max H. Bazerman, “<a href="http://www.hbs.edu/research/pdf/08-080.pdf">No harm, no foul:</a> <a href="http://www.hbs.edu/research/pdf/08-080.pdf">The outcome bias in ethical judgments</a>,” HBS Working Paper Number: 08-080, February 2008<br /><br />Gino, Francesca, Lisa Lixin Shu, and Max H. Bazerman. <a href="http://www.hbs.edu/research/pdf/09-020.pdf">"Nameless + Harmless = Blameless: When Seemingly Irrelevant Factors Influence Judgment of (Un)ethical Behavior.</a>" Harvard Business School Working Paper, No. 09-020, August 2008.<br /><br />So it looks like we do not get to be the experimental moral luck vanguard. On the plus side I was at least lucky enough to have a wonderful coffee conversation with one of the authors yesterday, <a href="http://www.wjh.harvard.edu/soc/gs/Shu_Lisa/">Lisa Shu</a>. I look forward to reading more of her work.Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com1tag:blogger.com,1999:blog-8880605103116805068.post-58927377177676661642008-09-30T20:57:00.000-07:002009-02-10T17:21:05.644-08:00High Tech Fever Interview<p><object height="350" width="425"><param name="movie" value="http://www.youtube.com/v/qzhhUIllsUQ"><br /> <embed src="http://www.youtube.com/v/qzhhUIllsUQ" type="application/x-shockwave-flash" width="425" height="350"></embed> </object></p><p><a href="http://www.hightechfever.tv/">Hightechfever.tv</a> is a live, weekly Cambridge local access TV show that focuses on entrepreneurship and technology. Despite its humble profile the show pulls in an amazingly great range of guests due to, MIT lecturer and host, <a href="http://www.maximizingprogress.org/">Joost Bonsen’s</a> extensive network. On September 10th I sat down with Joost to discuss several judgment and decision-making topics including behavioral economics, prospect theory, anchoring, and cognitive reflection testing. Prominent scholars mentioned include Kahneman, Tversky, Ariely, Prelec, Loewenstein, Frederick, and Thaler. The Youtube link above shows the most relevant segment of the interview.</p>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com1tag:blogger.com,1999:blog-8880605103116805068.post-13092173274938632422008-09-21T13:15:00.000-07:002008-09-21T13:26:07.995-07:00Iconoclast<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFE4fZvPCzxZwzxgkN_5loE3HsB59HWBjAV6EJgufYl6iKJB5CQbca8I9R4abVwZ6ssk-459oIeMsUt9upC_LVRLxWyiqtl6KoRIYU-zZOXTYddfLhyphenhyphenyewCKHIxIvRNg8wtzxiZMK7zeEa/s1600-h/Mooby+the+Golden+Calf.jpg"><img id="BLOGGER_PHOTO_ID_5248571246696289426" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; CURSOR: hand" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFE4fZvPCzxZwzxgkN_5loE3HsB59HWBjAV6EJgufYl6iKJB5CQbca8I9R4abVwZ6ssk-459oIeMsUt9upC_LVRLxWyiqtl6KoRIYU-zZOXTYddfLhyphenhyphenyewCKHIxIvRNg8wtzxiZMK7zeEa/s200/Mooby+the+Golden+Calf.jpg" border="0" /></a><br /><div>National Public Radio does a surprisingly good job covering behavioral topics. Such topics are typical for science based shows including <a href="http://www.sciencefriday.com/">Science Friday</a> and <a href="http://lcmedia.com/mindprgm.htm">The Infinite Mind</a> but occasionally one of the mainstream shows like <a href="http://www.onpointradio.org/">On Point</a> will cover an interesting behavior topic as well.<br /><br /><em><span style="color:#ffff00;">(Above: Mooby the Golden Calf Idol)</span></em></div><div></div><div></div><div></div><div></div><div>On Point’s host Tom Ashbrook drives me crazy with his hyperbolic comments and questions; however, this Wednesday’s show, “<a href="http://www.onpointradio.org/shows/2008/09/getting-outside-the-box/">Getting Outside the Box</a>” wasn’t half bad thanks to guest Professor <a href="http://www.ccnl.emory.edu/greg/">Gregory Berns</a>. Berns packs an MD/PhD and is a professor of Psychiatry and Behavioral Sciences at Emory University as well as of Biomedical Engineering at the Georgia Institute of Technology. He uses fMRI and computer modeling techniques to attack questions of Neuroeconomics. Berns was on the show plugging his new book, “<a href="http://www.amazon.com/Iconoclast-Neuroscientist-Reveals-Think-Differently/dp/1422115011/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1222016531&sr=8-1">Iconoclast: A Neuroscientist Reveals How to Think Differently</a>.” I have not yet read the book but given its focus on the intersection of psychology and innovation (the whole purpose of this blog) you can bet I will be ordering it from Amazon directly.<br /><br />Who is an iconoclast in this context? As Berns puts it, iconoclasts are those rare individuals that have “truly novel ideas that tear down existing ways of thought and put something new in its place.” Obviously, most people are not iconoclasts. Professor Berns gives one explanation for this rarity by pointing to brain physics and psychology’s efficiency principle. Our brains have limited hardware. For example, the human brain apparently gets by on only 40 Watts of energy. Similarly limited, the <a href="http://www.uphs.upenn.edu/news/News_Releases/jul06/retinput.htm">bandwidth of the human eye</a> is slower than a cable modem at only 10MBs per second (from researchers at my dear old <a href="http://www.upenn.edu/">Penn</a>. The show claimed 1MB/s). To function on such limited capacity we need to use thinking short cuts; however, to be creative the brain has to get out of this efficiency mode. Iconoclasts have this capability and exercise it.<br /><br />One of the show’s callers, a fan of Harvard’s <a href="http://en.wikipedia.org/wiki/EO_Wilson">E. O. Wilson</a>, provided the additional insight that iconoclastic behavior in animals tends to get them killed. For example, the maverick iconoclast in a school of fish that turns right when everyone else turns left is the one most likely to be eaten. Evolution itself is against iconoclasts.<br /><br />Nonetheless, at a cultural level (Ashbrook’s one good comment) we value iconoclasts (or at least we think we do) and many of us want to be one. Berns spends most of the show explaining three primary factors related to iconoclasm and innovation along with a few hints at how to enhance your own iconoclastic behavior.<br /><br />1) Perception: The mental images in our imagination are usually based on past experiences. It takes novel stimuli and juxtaposition to trigger the perception shift necessary for new thought.<br /><br />2) Fear: As Berns puts it, the “fear of loosing the status quo is one of the greatest inhibitors of change and innovation.” To be an iconoclast you must suppress fear. Fear resides in the amygdala and Berns believes its impact can be overridden by conscious thought. “Cognitive Reappraisal” can control fear by reframing the view of the problem.<br /><br />3) Social Intelligence: To be a proper iconoclast you have to be able to sell your ideas. People don’t like change so iconoclasts have to sell them on changing their minds.<br /><br />One could question this list. Does an iconoclast really need all three of these abilities? An organization could exhibit iconoclastic behavior without any one individual who possesses all these abilities. For instance, a creative genius coward could be paired with a fearless leader spokesperson with the social intelligence to sell the ideas. In practice this too seems a rare combination yet it is not clear how Berns’s observation apply at the organizational behavior level. Iconoclastic behavior of teams seems like a great topic for further research.</div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-52658475638681803482008-09-19T07:40:00.000-07:002008-10-28T13:31:09.352-07:00Breadcrumbs of Self-Deception<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhEPbqE1FiDfJ9HpxP_Ki9uoKQ_QzK_WY0jJEWy_Cqs8Xq2Px9h2FzEFXRVUywsiqLdFZNi8rYq3fzHwZ7QRdN79kBVVZKCAWB2prgKxeteppy0ZC2gxDeCgkMr41SsvzjmYKnyrHJSDC2/s1600-h/breadcrumbs.jpg"><img id="BLOGGER_PHOTO_ID_5259252438652085314" style="FLOAT: right; MARGIN: 0px 0px 10px 10px; CURSOR: hand" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhEPbqE1FiDfJ9HpxP_Ki9uoKQ_QzK_WY0jJEWy_Cqs8Xq2Px9h2FzEFXRVUywsiqLdFZNi8rYq3fzHwZ7QRdN79kBVVZKCAWB2prgKxeteppy0ZC2gxDeCgkMr41SsvzjmYKnyrHJSDC2/s200/breadcrumbs.jpg" border="0" /></a><br /><div>Can there be a benefit to forgetting and, if so, do people have a mechanism that enables them to forget? It is a bit counterintuitive to think that we might benefit from forgetting but with a little effort it is not difficult to think of things we might prefer not to remember. Perhaps we would rather forget some particularly embarrassing moments from high school, the time of an appointment we did not really wish to keep, or even the displeasure of watching the new Indiana Jones movie. Might there also be possible benefits from forgetting the true justification for making a decision?<br /><br />As <a href="http://www.prospecttheory.net/2008/09/justifying-unjustifiable.html">discussed previously</a>, research by Christopher Hsee describes how people incorporate unjustifiable information into their decision-making. The vast majority of people do not want to see themselves as making unethical decisions. As such, Hsee’s hypothesis is that people will only incorporate unjustifiable information when the decision-weighting of the justifiable information is vague and elastic. Unjustifiable information is thus incorporated <strong>indirectly and subconsciously</strong> through readjusting the weighting of the justifiable information. People thereby make unjustified decisions yet preserve their self image as ethical and just.<br /><br />As an example of the phenomenon, one of Hsee’s studies uses a scenario involving a condo appraiser who, for different subject groups, is motivated either to deflate or inflate the valuation of a property. Their motivation derives from an unjustifiable conflict of interest where the condo seller/buyer is actually the fiancée of the appraiser. Hsee shows that appraisers only inflate/deflate values when there is substantial elastic wiggle room in how the appraiser evaluates the justifiable attributes of the apartment like age of the appliances, carpeting, etc. and that they do not make biased assessments when the attribute weightings are not subjective.<br /><br />Hsee’s experimental results and those of others seem to strongly support this theory and it is very likely correct. However, let’s consider an alternative explanation centered on motivated forgetting. First, grant the assumption that people do not want to consider themselves as unjust. Next, assume decision subjects are at least conscious of the temptation to incorporate unjustifiable information. I believe Hsee would agree with this awareness. However, motivated forgetting goes further to suggest that at the time of the decision subjects are consciously aware of their incorporation of unjustified information. These subjects are conscious of their transgression yet are careful to lay out a logical story of how the same conclusion could be reached using only justifiable information. The story may partially be constructed to explain the decision to others but the story serves a larger purpose for the decision maker himself. After the story is created the subject very promptly and conveniently forgets the true basis of their decision. Then, if necessary at some future point, they can follow the story like “breadcrumbs of self-deception” to retain their world view as a just individual. Like Hsee, the motivated forgetting approach assumes subjects will only incorporate unjustifiable information when a decision biased by motive can be justified based on a manipulation of the justifiable information. This is because without sufficient nuggets of justifiable information to weave a breadcrumb story around, the motivated forgetting mechanism would not function. Subjects know when they would not be able to fool themselves.<br /><br />As a theory, motivated forgetting seems to add little value here as it predicts the same outcomes as Hsee’s elasticity hypothesis. Also, in practice it would be extremely difficult to verifiably demonstrate that motivating forgetting is occurring. Perhaps someone brighter than me will have an idea for a good experiment.</div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-66635498164652873392008-09-17T17:02:00.000-07:002008-10-28T13:24:35.739-07:00Justifying the Unjustifiable<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQyvwmYoE3Z10VTb95cinkSX9b7pXtigEv9p9YMyk6OHduHXdLZthjYLrx8-Ek4a46uEn82jpPex2P0gLkhJLb-wQmlAJHRV-TlZAnS-bOkeefqxCYqqW68C1Pb2oFm1fP6amOVpV2NATj/s1600-h/toms+cafe.jpg"><img id="BLOGGER_PHOTO_ID_5247145774468857058" style="FLOAT: right; MARGIN: 0px 0px 10px 10px; CURSOR: hand" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQyvwmYoE3Z10VTb95cinkSX9b7pXtigEv9p9YMyk6OHduHXdLZthjYLrx8-Ek4a46uEn82jpPex2P0gLkhJLb-wQmlAJHRV-TlZAnS-bOkeefqxCYqqW68C1Pb2oFm1fP6amOVpV2NATj/s200/toms+cafe.jpg" border="0" /></a><br /><p>Several weeks ago I met with Columbia University Marketing Professor <a href="http://www4.gsb.columbia.edu/cbs-directory/detail/5845231/Lee">Leonard Lee</a>. Over a fantastic pistachio milkshake at Tom’s Café (of Seinfeld fame), we got on the topic of moral decision-making research. Leonard suggested that I read an older paper by Chicago Professor <a href="http://faculty.chicagogsb.edu/christopher.hsee/vita/">Christopher Hsee</a>. The paper, “<a href="http://faculty.chicagogsb.edu/christopher.hsee/vita/Papers/ElasticJustification1996.pdf">Elastic justification: How unjustifiable factors influence judgments</a>,” describes how unjustifiable information can subconsciously creep into the decision-making process. To summarize, Hsee breaks information into two primary categories:<br /></p><ul><li>Justifiable: Information that is directly relevant to the judgment being made by the accepted criteria of the decision-maker (e.g. a candidate’s experience)<br /></li><li>Unjustifiable: Information the decision-maker may wish to take into consideration but that he knows, by the criteria of what is acceptable, should not come to bear on the decision. (e.g. a candidate’s race or sex)</li></ul><br /><p>Hsee’s studies show that decision-makers do not include unjustifiable information in their decisions except under certain conditions relating to the JUSTIFIABLE information. The degree of "elasticity" in how to weigh the justifiable factors determines how much influence the unjustifiable information has on the judgment. If the importance weighting assigned to various justifiable attributes is clearly defined and fixed (inelastic), unjustifiable information does not influence the decision. However, if the weighting is vague and open to interpretation (elastic), unjustifiable information will influence the decision by reweighting the importance of the justifiable factors. Since past literature shows that people try to make justified decisions and line up consistent facts/evidence for those decisions, Hsee concludes that people do not knowingly incorporate unjustifiable information. The process is subconscious.<br /><br />The paper’s findings stand out because they are contrary to normative decision theory which would not recognize a split between justifiable and unjustifiable information. Instead, the normative approach takes in all information, assigns each factor a relevant weight according to its probable utility impact, and concludes with the utility maximizing decision (see for example <a href="http://www.sas.upenn.edu/~baron/">Jon Baron’s</a> work on Multi-Attribute Utility Theory). In contrast, Hsee’s work shows that decision-makers exclude unjustifiable information in certain cases. Reweighting utility impact for a given factor is also non-normative.<br /><br />In the paper Hsee sites three historical studies as evidence as well as two of his own. It is the second of Hsee’s studies with which I take some issue. In this second study subjects were given a “language intuition test” by which they were asked to select from a multiple choice list the meaning of unfamiliar Chinese characters. 20 questions were asked of each subject, only 10 of which counted towards a total score. Subject later self reported their score with a financial incentive for higher scores. Hsee suggests that two factors would influence the self reported score: 1) actual performance and 2) desire to report a high score for the financial incentive. He then asserts that the former is a justifiable factor and the later is unjustifiable and also predicts that the degree of elasticity in the grading process will determine the amount the unjustifiable factor will influence scores upward. In the inelastic condition subjects were asked to score only odd numbered questions. In the elastic condition, scores were based on the subject’s evaluation of the “ying/yang nature of the symbols” – a highly vague and subjective approach. Subjects were to count the 10 questions whose symbols they found to be the most “yang” in nature. As anticipated, subjects in the elastic condition reported higher overall scores.<br /><br />Unfortunately the study design does not seem well suited as a test of Hsee’s theory. I do not believe it is possible to determine whether or not subjects are indirectly incorporating unjustifiable information by reweighting the justifiable or merely directly incorporating their “unjustifiable” desire for a high score. In fact, in the elastic condition there is not a justifiable method of selection provided to subjects at all. How does one justifiably assess the “yangness” of a character? Faced with a process such as this one it is no surprise that subjects did not feel unjustified in selecting questions that they happened to get right as yang characters. The the yangness approach may break a social contract with the subjects, allowing them to have free reign in “cheating” on their scoring. One might ask what the selection process of students who did not wish to cheat would have looked like. The study would be better formed if it provided a subjective yet seemingly justifiable procedure for selection.<br /><br />I do not wish to discard the entire paper based on Study #2. Hsee has a very interesting theory with significant merit conferred by the other studies. There are also some very interesting additional questions the follow from the study. Further research seem warranted to answer the following:<br /></p><ul><li>Can we evaluate the specific weighting assigned by subjects to justifiable factors? For example in Hsee’s study #1 involving real estate appraisal, what relative weights do subjects place on living room size, appliances, carpets, etc?</li><br /><li>Can we demonstrate that the weight assigned to a specific factor changed? For instance can we demonstrate that subjects specifically reweighted the value of good appliances relative to carpets as a means to indirectly incorporate unjustifiable factors? Perhaps this can be solicited by asking subjects to assign numeric weightings or at least by rank ordering the importance of the factors.</li><br /><li>How might we prove/disprove that this process takes place subconsciously? Perhaps subjects instead make conscious decisions and then use a purposeful forgetting/self-deception mechanism to remain justified in their own eyes – (more forthcoming on a "breadcrumbs of self-deception" idea). There would seem to be significant moral implications if this is a conscious process.<br /></li></ul>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-30338379707548988692008-07-13T20:00:00.000-07:002008-07-13T20:03:16.687-07:00Irony<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEin2c_wmGxwtQMHjh3LM2Yiidz_OMuLbj8gaZ-lk0GRuCeiCxli8yNpAQm9VFazEnh-mmIl0U6LyuFMQDPf5TYf7jTM1R3dq_dqq2EKg8-cfbBYsbf28G0guyJbohD5OhXk8bO7qpqx7O2U/s1600-h/telephone.jpg"><img id="BLOGGER_PHOTO_ID_5222699751919622098" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; CURSOR: hand" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEin2c_wmGxwtQMHjh3LM2Yiidz_OMuLbj8gaZ-lk0GRuCeiCxli8yNpAQm9VFazEnh-mmIl0U6LyuFMQDPf5TYf7jTM1R3dq_dqq2EKg8-cfbBYsbf28G0guyJbohD5OhXk8bO7qpqx7O2U/s200/telephone.jpg" border="0" /></a><br /><div>Sometimes life just begs to be personified. Small coincidences, especially those that appear to carryout some kind of karmic rebalancing mission, are hard to contemplate without adding ears, nose, and ginning smirk to the blank potato head vastness of the universe. My last posting explored an implied criticism of US intellectual property law and the monopoly protection granted to what may be acts of “discovery” verses “invention.” So of course it came as a shock that just this week I was granted my first patent for an invention my co-inventors and I submitted seven to eight years ago. Patent number <a href="http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1&u=%2Fnetahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=7398227.PN.&OS=PN/7398227&RS=PN/7398227">7,398,227</a> “Methods, systems, and computer for managing purchasing data.” Not exactly the telephone but I’ll take it.</div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com1tag:blogger.com,1999:blog-8880605103116805068.post-29274901526342255212008-06-30T12:38:00.000-07:002008-06-30T12:43:28.127-07:00In the AirI have mixed feelings about Malcolm Gladwell. His writing is certainly clear and engaging and he manages to create impassioned interest in social science topics that would normally draw yawns. However, I cannot help but feel he receives credit better due to true academics for the volume of hard won research they produce and he neatly makes digestible. It is possible that his latest article in the New Yorker is no exception but it does give pause to reconsider. He may have some “new” ideas of his own.<br /><br />The article is entitled, “<a href="http://www.newyorker.com/reporting/2008/05/12/080512fa_fact_gladwell">In the Air: Who Says Big Ideas are Rare</a>” and in it, regardless of intent, Gladwell provides a subtle yet powerful indictment of the current intellectual property system. The preponderance of the article itself is spent highlighting the many historical incidences of simultaneous invention/discovery (e.g. telephone by both Alexander Graham Bell and Elisha Gray) and profiling modern day invention shop <a href="http://www.intellectualventures.com/">Intellectual Ventures</a> co-founded by <a href="http://en.wikipedia.org/wiki/Nathan_Myhrvold">Nathan Myhrvold</a>. What really is of interest is the digression into the nature of invention/discovery. The best summary of Gladwell’s line of thinking is made in the article itself with the observation - “Ideas weren’t precious. They were everywhere, which suggested that maybe the extraordinary process that we thought was necessary for invention – genius, obsession, serendipity, epiphany – wasn’t necessary at all.” The grand implication is that technology a process of discovery not innovation.<br /><br />Why does it matter if technology is “discovered” verses “invented?” I would argue the difference is much more than semantics. In an invention paradigm, technology is brought forth by the blood, sweat, and tears of the inventor(s) along with their unique creativity and insight. Technology is direct progeny of the inventor and it exists in the universe as a direct result of inventors’ actions. In a discovery paradigm, the technology always existed. The laws of physics and chemistry -- even the social scientific laws of behavior -- were already there to dictate function and need. If Gladwell and others are drawing the right conclusion from years of simultaneous invention “multiples,” the discovery of the technology is also inevitable. In this paradigm an inventor, or better put discoverer, may apply similar effort and creative insight but does his or her discovery of technology justify monopoly protection offered by patents -- especially if discovery by somebody is already a forgone conclusion?<br /><br />I do not know which, if any, of these paradigms are right but Gladwell’s questioning of invention provides some real food for thought. If technology is discovery based, what is the appropriate incentive structure to drive it? Would reorienting on a discovery mindset attract different personalities to work on technology? What should our expectations be about the speed of technology progress if all possible technology already exists, waiting to be discovered?Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-9968824913135416162008-05-12T15:48:00.000-07:002008-05-12T15:55:17.189-07:00Behavioral Economics and Digital Institutions: A View from the Field<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj08GXzrCq5iwmH5IwUm_CxowDetvXbQr9vXSDMLZVaG4AX0FHD2qg4fvZs14NA6TT714n3A49gwUIDl7KFw_p0_22GrW6sAD62JD6egfepLfpjETk9Loa5sj3GNRRaostyt3AAKQznK4zt/s1600-h/brain4.jpg"><img id="BLOGGER_PHOTO_ID_5199628050693042386" style="FLOAT: right; MARGIN: 0px 0px 10px 10px; CURSOR: hand" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj08GXzrCq5iwmH5IwUm_CxowDetvXbQr9vXSDMLZVaG4AX0FHD2qg4fvZs14NA6TT714n3A49gwUIDl7KFw_p0_22GrW6sAD62JD6egfepLfpjETk9Loa5sj3GNRRaostyt3AAKQznK4zt/s320/brain4.jpg" border="0" /></a><br /><div>The <a href="http://www.gruterinstitute.org/">Gruter Institute</a> for Law and Behavioral Research is holding a conference at Lake Tahoe next week. The theme is “Law, Behavior & the Brain.” I have been asked to give a talk on digital institutions. You may be asking, “What is a digital institution and what does it have to do with my brain?” For those answers and more, here is the abstract for my talk.<br /><br /><span style="font-size:130%;"><strong><u>Abstract</u></strong><br /></span><br />Digital Institutions allow us to “reframe strategic interactions,”<a title="" style="mso-footnote-id: ftn1" href="http://www.blogger.com/post-create.g?blogID=8880605103116805068#_ftn1" name="_ftnref1">[1]</a> incorporate externalities, and leverage behavioral economic tendencies toward more positive outcomes. Compared to traditional institutions they are relatively quick to establish, cheap to operate, and easy to adapt or discard. They can even be self organizing and in the extreme lead to a vision of “governance by algorithm.”<a title="" style="mso-footnote-id: ftn2" href="http://www.blogger.com/post-create.g?blogID=8880605103116805068#_ftn2" name="_ftnref2">[2]</a><br /><br />Today’s most innovative corporations, though founded as traditional institutions, are both witness to and participant in the emergence of their digital counterparts. These same companies will also be deeply changed by the phenomena. This talk provides a first person view from within IBM’s famed T.J. Watson Research Center. With 60 years of history, over 3,000 researchers, and multiple Nobel Prizes, IBM Research provides an exceptional environment for identifying and making sense of change. The discussion covers three topics from the perspective of a Digital Institutions “practitioner.” First, a survey is provided covering several technologies developed at IBM Research that enable Digital Institutions; technologies that include 3D metaverses, real time speech-to-speech translation, and semantic web reasoners. Next, we examine a specific instance of Digital Institution formation involving a volunteer team leading IBM’s World Development Initiative (WDI) to address the needs of those people at the “bottom of the pyramid” living off less than $5 per day. Finally, the talk covers a problem space for future investigation in intellectual property licensing where Digital Institutions might produce better outcomes through overcoming psychological bias in decision making.</div><br /><div></div><br /><div><br /><a title="" style="mso-footnote-id: ftn1" href="http://www.blogger.com/post-create.g?blogID=8880605103116805068#_ftnref1" name="_ftn1"><span style="font-size:85%;">[1]</span></a><span style="font-size:85%;"> Oliver Goodenough and Monika Gruter Cheny, “Is Free Enterprise Values in Action?” Preface to “Moral Markets: The Critical Role of Values in the Economy,” Edited by Paul J. Zak, 2008<br /></span><a title="" style="mso-footnote-id: ftn2" href="http://www.blogger.com/post-create.g?blogID=8880605103116805068#_ftnref2" name="_ftn2"><span style="font-size:85%;">[2]</span></a><span style="font-size:85%;"> John Henry Clippinger, “A Crowd of One: The Future of Individual Identity,” 2007<br /></span><br /></div>Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-40611743050050962122008-04-29T20:19:00.000-07:002008-04-29T20:23:24.598-07:00Penny for your Thoughts: RevisitedHere is a paper that might put a new lens on the previously discussed Alter and Oppenheimer money familiarity study (or perhaps vice versa). In "<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=979648">The Dishonesty of Honest People: A Theory of Self-Concept Maintenance</a>," Nina Mazar, On Amir, and <a href="http://en.wikipedia.org/wiki/Dan_Ariely">Dan Ariely</a> discuss the results of a series of cheating experiments. In the experiments students are paid 50 cents for each question they get right on a test. Some of the experimental conditions provide an opportunity to cheat by allowing students to self report their scores. The surprising finding is that cheating dramatically increases when tokens are given to students instead of cash, even though these tokens can be exchanged for cash at a station only a few feet away. The authors of the Dishonesty study believe there is something special about cash. It is why people might take home a few office supplies but they are much less likely to take the equivalent value out of petty cash. Moral ambiguity is erased.<br /><br />Perhaps there is a related effect at play in Adam Alter and Daniel Oppenheimer’s research. $2 bills, Susan B. Anthony dollars, and altered bills play the role of tokens. Like the tokens in the Dishonesty study people rationally know they have equivalent value to cash (ironically a token of value in its own right). However, in practice tokens and cash are not the same since people behave differently by say, increasing their cheating or having a willingness to part with a token at a discount. Of course we beg the question of why $2 bills are tokens and $1 bills are not. We may be back to familiarity.<br /><br />Another take is that familiarity is playing a role in the Dishonesty study. There could be a discounting of the unfamiliar tokens taking place. People are cheating the same “amount” but they need more of the discounted tokens to steal the equivalent perceptual value.Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com0tag:blogger.com,1999:blog-8880605103116805068.post-1517852269515538002008-04-20T15:21:00.000-07:002008-04-20T15:28:33.842-07:00Penny for your ThoughtsInto the growing body of research on “predictably irrational” behavior comes a new study from Adam Alter and Daniel Oppenheimer of Princeton, to be published in the <a href="http://www.psychonomic.org/PBR/">Psychonomic Bulletin & Review</a>. Like others before it, this study examines the great plasticity of perceived value. In their experiments, Alter and Oppenheimer’s subjects value a $1 Susan B Anthony coin less than they do a traditional $1 greenback bill. Similarly, subjects also seem to value $2 bills less than they rationally should as compared to the more frequently encountered “ones.” The authors argue that this is a result of familiarity which subjects value more than they rationally should.<br /><br />Initially, the authors’ explanation of the results did not strike me as correct. Generally rare things are the most valuable. Even with money, the units we see the least frequently (like $100 bills) are more valuable than those we see all the time ($1 bills). However, I have tried to think of alternative theories and I have not hit on anything that holds together as well as the familiarity explanation.<br /><br />One alternative explanation is that subjects are using touch stone categories as heuristics to determine value. Imagine that we place amounts we encounter into one of three buckets valued lowest to highest: pocket change, wallet, and bankable. These categories are formed around how people use money, where they physically store it, and perhaps some kind of “purchase ambition.” Subjects would place a Susan B. Anthony coin into the pocket change bucket. The $1 bill would be placed in the higher category of “wallet” and thus be valued more. Of course the $2 bill falls into the same “wallet” category as well yet subjects value the $2 bill significantly less than two $1 bills. Something else must be going on.<br /><br />Perhaps there is a glass half full or half empty framing effect with value. Here are some possible subconscious monologues. I have a single coin and I feel poor because you can’t get much for a coin (half empty). I have a dollar bill and I feel relatively wealthy because one dollar is a psychological threshold to having something of real value (half full). The same effect may happen with two $1 bills. I separate the money into two units and frame each on the threshold of value and feel even wealthier (half full). On the other hand, the $2 bill may inspire visions of higher value bills. I now frame on the wish that I had a $20 bill and I then feel poor (half empty).<br /><br />Neither of the two theories I put forward can account for a third experiment run by the authors but it does prompt a new alterative. In the third experiment subjects effectively compare the value of one real $1 bill and one that has been slightly altered by reversing the image of George Washington’s head (the fake). The fake should appear less “familiar” than the real bill and therefore be valued less, which indeed was the case.<br /><br />Is it possible that subjects are not valuing the familiar itself but instead discounting the unfamiliar? Unfamiliar money could somehow make subjects less comfortable, perhaps because they fear that it could be fake? They may worry it will be more difficult to trade it to others in the future even if they understand that it is the equivalent to the more frequently encountered money. Maybe, but to risk a bad pun this is probably just the other side of the same coin. I think I will stick with the authors on this one after all. They present the simplest explanation to all the observations.Justin M. Cookhttp://www.blogger.com/profile/12634020113872985261noreply@blogger.com4