Thursday, November 20, 2008

Towelie Logic

The Society for Judgment and Decision Making 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.

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 forthcoming paper in Journal of Consumer Research. As described in their abstract:

“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.”

I provide an overview of the towel study from the paper as well as my take on the findings in last night’s broadcast.

Thursday, November 6, 2008

Je Regrette 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.

On November 4th I voted on a relatively minor ballot issue 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.

This was a simple yes or no question but as a JDM 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.

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 Libertarian Paternalism when it comes to designing our ballots. Voting only works if we are asking the right questions.

Tuesday, November 4, 2008

A Curious Education

I am currently reading a broad survey paper by George Loewenstein 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 “Buying Behavior” 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.

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:

“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.”

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.