On the Robustness of the Winner's Curse Phenomenon
We set out to find ways to help decision makers overcome the "winner's curse," a phenomenon commonly observed in asymmetric information bargaining situations, and instead found strong support for its robustness. In a series of manipulations of the "Acquiring a Company Task," we tried to enhance decision makers' cognitive understanding of the task. We did so by presenting them with different parameters of the task, having them compare and contrast these different parameters, giving them full feedback on their history of choices and resulting outcomes, and allowing them to interact with a human opponent instead of a computer program. Much to our surprise, none of these manipulations led to a better understanding of the task. Our results demonstrate and emphasize the robustness of the winner's curse phenomenon.
Pride to Cooperate: The Consideration of Pride Promotes Cooperation in a Social Dilemma
In social dilemmas, broad collective interests conflict with immediate self-interests. In two studies, we examine the role of pride in guiding cooperative behavior in a social dilemma. We find that the consideration of pride led to more cooperation compared to the consideration of joy or a control condition (Study 1) and compared to the consideration of enjoyment (Study 2). The importance participants assigned to cooperation mediated this effect of emotion on cooperation (Studies 1 and 3). We suggest that because pride is linked to pro-social behavior, considering pride activates the concept of pride which in turn makes related behavioral representations more accessible and thus increases cooperation.
Keywords: social dilemma;
Between Self-interest and Reciprocity: The Social Bright Side of Self-control Failure
Despite the importance of reciprocity in many areas of social life, little is known about possible factors affecting it and its interplay with the self-interest motive to maximize one’s own gains. In this study, we examined the role of cognitive control in reciprocal behavior to determine whether it is a deliberate and controlled act or whether the behavior is evoked automatically. In Experiment 1, depletion of cognitive control resources increased the rate of rejected unfair offers in the ultimatum game despite associated financial loss. In Experiments 2A and 2B, using 2 depletion manipulations, we extended these results and showed that depleted participants returned more money in response to highly trusting investments during the trust game. These results suggest that reciprocity considerations are actively suppressed when attempting to maximize one’s own gains. When cognitive control is limited, this suppression becomes difficult, and consequently reciprocity considerations prevail.
Keywords: cognitive control;
Self-reported Ethical Risk Taking Tendencies Predict Actual Dishonesty
Are people honest about the extent to which they engage in unethical behaviors? We report an experiment examining the relation between self-reported risky unethical tendencies and actual dishonest behavior. Participants’ self-reported risk taking tendencies were assessed using the Domain-Specific Risk-Taking (DOSPERT) questionnaire, while actual self-serving dishonesty was assessed using a private coin tossing task. In this task, participants predicted the outcome of coin tosses, held the predictions in mind, and reported whether their predictions were correct. Thus, the task allowed participants to lie about whether their predictions were correct. We manipulated whether reporting higher correct scores increased (vs. not) participants monetary payoff. Results revealed a positive relation between self-reported unethical risky tendencies and actual dishonesty. The effect was limited to the condition in which dishonesty was self-serving. Our results suggest liars are aware of their dishonest tendencies and are potentially not ashamed of them.
Keywords: ＂DOSPERT,＂ Risk Taking;
Is It All about the Self? The Effect of Self-control Depletion on Ultimatum Game Proposers
In the ultimatum-game, as in many real-life social exchange situations, the selfish motive to maximize own gains conflicts with fairness preferences. In the present study we manipulated the availability of cognitive-control resources for ultimatum-game proposers to test whether preference for fairness is a deliberative cognitive-controlled act or an automatic act. In two experiments we found that a shortage of cognitive control (ego depletion) led proposers in the ultimatum game (UG) to propose significantly more equal split offers than non-depleted proposers. These results can be interpreted as resulting from an automatic concern for fairness, or from a greater fear of rejection, which would be in line with a purely self-interested response. To separate these competing explanations, in Experiment 2 we conducted a dictator-game in which the responder cannot reject the offer. In contrast to the increased fairness behavior demonstrated by depleted ultimatum-game proposers, we found that depleted dictator-game allocators chose the equal split significantly less often than non-depleted allocators. These results indicate that fairness preferences are automatically driven among UG proposers. The automatic fair behavior, however, at least partially reflects concern about self-interest gain. We discuss different explanations for these results.
When Feeling Skillful Impairs Coordination in a Lottery Selection Task
Choosing a major field of study to secure a good job after graduation is a tacit coordination problem that requires considering others' choices. We examine how feeling skillful, either induced (Experiment 1) or measured (Experiment 2), affects coordination in this type of task. In both experiments participants chose between two lotteries, one offering a larger prize than the other. Participants' entry into the chosen lottery was either related or unrelated to their skill, with the final prize allocated randomly to one of the entrants in each lottery. Importantly, across conditions skill was irrelevant to choosing between lotteries. Notwithstanding, when skill was related to determining lottery entrants, participants who felt highly skillful chose the high prize lottery excessively. Results further suggest that this stems from high confidence in self skill, rather than incorrect expectations regarding others.
Choosing Between Lotteries: Remarkable Coordination Without Communication
The current research examines tacit coordination behavior in a lottery selection task. Two hundred participants in each of three experiments and 100 in a fourth choose to participate in one of two lotteries, where one lottery has a larger prize than the other. Independent of variations in the complexity of the mechanism of prize allocation, the prize amounts, and whether the lottery is the participant's first or second choice, we typically find that the percentage of participants who choose the high versus low-prize lotteries does not significantly differ from the equilibrium predictions. This coordination is achieved without communication or experience. We additionally find that participants with an analytical thinking style and a risk-averse tendency are more likely to choose the low-prize lottery over the high-prize lottery. This tendency seems to be stable across choices. The pattern of our results suggests that to achieve tacit coordination, having a subset of individuals who attend to the choices of others is sufficient.
Changes in Negative Reciprocity as a Function of Age
Standard economic models assume people exclusively pursue material self-interests in social interactions. However, people exhibit social preferences; that is, they base their choices partly on the outcomes others obtained in a social interaction. People care about fairness, and reciprocity affects behavior. This study examines the differences in negative reciprocity (costly punishment for unfair divisions) as a function of age. Sixty-one kindergarteners (5-year-olds), 53 second graders (8-year-olds), and 57 sixth graders (12-year-olds) played a dictator game or a mini–ultimatum game either with a human proposer or with a random machine that determined the division between the two players. By keeping the divisions between the players constant and varying the source of the unfair proposal, we were able to differentiate between reciprocity-based and inequality-aversion preferences. We found that kindergarteners proposed and accepted unfair divisions regardless of the source of the offer, behaving according to the standard economic model. Children in the sixth grade tended to reject unfair offers from a human proposer but accept unfair divisions from a random device, indicating the emergence of negative reciprocity preferences by age eight (and contrary to inequality aversion). Children at this age also tended to give more fair offers in the ultimatum game than in the dictator game, indicating the emergence of strategic thinking.
Pitfall or Scaffolding? Starting-point Pull in Configuration Decision Making
In configuration problems, such as the construction of a weekly study schedule, decision makers must assemble a combination of parts under a set of constraints. Interactions may be present between the parts, and more than a single objective function may exist, such as minimizing the number of days on campus and maximizing the interest level of the courses. Little is known about the decision-making processes involved in configuration tasks. Building on problem-solving and resource-allocation literature, the current study examines the effect of the starting points on performance in these tasks. We predicted that task constraints serve as starting points for the construction process that pull the entire configuration toward them. In 2 experiments, we asked participants to construct a weekly course schedule. We manipulated the course-offering sets so that starting the configuration with one of the task constraints (mandatory courses or a requirement to be on campus on specific days) and myopically building the configuration around it would either help or hinder the effort to reach a good schedule. By several convergent measures, participants succeeded more with the "Asset" course-offering sets than with the "Obstacle" sets. Think-aloud protocol analysis also supported this starting-point pull effect. The results of Experiment 3 show that for a starting point to pull the configuration, it has to be a constraint on the task. All 3 experiments show how building the configuration myopically around the starting points unduly affects the end result.
Leaving It to Chance"—Passive Risk Taking in Everyday Life
While risk research focuses on actions that put people at risk, this paper introduces the concept of "passive risk"—risk brought on or magnified by inaction. We developed a scale measuring personal tendency for passive risk taking (PRT), validated it using a 150 undergraduate student sample, and obtained three factors indicating separate domains of passive risk taking: risk involving resources, medical risks and ethical risks. The scale has criterion validity, as it is correlated with reported passive risk taking in everyday life, and also has high test-retest reliability. While correlated with the DOSPERT scale, the PRT shows divergent validity from classic risk taking constructs like sensation seeking, and convergent validity with tendencies previously not linked to risk taking, such as procrastination and avoidance. The results indicate that passive risk is a separate and unique domain of risk taking, which merits further research to understand the cognitive and motivational mechanism perpetuating it.
Honesty Requires Time (and Lack of Justifications)
Recent research suggests that refraining from cheating in tempting situations requires self-control, which indicates that serving self-interest is an automatic tendency. However, evidence also suggests that people cheat to the extent that they can justify their unethical behavior to themselves. To merge these different lines of research, we adopted a dual-system approach that distinguished between the intuitive and deliberative cognitive systems. We suggest that for people to restrict their dishonest behavior, they need to have enough time and no justifications for self-serving unethical behavior. We employed an anonymous die-under-cup task in which participants privately rolled a die and reported the outcome to determine their pay. We manipulated the time available for participants to report their outcome (short vs. ample). The results of two experiments support our prediction, revealing that the dark side of people's automatic self-serving tendency may be overcome when time to decide is ample and private justifications for dishonesty are not available.
Reciprocity and Uncertainty
Guala points to a discrepancy between strong negative reciprocity observed in the lab and the way cooperation is sustained "in the wild." This commentary suggests that in lab experiments, strong negative reciprocity is limited when uncertainty exists regarding the players' actions and the intentions. Thus, costly punishment is indeed a limited mechanism for sustaining cooperation in an uncertain environment.
Overcoming the Winner's Curse: An Adaptive Learning Perspective
The winner's curse phenomenon refers to the fact that the winner in a common value auction, in order to actually win the auction, is likely to have overestimated the item's value and consequently is likely to gain less than expected and may even lose (i.e., it is said to be "cursed"). Past research, using the "Acquiring a company" task has shown that people do not overcome this bias even after they receive extensive feedback. We suggest that the persistence of the winner's curse is due to a combination of two factors: variability in the environment that leads to ambiguous feedback (i.e., choices and outcomes are only partially correlated) and the tendency of decision makers to learn adaptively. We show in an experiment that by reducing the variance in the feedback, performance can be significantly improved.
The Speed of Learning in Noisy Games: Partial Reinforcement and the Sustainability of Cooperation
In an experiment, players ability to learn to cooperate in the repeated prisoners dilemma was substantially diminished when the payoffs were noisy, even though players could monitor one anothers past actions perfectly. In contrast, in one-time play against a succession of opponents, noisy payoffs increased cooperation, by slowing the rate at which cooperation decays. These observations are consistent with the robust observation from the psychology literature that partial reinforcement (adding randomness to the link between an action and its consequences while holding expected payoffs constant) slows learning. This effect is magnified in the repeated game: when others are slow to learn to cooperate, the benefits of cooperation are reduced, which further hampers cooperation. These results show that a small change in the payoff environment, which changes the speed of individual learning, can have a large effect on collective behavior. And they show that there may be interesting comparative dynamics that can be derived from careful attention to the fact that at least some economic behavior is learned from experience.
Stretching the Effectiveness of Analogical Training in Negotiations: Teaching Diverse Principles for Creating Value
Learning in Noisy Games: Partial Reinforcement and the Sustainability of Cooperation
Games, Gaming, and Gambling;
Overcoming Focusing Failures in Competitive Environments
The Effect of Adding a Constant to All Payoffs: Experimental Investigation, and a Reinforcement Learning Model with Self-Adjusting Speed of Learning