Boxed In
The performance advantage of traveling
Uri Zak
Journal of Economic Psychology, forthcoming
Abstract:
Many individuals travel between countries as part of their professional routines. How do they perform during those short trips abroad? To begin to answer this question, I analyzed the outcomes of over 5 million chess games played around the world. Importantly, tournament chess provides a clean setting in which location-dependent factors are mostly irrelevant; the audiences are quiet and the referees make hardly any judgments. Controlling for differences in chess skills, I found enhanced performance among players who were competing outside of their home countries. This finding was robust to additional controls such as age, sex, and skill momentum or game practice, and to the inclusion of individual or country fixed effects. This advantage, an approximately 2% increase in game outcome, suggests that traveling has a positive effect on performance.
Amplification of the status quo bias among physicians making medical decisions
Adrian Camilleri & Sunita Sah
Applied Cognitive Psychology, forthcoming
Abstract:
The status quo bias (SQB) is the tendency to prefer the current state of affairs. We investigated if experts (physicians) fall prey to the SQB when making decisions in their area of expertise and, if so, whether the SQB is reduced or amplified for experts compared to non-experts. We presented 302 physicians and 733 members of the general population with a medical scenario and two non-medical scenarios. In each scenario, participants were asked to make a decision between two options. For half of the participants, one of the options was presented as the status quo. All groups displayed a SQB but physicians displayed an amplification of the SQB but only when making decisions in the medical scenario. Experts may be more swayed by status quo options when making decisions in their area of expertise. We discuss why the SQB may be amplified for experts and the implications for practice.
Informational Determinants of Large-area Hurricane Evacuations
Noah Dormady et al.
Bulletin of the American Meteorological Society, forthcoming
Abstract:
This study reports on two experiments to investigate the informational determinants of hurricane evacuation decisions (temporal and spatial). Whereas most observational and experimental studies in this domain address the public's response to forecast information, this study addresses emergency management decisions. Using a subject sample of emergency managers and other public safety leaders, contrasted with a more typical university subject pool, this study presents an experimental design that overcomes the counterfactual problem present in all prior published experiments, by relying on an actual storm (Hurricane Rita) with a known outcome. Several methodological advancements are presented, including the use of an established numeracy instrument, integration of advanced hydrodynamic forecasts, and use of a loss aversion frame to improve generalizability. Results indicate that the availability of additional forecast information (e.g., wind speed, forecast tracks) significantly increases the probability and improves the timing of early voluntary evacuation. However, we observe that more numerate subjects are less likely to avoid relying upon forecast information that is characterized by probability (e.g., the uncertainty in the forecast track, sometimes referred to as the "cone of uncertainty"). Consequently, more numerate emergency managers are almost twice as likely as less numerate ones to provide additional evacuation time to their coastal communities, and they do so by longer than a typical workday (8.8 hours). Results also indicate that subjects knowingly over-evacuate large populations when making spatial mandatory evacuation orders. However, results indicate that numeracy mitigates this effect by more than half in terms of the population subject to mandatory evacuation.
Investor memory of past performance is positively biased and predicts overconfidence
Daniel Walters & Philip Fernbach
Proceedings of the National Academy of Sciences, 7 September 2021
Abstract:
We document a memory-based mechanism associated with investor overconfidence. In Studies 1 and 2, investors were asked to recall their most important trades in the recent past and then reported investing confidence and trading frequency. After the study, they looked up and reported the actual returns of these trades. In both studies, investors were biased to recall returns as higher than achieved, and larger memory biases were associated with greater overconfidence and trading frequency. The design of Study 2 allowed us to separately investigate the effects of two types of memory biases: distortion and selective forgetting. Both types of bias were present and were independently associated with overconfidence and trading frequency. Study 3 was an incentive-compatible experiment in which overconfidence and trading frequency were reduced when participants looked up previous consequential trades compared to when they reported them from memory.
On the role of similarity in mental accounting and hedonic editing
Ellen Evers, Alex Imas & Christy Kang
Psychological Review, forthcoming
Abstract:
The theory of mental accounting is often used to understand how people evaluate multiple outcomes or events. However, a model predicting which outcomes are associated with the same mental account and evaluated jointly, versus different accounts and evaluated separately, has remained elusive. We develop a framework that incorporates an online, bottom-up process of similarity and categorization into mental accounting operations. In this categorization-based model of mental accounting, outcomes that overlap on salient attributes are automatically categorized and assigned to the same mental account while outcomes that do not overlap on salient attributes are assigned to different accounts. We use this model to derive the hedonic accounting hypothesis, which generates testable behavioral predictions on people's preferences over the timing of outcomes given similarity-based constraints on mental accounting operations. Six studies provide support for the predictions: People prefer to experience similar losses close together in time and spread dissimilar losses apart; the reverse is true for gains, with a preference for dissimilar gains close together in time and similar gains spread apart across time. Importantly, our model is able to rationalize prior evidence that has found only limited support for the predictions of mental accounting and hedonic editing. Once the psychological process of similarity and categorization is explicitly incorporated into a formal model of mental accounting, its predictions are supported by the data.
The Effect of Cultural Trust on Cooperation in Two Behavioral Experiments
Joshua Doyle
Social Psychology Quarterly, September 2021, Pages 246-266
Abstract:
Trust is an important factor for cooperation in social dilemmas because of uncertainty and free-riding fears. Many contemporary social problems are characterized by uncertainty because they depend on the cooperation of thousands to resolve. Social trust as a personal belief is necessary but not sufficient for cooperation under these conditions. In contemporary social dilemmas, the trust-cooperation relationship likely depends on cultural trust: what people believe most other people believe about the trustworthiness of people in general. I test this theory in two experimental studies. In the first, cultural trust has an effect on cooperation independent of participants' first-order social trust. In the second, I find that if participants learn that others expect them to not believe information on the trustfulness of most other people, they will behave more or less cooperatively, depending on whether the information indicates most others' trust is high or low. I end with a discussion of the implications my findings have for addressing social dilemmas in an era of declining social trust.