Copyright (c) 2013 Carnegie Mellon University All rights reserved. http://repository.cmu.edu/sds Recent documents in Department of Social and Decision Sciences en-us Wed, 12 Jun 2013 15:03:02 PDT 3600 http://repository.cmu.edu/sds/118 http://repository.cmu.edu/sds/118 Wed, 21 Sep 2011 13:47:03 PDT Recent research in behavioral sciences presents strong evidence of poor human understanding for dynamic systems. Computer-based dynamic control tasks have an important potential for helping behavioral scientists advance research that investigates reasons for poor understanding and for helping students understand how dynamic systems work. In this paper, we introduce a simulation called Dynamic Stocks and Flows (DSF) that portrays the basic building blocks of dynamic systems: an accumulation; an inflow and outflow determined by an environment; and an inflow and outflow determined by a decision maker. In DSF, decision makers control the accumulation to a goal level by making repeated inflow and outflow decisions. We provide details of an experiment conducted with DSF that highlight some problems people face in controlling a dynamic system with different kinds of environmental inflow and outflow functions. DSF is flexible enough to represent dynamic systems with continuous or discrete accumulations, and with real-time or event-driven decision-making. We suggest that these and other features in DSF make it a good research and educational tool.

]]> Cleotilde Gonzalez et al. http://repository.cmu.edu/sds/117 http://repository.cmu.edu/sds/117 Wed, 21 Sep 2011 13:47:01 PDT This paper presents a case of parsimony and generalization in model comparisons. We submitted two versions of the same cognitive model to the Market Entry Competition (MEC), which involved four-person and two-alternative (enter or stay out) games. Our model was designed according to the Instance-Based Learning Theory (IBLT). The two versions of the model assumed the same cognitive principles of decision making and learning in the MEC. The only difference between the two models was the assumption of homogeneity among the four participants: one model assumed homogeneous participants (IBL-same) while the other model assumed heterogeneous participants (IBL-different). The IBL-same model involved three free parameters in total while the IBL-different involved 12 free parameters, i.e., three free parameters for each of the four participants. The IBL-different model outperformed the IBL-same model in the competition, but after exposing the models to a more challenging generalization test (the Technion Prediction Tournament), the IBL-same model outperformed the IBL-different model. Thus, a loser can be a winner depending on the generalization conditions used to compare models. We describe the models and the process by which we reach these conclusions.

]]> Cleotilde Gonzalez et al. http://repository.cmu.edu/sds/116 http://repository.cmu.edu/sds/116 Wed, 21 Sep 2011 13:46:59 PDT This research demonstrates thatwhen individuals are expected to detect novel targets, they will be best prepared when trained with diverse categories. Participants were trained in a simulated luggage screening task, in one of three conditions of diversity: high (participants searched for dangerous objects belonging to five different categories); low (participants searched for targets belonging to one of the five categories); and no training (control condition). After training, all participants were asked to look for the same novel dangerous objects in the bags. Results show that, during training, the low diversity condition resulted in highest hit rates and fastest response times. In contrast, after training, results were reversed: participants that trained in a high diversity condition were most effective at detecting novel targets. Those with no training at all were equally poor at detecting novel targets as those that trained in a low diversity condition

]]> Cleotilde Gonzalez et al. http://repository.cmu.edu/sds/115 http://repository.cmu.edu/sds/115 Wed, 21 Sep 2011 13:46:57 PDT Traditional economic theory often describes real-world social dilemmas as abstract games where an individual’s goal is to maximize economic benefit by cooperating or competing with others. Despite extensive empirical work, descriptive models of human behavior in social dilemmas are lacking in both cognitive realism and predictive power. This article addresses a central challenge arising from the success of modeling individuals making decisions from experience: our ability to scale these models up to explain social interactions. We propose that models based on the instance-based learning theory (IBLT) will help us to understand how conflictual social interactions are influenced by prior experiences of involved individuals and by information available to them during the course of interaction. We present mechanisms by which IBLT might capture the effects of social interaction with different levels of information without assuming predefined interaction strategies, but rather by assuming learning from experience.

]]> Cleotilde Gonzalez et al. http://repository.cmu.edu/sds/114 http://repository.cmu.edu/sds/114 Wed, 21 Sep 2011 13:46:55 PDT Misperceptions of stock and flow relationships are pervasive and an important problem to solve in system dynamics. Prior studies have shown that individuals perform poorly on accumulation problems, even when considering relatively simple systems, an effect termed the Stock–Flow (SF) failure. This study examines the effects of domain experience in overcoming the SF failure. We compared performance of medical students and undergraduates with no medical education on accumulation problems in medical and general domains. Medical students performed better than undergraduates only in some of the problems (including the general domain problems), and they performed equally poorly as undergraduates in problems that required medical domain experience. There was no correlation between performance in the stock and flow problems and either duration of medical education or age. Thus we conclude that domain experience is not a strong indicator for overcoming the SF failure.

]]> Angela Brunstein et al. http://repository.cmu.edu/sds/112 http://repository.cmu.edu/sds/112 Mon, 07 Dec 2009 13:41:09 PST Social cooperation often relies on individuals’ spontaneous norm obedience when there is no punishment for violation or reward for compliance. However, people do not consistently follow pro-social norms. Previous studies have suggested that an individual’s tendency toward norm conformity is affected by empirical information (i.e. what others did or would do in a similar situation) as well as by normative information (i.e. what others think one ought to do). Yet little is known about whether people have an intrinsic desire to obtain norm-revealing information. In this paper, we use a dictator game to investigate whether dictators actively seek norm-revealing information and, if so, whether they prefer to get empirical or normative information. Our data show that although the majority of dictators choose to view free information before making decisions, they are equally likely to choose empirical or normative information. However, a large majority (more than 80%) of dictators are not willing to incur even a very small cost for getting information. Our findings help to understand why norm compliance is context-dependent, and highlight the importance of making norm-revealing information salient in order to promote conformity.

]]> Erte Xiao et al. http://repository.cmu.edu/sds/113 http://repository.cmu.edu/sds/113 Mon, 07 Dec 2009 13:41:09 PST Inequity aversion and reciprocity have been identified as two primary motivations underlying human decision making. However, because income and wealth inequality exist to some degree in all societies, these two key motivations can point to different decisions. In particular, when a beneficiary is less wealthy than a benefactor, a reciprocal action can lead to greater inequality. In this paper we report data from a trust game variant where trustees’ responses to kind intentions generate inequality in favor of investors. In relation to a standard trust game treatment where trustees’ responses reduce inequality, the proportion of non-reciprocal decisions is twice as large when reciprocity promotes inequality. Moreover, we find investors expect that this will be the case. Overall, we find a majority (more than half) of trustees do not reciprocate when reciprocity increases inequality that favors investors. Our results call attention to the potential importance of inequality in principal-agent relationships and have important implications for policies aimed at promoting cooperation.

]]> Erte Xiao et al. http://repository.cmu.edu/sds/111 http://repository.cmu.edu/sds/111 Mon, 07 Dec 2009 13:41:08 PST Inequality aversion is a key motive for punishment, with many prominent studies suggesting people use punishment to reduce or eliminate inequality. Punishment in laboratory games, however, is nearly always designed to promote equality (e.g., rejections in standard ultimatum games) and the marginal cost of punishment is typically non-trivially positive. As a consequence, individual preferences over punishment outcomes remain largely uninformed. We here report data from a laboratory experiment using dictator games. We find that when people are treated unfairly they systematically prefer to use punishment to create advantageous inequality. Our results shed new light on human preferences over punishment outcomes, and have important implications for the design of mechanisms to deter misconduct.

]]> Daniel Houser et al. http://repository.cmu.edu/sds/110 http://repository.cmu.edu/sds/110 Fri, 04 Dec 2009 13:02:56 PST People can become less cooperative when threatened with sanctions, and previous research suggests both "intentions" and incentives underlie this effect. We report data from an experiment aimed at determining the relative importance of intentions and incentives in producing non-cooperative behavior. Participants play a one-shot investment experiment in pairs. Investors send an amount to trustees, request a return on this investment and, in some treatments, can threaten sanctions to enforce their requests. Decisions by trustees facing threats imposed (or not) by investors are compared to decisions by trustees facing threats imposed (or not) by nature. When not threatened, trustees typically decide to return a positive amount less than the investor requested. When threatened this decision becomes least common. If the request is large relative to the sanction then most trustees return nothing. If the request is small, trustees typically return the requested amount. These results do not vary with investors’ intentions.

]]> Daniel Houser et al. http://repository.cmu.edu/sds/109 http://repository.cmu.edu/sds/109 Fri, 04 Dec 2009 13:02:56 PST Evolutionary theory reveals that punishment is effective in promoting cooperation and maintaining social norms. Although it is accepted that emotions are connected to punishment decisions, there remains substantial debate over why humans use costly punishment. Here we show experimentally that constraints on emotion expression can increase the use of costly punishment. We report data from Ultimatum Games, where a proposer offers a division of a sum of money and a responder decides whether to accept the split, or reject and leave both players with nothing. Compared to the treatment where expressing emotions directly to proposers is prohibited, rejection of unfair offers is significantly less frequent when responders can convey their feelings to the proposer concurrently with their decisions. These data support the view that costly punishment might itself be used to express negative emotions, and suggest that future studies will benefit by recognizing that human demand for emotion expression can have significant behavioral consequences in social environments including families, courts, companies and markets.

]]> Erte Xiao et al. http://repository.cmu.edu/sds/108 http://repository.cmu.edu/sds/108 Fri, 04 Dec 2009 13:02:55 PST The role of natural language communication in economic exchange has been the focus of substantial experimental analysis. Recently, scholars have taken the important step of investigating whether certain types of communication (e.g., promises) might affect decisions differently than other types of communication (e.g., empty talk). Doing this requires the classification of natural language messages. Unfortunately, no broadly accepted method is available for this purpose. We here describe a coordination game for objective classification of natural language messages. The game is similar in spirit to the ‘ESP’ game that has proven successful for the classification of tens of millions of internet images. We illustrate our game using data reported by Charness and Dufwenberg (2006). We demonstrate that our objective classification procedure allows one to infer more from the data than is possible with subjective approaches

]]> Daniel Houser et al. http://repository.cmu.edu/sds/107 http://repository.cmu.edu/sds/107 Fri, 04 Dec 2009 13:02:54 PST Convergent evidence for detrimental effects of punishment on cooperation has been obtained in a wide variety of environments, ranging from American students facing punishment in laboratory experiments, to Israeli parents facing fines for arriving late to their child’s day care. We show here that enhancing the norm salience role of punishment can eliminate its detrimental effects. In a public goods game, privately implemented punishment reduces cooperation in relation to a baseline treatment without punishment. However, when that same incentive is implemented publicly, but anonymously to avoid shame, cooperation is sustained at significantly higher rates than in both baseline and private punishment treatments. Our data provide evidence that publicly implemented punishment enhances the salience of the violated social norm to both the punished and those who observe punishment, and that this increased norm salience promotes group members’ norm obedience. Our findings have important efficiency implications for the design of mechanisms intended to deter misconduct.

]]> Erte Xiao et al. http://repository.cmu.edu/sds/106 http://repository.cmu.edu/sds/106 Fri, 04 Dec 2009 09:53:38 PST We explore the relationship between outcomes in a coordination game and a pre-play asset market in which values are determined by outcomes in the subsequent coordination game. Across two experiments, we vary the payoffs from the market relative to the game, the degree of interdependence in the game, and whether traders' asset payoffs are dependent on outcomes in their own or another game. Markets lead to significantly lower efficiency across treatments, even when they produce no distortion of incentives in the game. Market prices forecast game outcomes. Our experiments shed light on how financial markets may influence affiliated economic outcomes.

]]> Shimon Kogan et al. http://repository.cmu.edu/sds/105 http://repository.cmu.edu/sds/105 Fri, 04 Dec 2009 09:53:37 PST We demonstrate that people can adopt a favorable view of ambiguous risks – contrary to the usual attitude of ambiguity aversion – when doing so permits justification for unfair behavior. We use simple binary dictator games in which one participant in a pair chooses between two allocation options for herself and an anonymous recipient. The “fair” option gives both participants relatively equal allocations, while the “unfair” option gives more to the dictator, less to the recipient, and also makes the recipient’s allocation dependent on a p=0.5 lottery. Dictators choose the unfair option more frequently when the recipient’s allocation depends on an ambiguous lottery than on a lottery with a known probability – even though the objective distributions of outcomes are identical under the two kinds of lotteries. Further, dictators’ estimates of the expected value of the recipients’ allocations are inflated under ambiguity, indicating that dictators form self-serving beliefs about ambiguity. Finally, increased unfair behavior under ambiguity is extinguished when dictators are constrained by their own initial unmotivated, and negative, attitudes towards ambiguity.

]]> Emily C. Haisley et al. http://repository.cmu.edu/sds/104 http://repository.cmu.edu/sds/104 Fri, 04 Dec 2009 09:53:37 PST This chapter is about experiments that study aspects of organizational structure and economic performance. Relative to field studies using empirical data, experiments often have obvious advantages, especially the value of control and randomized assignment to implement theoretical assumptions that can only be imperfectly measured or controlled econometrically using field data. Despite these advantages, the range of organizational hypotheses studied in experiments is small, although it is growing rapidly.

]]> Colin F. Camerer et al. http://repository.cmu.edu/sds/103 http://repository.cmu.edu/sds/103 Fri, 04 Dec 2009 09:53:36 PST We address two problems with how trust is frequently measured in economics. First, we highlight the importance of clearly identifying the target of trust, which when ignored can lead to inconsistencies between trust measures. Second, we note the importance of distinguishing trust from other closely related concepts. We conduct an experiment using a new behavioral measure of trust – individuals’ willingness to pay to avoid being vulnerable to the target of trust – and vary the target of trust. To test our behavioral measure, we also collect data on potentially confounding effects (i.e., altruism and risk aversion) and on attitudinal measures of trust. Subjects discriminate based on perceived characteristics of different targets in determining whether to trust, in a manner consistent with trust elicited using attitudinal measures and with actual trustworthiness. Risk aversion and altruism do not correlate highly with our measure of trust.

]]> Roberto A. Weber et al. http://repository.cmu.edu/sds/102 http://repository.cmu.edu/sds/102 Fri, 04 Dec 2009 09:53:35 PST Social norms play an important role in individual decision making. Bicchieri (2006) argues that two different expectations influence our choice to obey a norm: what we expect others to do (empirical expectations) and what we believe others think we ought to do (normative expectations). Little is known about the relative importance of these two types of expectation in individuals’ decisions, an issue that is particularly important when normative and empirical expectations are in conflict (e.g., systemic corruption, high crime cities). In this paper, we report data from Dictator game experiments where we exogenously manipulate dictators’ expectations in the direction of either selfishness or fairness. When normative and empirical expectations are in conflict, we find that empirical expectations about other dictators’ choices significantly predict a dictator’s own choice. However, dictators’ expectations regarding what other dictators think ought to be done do not have a significant impact on their decisions after controlling for empirical expectations. Our findings about the crucial influence of empirical expectations are important for designing institutions or policies aimed at discouraging undesirable behavior.

]]> Cristina Bicchieri et al. http://repository.cmu.edu/sds/101 http://repository.cmu.edu/sds/101 Fri, 04 Dec 2009 09:53:34 PST Research in economics and psychology has established that informal non-monetary sanctions, particularly expressions of negative emotion or disapproval, can enforce fair economic exchange. However, scholars are only beginning to understand the reasons non-monetary sanctions affect economic outcomes. Here we provide evidence that a preference to avoid written expression of disapproval, or negative emotion, plays an important role in promoting fair decision making. We study one-shot Dictator games where one subject has the right to determine a division of an amount of money between herself and her receiver. In relation to the standard game, we find significantly fewer earning-maximizing decisions when receivers can react to offers with ex post written messages. We further find that credible threats of monetary sanctions, while economically inefficient, are significantly more effective than written messages in deterring selfishness. Our data provide new perspectives on the role of communication in promoting economic efficiency in social environments, and support economic theories of decision incorporating psychological factors such as guilt, shame, and self-deception.

]]> Erte Xiao et al. http://repository.cmu.edu/sds/100 http://repository.cmu.edu/sds/100 Fri, 04 Dec 2009 09:53:34 PST The millions of deaths that occurred during China’s great famine of 1959-1961 represent one of the world’s greatest civil demographic disasters. Two primary hypotheses have been advanced to explain the famine. One is that China experienced three consecutive years of bad weather while the other is that national policies were wrong in that they reduced and misallocated agricultural production. The relative importance of these two factors to the famine remains controversial among China scholars. This paper uses provincial-level demographic panel data and a Bayesian empirical approach in an effort to distinguish the relative importance of weather and national policy on China’s great demographic disaster. Consistent with the qualitative literature in this area, we find that national policy played an overall more important role in the famine than weather. However, we provide new quantitative evidence that weather was also an important factor, particularly in those provinces that experienced excessively wet conditions.

]]> Daniel Houser et al. http://repository.cmu.edu/sds/99 http://repository.cmu.edu/sds/99 Thu, 03 Dec 2009 13:55:48 PST Efficient growth often requires the integration of individuals from lower-performing groups, firms, or societies into higher-performing ones. Such integration may be difficult without facilitating interventions or restrictions. We explore, using a laboratory experiment, the effectiveness of two regularly-employed entry restrictions: entry quotas and entry exams. We use a coordination game with Pareto-ranked equilibria, in which we allow an efficiently-coordinated group and an inefficiently-coordinated one to arise endogenously. We then allow individuals to move from the low-performing group to the better one. We vary whether such movement is unrestricted, is limited to one entrant per period, or is subject to passing an entry exam. We find both kinds of restrictions improve the efficient integration of entrants, but that there is no additional benefit obtained by their combination. The restrictions lead both to improved behavior among entrants and to the maintenance of good behavior among incumbents in the high-performing group.

]]> Timothy C. Salmon et al.