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Behavioral Economics Improve Workforce Health Decisions

Behavioral Economics Improve Workforce Health Decisions | Bounded Rationality and Beyond | Scoop.it

Research about behavioral economics—the study of how people make choices, drawing on insights from psychology and economics—can be extremely useful in designing and communicating employee health plans.

Many health decisions that should be rational are not. In fact, irrational decisions that involve health benefits and health care are prevalent throughout peoples’ lives. The following are a few examples:

• Although children receive numerous public health messages, many young adults still become tobacco and drug users and/or obese and diabetic.

• While people understand the value of preventive health care and like the fact that many health plans now offer preventive care services without deductibles, co-payments or co-insurance, many still fail to get free health screenings or physical exams.

• Few consumers access the substantial amount of data that is available about hospital costs and mortality, readmission and hospital-acquired infection rates when they make decisions about hospitals and surgeons.

• Many people with addictions relapse into addictive behavior following lengthy periods of abstinence and sobriety.

• When some people reach age 65, they ask a friend which of the many Medicare plans to purchase instead of researching the options and making an informed decision.

In each of these examples, behavioral biases cloud rational judgment. Understanding these tendencies can help organizations redesign how they configure and communicate their health benefit plans to nudge people toward better decisions that produce better outcomes for participants and employers.

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A Political Justification of Nudging

Abstract: Nudge policies are typically justified from paternalistic premises: nudges are acceptable if they benefit the individuals who are nudged. A tacit assumption behind this strategy is that the biases of decision that choice architects attempt to eliminate generate costs that are paid mainly by the decision-makers. For example, in the case of intertemporal discounting, the costs of preference reversal are paid by the discounters. We argue that this assumption is unwarranted. In the real world the costs of reversal are often transferred onto other individuals. But if this is the case, the biases create externalities, and nudges are best justified from a political rather than paternalistic standpoint. 
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Choice Architecture by Richard H. Thaler, Cass R. Sunstein, John P. Balz :: SSRN

Choice Architecture by Richard H. Thaler, Cass R. Sunstein, John P. Balz :: SSRN | Bounded Rationality and Beyond | Scoop.it
Abstract:      
Decision makers do not make choices in a vacuum. They make them in an environment where many features, noticed and unnoticed, can influence their decisions. The person who creates that environment is, in our terminology, a choice architect. In this paper we analyze some of the tools that are available to choice architects. Our goal is to show how choice architecture can be used to help nudge people to make better choices (as judged by themselves) without forcing certain outcomes upon anyone, a philosophy we call libertarian paternalism. The tools we highlight are: defaults, expecting error, understanding mappings, giving feedback, structuring complex choices, and creating incentives.
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Sound representation in higher language areas during language generation

Abstract

How language is encoded by neural activity in the higher-level language areas of humans is still largely unknown. We investigated whether the electrophysiological activity of Broca’s area correlates with the sound of the utterances produced. During speech perception, the electric cortical activity of the auditory areas correlates with the sound envelope of the utterances. In our experiment, we compared the electrocorticogram recorded during awake neurosurgical operations in Broca’s area and in the dominant temporal lobe with the sound envelope of single words versus sentences read aloud or mentally by the patients. Our results indicate that the electrocorticogram correlates with the sound envelope of the utterances, starting before any sound is produced and even in the absence of speech, when the patient is reading mentally. No correlations were found when the electrocorticogram was recorded in the superior parietal gyrus, an area not directly involved in language generation, or in Broca’s area when the participants were executing a repetitive motor task, which did not include any linguistic content, with their dominant hand. The distribution of suprathreshold correlations across frequencies of cortical activities varied whether the sound envelope derived from words or sentences. Our results suggest the activity of language areas is organized by sound when language is generated before any utterance is produced or heard.

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Factors influencing the purchase and consumers’ willingness to pay for ground bison

A consumer preference study that included willingness to pay and consumer sensory experiments was conducted for ground bison versus ground beef. A total of 82 subjects completed the study. The initial statistical analysis suggest that there is consistent consumer behavior with respect to consumer preference and frequency of consumption within species consumption options, but consistent consumer behavior appears to weaken when across species consumption preferences is compared to across species frequency of consumption patterns.

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How Does the Brain Adapt to the Restoration of Eyesight?

How Does the Brain Adapt to the Restoration of Eyesight? | Bounded Rationality and Beyond | Scoop.it
Recent scientific advances have meant that eyesight can be partially restored to those who previously would have been blind for life. However, scientists at the University of Montreal and the University of Trento have discovered that the rewiring of the senses that occurs in the brains of the long-term blind means that visual restoration may never be complete.
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Nudging Energy Efficiency Behavior: The Role of Information Labels

Nudging Energy Efficiency Behavior: The Role of Information Labels | Bounded Rationality and Beyond | Scoop.it
Abstract: We use choice experiments and randomized information treatments to study the effectiveness of alternative energy efficiency labels in guiding households’ energy efficiency decisions. We disentangle the relative importance of different types of information and distinguish it from intertemporal behavior. We find that insufficient information can lead to considerable undervaluation of energy efficiency. Simple information on the monetary value of energy savings was the most important element guiding cost-efficient energy efficiency investments, with information on physical energy use and carbon dioxide emissions having additional but lesser importance. The degree to which the current US EnergyGuide label guided cost-efficient decisions depends on the discount rate. Using elicited individual discount rates, the current EnergyGuide label came very close to guiding cost-efficient decisions. Using a uniform 5% discount rate, the current label led to one-third undervaluation of energy efficiency. Our results reinforce the centrality of discounting in understanding individual behavior and guiding policy. 
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What Is Compliance?

What Is Compliance? | Bounded Rationality and Beyond | Scoop.it
Have you ever done something simply because someone asked you to? In psychology, this is known as compliance. Learn more about the psychology behind compliance, including some of the techniques people use to get people to comply with their wishes.
What Is Compliance?

In psychology, compliance refers to changing one's behavior due to the request or direction of another person. It is going along with the group or changing a behavior to fit in with the group, while still disagreeing with the group. Unlike obedience, in which the other individual is in a position of authority, compliance does not rely upon being in a position of power or authority over others.

"Compliance refers to a change in behavior that is requested by another person or group; the individual acted in some way because others asked him or her to do so (but it was possible to refuse or decline.)"
(Breckler, Olson, & Wiggins, 2006)

 

"Situations calling for compliance take many forms. These include a friend's plea for help, sheepishly prefaced by the question "Can you do me a favor?" They also include the pop-up ads on the Internet designed to lure you into a commercial site and the salesperson's pitch for business prefaced by the dangerous words "Have I got a deal for you!" Sometimes the request is up front and direct; what you see is what you get. At other times, it is part of a subtle and more elaborate manipulation."
(Kassin, Fein, & Markus, 2011)
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The Asch Experiments: Why Do We Feel the Need to Conform?

The Asch Experiments: Why Do We Feel the Need to Conform? | Bounded Rationality and Beyond | Scoop.it

Do you think of yourself as a conformist or a non-conformist? If you are like most people, you probably believe that you are non-conformist enough to stand up to a group when you know you are right, but conformist enough to blend in with the rest of your peers.

 

Imagine yourself in this situation: You've signed up to participate in a psychology experiment in which you are asked to complete a vision test. Seated in a room with the other participants, you are shown a line segment and then asked to choose the matching line from a group three segments of different lengths. The experimenter asks each participant individually to select the matching line segment. On some occasions everyone in the group chooses the correct line, but occasionally, the other participants unanimously declare that a different line is actually the correct match.

 

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The Neuropeptide Oxytocin Regulates Parochial Altruism in Intergroup Conflict Among Humans

ABSTRACT

Humans regulate intergroup conflict through parochial altruism; they self-sacrifice to contribute to in-group welfare and to aggress against competing out-groups. Parochial altruism has distinct survival functions, and the brain may have evolved to sustain and promote in-group cohesion and effectiveness and to ward off threatening out-groups. Here, we have linked oxytocin, a neuropeptide produced in the hypothalamus, to the regulation of intergroup conflict. In three experiments using double-blind placebo-controlled designs, male participants self-administered oxytocin or placebo and made decisions with financial consequences to themselves, their in-group, and a competing out-group. Results showed that oxytocin drives a “tend and defend” response in that it promoted in-group trust and cooperation, and defensive, but not offensive, aggression toward competing out-groups.

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The Neuroscience Of Being A Good Leader

The Neuroscience Of Being A Good Leader | Bounded Rationality and Beyond | Scoop.it

Neuroscience has gained so much popularity in the last few years, because of advancements made by scientists in human nature and behavior change. I find neuroscience so interesting, and have been spending a lot of my free time learning more about it.  All of this research is especially relevant for being a good leader in the workplace, where executives need to change the behavior of potentially thousands of employees. But getting people to change their behavior is easier said than done. Change literally hurts us. In studies of people who have had coronary bypass surgery, only one in nine people adopt healthier day-to-day habits. I won’t go into too much detail behind why this is, but it’s basically because of the parts of the brain that are used to develop new habits vs continuing with old habits. The part of the brain used to build new habits uses a lot more energy than the part that’s used for old habits. A simple example is when someone that’s been driving a car for years goes somewhere in the world where they drive on the other side of the road. They find that driving incredibly difficult.

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Men and Women Process Emotions in Different Ways: This Affects What They Remember — PsyBlog

Men and Women Process Emotions in Different Ways: This Affects What They Remember — PsyBlog | Bounded Rationality and Beyond | Scoop.it

Study of 3,000+ finds men and women process emotions differently and this affects what they remember. 

Women rate emotional images as more stimulating and are more likely to remember them than men, a new study finds.

While strong emotions tend to boost memory for both men and women, this neuroimaging study may help explain why women often outperform men on memory tests.

The results come from a very large study of 3,398 people who took part in four different trials.

Both men and women were asked to look at a series of pictures, some of which were emotionally arousing and others which were neutral.

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Prof. Hankell's curator insight, January 23, 8:16 AM

The results, published in the Journal of Neuroscience, showed that women found the emotional pictures — and especially the negative pictures — more stimulating than the men...

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Senior Lectures: Ralph Abraham - Complex Dynamical Systems - YouTube

2010 lecture by Ralph Abraham to Ross School Seniors on the history of mathematics leading to the development of Complex Dynamical Systems Theory and the impact that Chaos Theory had on this 'new' branch of mathematics.
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A response to Dolan

Paul Dolan argues that there are two broad approaches to behavioural change: changing minds and changing contexts. He argues that while the former approach relies more heavily on conscious and reasoned processes, the latter predominantly deals with the subconscious, automated system of the human brain and attempts to facilitate change by altering the ‘environmental context’ in which people make decisions. In particular, he notes that the latter approach (i.e. changing contexts) has received relatively little attention in the past and that, by focusing on altering people’s choice environment, ‘mindspace’ represents a promising framework for improving the public’s financial capabilities. In explaining the rationale behind the development and application of the mindspace framework, he states: ‘new models of behaviour change are needed in general, and in consumer finance in particular, as existing theories and methods leave a substantial proportion of the variance in behaviour, beyond the effect of rational (conscious) intentions, to be explained’ 

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How emotions influence what we buy | Giancarlo Mirmillo | LinkedIn

How emotions influence what we buy | Giancarlo Mirmillo | LinkedIn | Bounded Rationality and Beyond | Scoop.it

People believe that the choices they make result from a rational analysis of available alternatives.

In reality, however, emotions greatly influence and, in many cases, even determine our decisions. In his book, Descartes Error, Antonio Damasio, professor of neuroscience at the University of Southern California, argues that emotion is a necessary ingredient to almost all decisions.

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Put your model where your mouth is: a choice prediction competition - Decision Science News

Put your model where your mouth is: a choice prediction competition - Decision Science News | Bounded Rationality and Beyond | Scoop.it
A competition among models that capture classical choice anomalies (including Allais, St. Petersburg, and Ellsberg paradoxes, and loss aversion) .
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Feedback and Emotions in the Trust Game

Feedback and Emotions in the Trust GameWe conduct an experiment on the impact of feedback in the Trust Game. In our treatment group, the Trustee has the opportunity to give feedback to the Investor (free in choice of wording and contents). The feedback option is found to reduce the share of Investors who sent no resources to the Trustee, while the impact on average behavior is less pronounced. The notion proposed by Xiao and Houser (2005, PNAS) according to which verbal feedback and monetary sanctions are substitutes is not supported. We use the PANAS-scale (Mackinnon et al., 1999) to capture change in subjects’ short-run affective state during the experiment. Receiving feedback has an impact on the Investors’ short-run affective state but giving feedback is not found to have an effect on Trustees’ short-run affective state.   
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Nudging Energy Efficiency Behavior: The Role of Information Labels

Abstract: We use choice experiments and randomized information treatments to study the effectiveness of alternative energy efficiency labels in guiding households’ energy efficiency decisions. We disentangle the relative importance of different types of information and distinguish it from intertemporal behavior. We find that insufficient information can lead to considerable undervaluation of energy efficiency. Simple information on the monetary value of energy savings was the most important element guiding cost-efficient energy efficiency investments, with information on physical energy use and carbon dioxide emissions having additional but lesser importance. The degree to which the current US EnergyGuide label guided cost-efficient decisions depends on the discount rate. Using elicited individual discount rates, the current EnergyGuide label came very close to guiding cost-efficient decisions. Using a uniform 5% discount rate, the current label led to one-third undervaluation of energy efficiency. Our results reinforce the centrality of discounting in understanding individual behavior and guiding policy.
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Nudging Healthy Lifestyles – Informing Regulatory Governance with Behavioural Research

Nudging Healthy Lifestyles – Informing Regulatory Governance with Behavioural Research | Bounded Rationality and Beyond | Scoop.it
Abstract: At a time when policy makers want to change the behaviour of citizens to tackle a broad range of social problems, such as climate change, excessive drinking, obesity and crime, a promising new policy approach has appeared that seems capable of escaping the liberal reservations typically associated with all forms of regulatory action. The approach, which stems from the increasingly ubiquitous findings of behavioural research, is generally captured under the evocative concept of ‘nudge.’ Inspired by ‘libertarian paternalism,’ it suggests that the goal of public policies should be to steer citizens towards making positive decisions as individuals and for society while preserving individual choice. As governments are taking considerable interest in the use of ‘nudging,’ this collection of essays provides a pioneering analysis of this innovative policy approach as it is currently experimented in the United Kingdom and the United States. In particular, it aims at critically examining the application of nudging approaches to the current efforts of regulating lifestyle choices, such as tobacco use, excessive use of alcohol, unhealthy diets and lack of physical exercise. In his opening essay, Nudging Healthy Lifestyles, Adam Burgess provides a critical assessment of the introduction of behavioural, nudging approaches to correct lifestyle behaviours in the UK. His thought-provoking analysis triggered a lively debate that has been framed along the subsequent essays signed by On Amir and Orly Lobel, Evan Selinger and Kyle Powys White, Alberto Alemanno and Luc Bovens. Each of these essays critically reflects upon the effectiveness as well as legitimacy of ‘nudging’ approaches
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Journal of the European Economic Association - Volume 11 Themed Issue: Social Norms: Theory and Evidence from Laboratory and Field - June 2013 - Wiley Online Library

Journal of the European Economic Association - Volume 11 Themed Issue: Social Norms: Theory and Evidence from Laboratory and Field - June 2013 - Wiley Online Library | Bounded Rationality and Beyond | Scoop.it
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The race may be close but my horse is going to win: Wish fulfillment in the 1980 presidential election - Springer

The race may be close but my horse is going to win: Wish fulfillment in the 1980 presidential election - Springer | Bounded Rationality and Beyond | Scoop.it
Abstract

Using data from the 1980 U.S. presidential election, we investigate the extent to which voter expectations about candidate electoral success and margin of victory are subject to systematic biases. In particular, we examine the extent to which candidate supporters overestimate their choice's likelihood of success. After finding a rather dramatic bias in the direction of “wishful thinking,” we review alternative explanations of this phenomenon, including a model based on nonrandom contact networks and one based on preference-related differences in expectations about exogenous variables that could affect the election outcome.

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Risk Perception and Affect

Abstract

Humans perceive and act on risk in two fundamental ways. Risk as feelings refers to individuals' instinctive and intuitive reactions to danger. Risk as analysis brings logic, reason, and scientific deliberation to bear on risk management. Reliance on risk as feelings is described as “the affect heuristic.” This article traces the development of this heuristic and discusses some of the important ways that it impacts how people perceive and evaluate risk.

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Stanford study finds walking improves creativity

Stanford study finds walking improves creativity | Bounded Rationality and Beyond | Scoop.it

Stanford researchers found that walking boosts creative inspiration. They examined creativity levels of people while they walked versus while they sat. A person's creative output increased by an average of 60 percent when walking.Many people claim they do their best thinking while walking. A new study finds that walking indeed boosts creative inspiration. Steve Jobs, the late co-founder of Apple, was known for his walking meetings. Facebook's Mark Zuckerberg has also been seen holding meetings on foot. And perhaps you've paced back and forth on occasion to drum up ideas. A new study by Stanford researchers provides an explanation for this. Creative thinking improves while a person is walking and shortly thereafter, according to a study co-authored by Marily Oppezzo, a Stanford doctoral graduate in educational psychology, and Daniel Schwartz, a professor at Stanford Graduate School of Education. The study found that walking indoors or outdoors similarly boosted creative inspiration. The act of walking itself, and not the environment, was the main factor. Across the board, creativity levels were consistently and significantly higher for those walking compared to those sitting. "Many people anecdotally claim they do their best thinking when walking. We finally may be taking a step, or two, toward discovering why," Oppezzo and Schwartz wrote in the study published this week in the Journal of Experimental Psychology: Learning, Memory and Cognition.

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Profiting From Market Randomness

Profiting From Market Randomness | Bounded Rationality and Beyond | Scoop.it
Summary
People believe they can control positive investment outcomes - when in reality, luck, chance, randomness is what mainly drives investment results.It is safe to say that the more someone’s investment performance deviates from the norm, the larger the probability of it coming from luck rather than skill.But since luck always reverts to the mean in the end, investing with the next hotshot fund manager could be a very bad (and unprofitable) decision.Therefore, the best and most cost-effective approach is to become a passive investor and take advantage of the market's long-term upward trend.More sophisticated investors can take it a step further by employing a barbell strategy which combines passive investing with dynamic hedging to protect against market downturns.

In the summer of 2012, I had the unfortunate privilege of attending a private investment conference. On the first day of this two-day event, each attendee was asked to predict what the market (the Dow Jones) would do the next day. To me, this contest seemed like a total waste of time. But after I realized how seriously everyone else was taking it, I decided to play along. I knew that the vast majority of people - expecting the market to remain calm as usual - would predict a small move, like up or down 75 points. So, I decided to have a little fun and predicted the market to be up 300 points. I knew that I would probably lose; but if I won, everyone would think I possessed some special knowledge or insight which they lacked. Sure enough, the next day the Dow was up 287 points, and I won by a huge margin - about 100 points.

After the conference, several dozen people came up to me wanting to know my "secret." Just to amuse myself, I told them that I used a highly accurate, proprietary algorithm that analyzed global news articles in order to predict the market's short-term performance. Of course, all of this was pure fiction. I had no idea what the market was going to do that day, nor did I care very much - I just got lucky. However, the fact that everyone believed me clearly demonstrates the blind faith and ignorance of these so-called "investment experts."

The main purpose of the following article is to help the general reader, as well as experienced investors, better understand and appreciate the role of luck in financial markets. Because only once we have a firm understanding of this mysterious and unpredictable force can we develop strategies to profit from it.

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Noam Chomsky: Are We on the Verge of Total Self-Destruction?

Noam Chomsky: Are We on the Verge of Total Self-Destruction? | Bounded Rationality and Beyond | Scoop.it
If you ask what the world is going to look like, it’s not a pretty picture.

Via jean lievens
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MINDSPACE Influencing behaviour through public policy

Influencing people‟s behaviour is nothing new to Government, which has often used tools such as legislation, regulation or taxation to achieve desired policy outcomes. But many of the biggest policy challenges we are now facing – such as the increase in people with chronic health conditions – will only be resolved if we are successful in persuading people to change their behaviour, their lifestyles or their existing habits. Fortunately, over the last decade, our understanding of influences on behaviour has increased significantly and this points the way to new approaches and new solutions. So whilst behavioural theory has already been deployed to good effect in some areas, it has much greater potential to help us. To realise that potential, we have to build our capacity and ensure that we have a sophisticated understanding of what does influence behaviour. This report is an important step in that direction because it shows how behavioural theory could help achieve better outcomes for citizens, either by complementing more established policy tools, or by suggesting more innovative interventions. In doing so, it draws on the most recent academic evidence, as well as exploring the wide range of existing good work in applying behavioural theory across the public sector. Finally, it shows how these insights could be put to practical use. This report tackles complex issues on which there are wide-ranging public views.We hope it will help stimulate debate amongst policy-makers and stakeholders and help us build our capability to use behaviour theory in an appropriate and effective way.

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