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Antonio Damasio: This Time With Feeling

Antonio Damasio, noted researcher and professor of neuroscience at USC, talks with The New York Times' David Brooks about emotions and the science of being huma
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Expert violinists can't tell old from new

Expert violinists can't tell old from new | Bounded Rationality and Beyond | Scoop.it

In PNAS, Fritz et al. (1) follow up their groundbreaking 2012 paper with what will probably be the final nail in the coffin for those who would believe that old musical instruments sound demonstrably better than new instruments. Their study used six prized instruments, Stradivari and Guarneri “del Gesu” violins, and six modern violins. World class violinists who were literally blind to provenance (the violinists wore goggles that dramatically reduced their ability to see) were given two opportunities to play them: in a small salon and in a concert hall. They were allowed to bring a friend to act as a second judge. Their task was to rank order the violins in terms of desirability and to label them as old vs. new. These highly trained and highly discerning musicians utterly failed at detecting old vs. new and showed no consistent preferences.

The study balanced rigor with real-world considerations and represents the most ecologically valid conditions possible while maintaining strict experimental protocols. Yet, intriguingly, the participants themselves remained unconvinced, even after having seen the results with their own eyes (or heard them with their own ears). Said one, “the one thing that you cannot put into a new violin is that it’s been played for 300 years—these instruments change and develop.” Said another, “I would absolutely buy a new instrument, but for a later generation. They need to be broken in” (2).

Why is it that musicians and scientists reach different conclusions when considering the same data? This arises in part due to different ways of knowing things. Scientists know what they know through systematic observation of the external world, mediated by replicable experiments and objective measurement. Artists know what they know through emotional experience, subjectivity, and intuition. When they …

 
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Rethinking Economics

Rethinking Economics | Bounded Rationality and Beyond | Scoop.it

We are an international network of students, thinkers and citizens...

...coming together to demystify, diversify, and invigorate economics.

We are thirsty for new ways of thinking. The economics we have been studying does not fit the economy we are living in.

We organise around the world. We are one of the founding members of theInternational Student Initiative for Pluralism in Economics (ISIPE).


Want to get involved? Read our organising aims and principles.

We are a non-partisan group. We are always looking for more organisers and collaborators.

Get involved and sign up to our mailing list!

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What is 'Behavioural Insights'? - YouTube

Behavioural insights draws on research into behavioural economics and psychology to influence choices in decision-making. By focusing on the social, cognitive and emotional behaviour of individuals and institutions it suggests that subtle changes to the way decisions are framed and conveyed can have big impacts on behaviour.
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The Intuitive Investor: A Simple Model of Intuition

The Intuitive Investor: A Simple Model of Intuition | Bounded Rationality and Beyond | Scoop.it
In part two of this new series, we present a simple model for intuition that provides a framework for understanding how to take advantage of its strengths and avoid its weaknesses.

Last month, I started a regular column on the power of intuition in investing that inspired many of you to write to me directly to discuss your experiences. While most of you viewed intuition positively, your responses indicated you still weren’t sure how to define it (i.e., that it lacked a central idea). You also expressed some reservations about applying intuition to investing because it is perceived as unreliable. Both these observations stem from the fact that we lack a simple, broadly adopted model of intuition to aid our understanding. With that in mind, here is my model. I hope it provides you with greater clarity.

A Simple Model of Intuition

Intuition is neither System 1 nor System 2 thinking as defined by Daniel Kahneman. Instead, intuition is a different category of mental action that is distinct from both instinct and deliberation. Intuition is a sense exactly like the five standard senses. Here is a simple model for understanding intuition as a sense:

 
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Loss Aversion in the Laboratory

Abstract: We report the results of a laboratory experiment testing for the existence of loss aversion in a standard risk aversion protocol (Holt and Laury, 2002). In our experiment, participants earn and retain money for a week before using it in an incentivized risk preference elicitation task. We find loss aversion, distinct from risk aversion, has a significant effect on behavior resulting in participants requiring higher compensation to bear risk.

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The optimism bias

The optimism bias | Bounded Rationality and Beyond | Scoop.it
Are we born to be optimistic, rather than realistic? Tali Sharot shares new research that suggests our brains are wired to look on the bright side -- and how that can be both dangerous and beneficial.
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Social norms, morals and self-interest as determinants of pro-environment behaviour

Abstract: This paper considers the role which selfish, moral and social incentives and pressures play in explaining the extent to which stated choices over pro-environment behaviours vary across individuals. The empirical context is choices over household waste contracts and recycling actions in Poland. A theoretical model is used to show how cost-based motives and the desire for a positive self- and social image combine to determine the utility from alternative choices of recycling behaviour. We then describe a discrete choice experiment designed to empirically investigate the effects such drivers have on stated choices. Using a latent class model, we distinguish three types of individual who are described as duty-orientated recyclers, budget recyclers and homo oeconomicus. These groups vary in their preferences for how frequently waste is collected, and the number of categories into which household waste must be recycled. Our results have implications for the design of future policies aimed at improving participation in recycling schemes.

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Cyberloafing at Work Makes You More Productive — PsyBlog

Cyberloafing at Work Makes You More Productive — PsyBlog | Bounded Rationality and Beyond | Scoop.it

Surfing the web at work for leisure makes you 9% more productive, a new study finds. Now there’s something positive to tell your boss the next time you’re caught on Facebook or YouTube at work. A new study finds that taking a break at work to browse the internet can boost your performance at work (Coker, 2014).

Dr. Brent Coker of Melbourne University was inspired to carry out the research after he forwarded a YouTube video to his sister.

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The scientific illusion of ‘modern’ macroeconomics

The scientific illusion of ‘modern’ macroeconomics | Bounded Rationality and Beyond | Scoop.it
from Lars Syll Deductivist modeling endeavours and an overly simplistic use of statistical and econometric tools are sure signs of the explanatory hubris that still haunts neoclassical mainstream

economics.

In a recent interview Robert Lucas says he now believes that

the evidence on postwar recessions … overwhelmingly supports the dominant importance of real shocks.

So, according to Lucas, changes in tastes and technologies should be able to explain the main fluctuations in e.g. the unemployment that we have seen during the last six or seven decades. But really — not even a Nobel laureate could in his wildest imagination come up with any warranted and justified explanation solely based on changes in tastes and technologies.

The Chicago übereconomist is simply wrong. But how do we protect ourselves from this kind of scientific nonsense? In The Scientific Illusion in Empirical Macroeconomics Larry Summers has a suggestion well worth considering — not the least since it makes it easier to understand how mainstream neoclassical economics actively has contributed to causing today’s economic crisis rather than to solving it

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UN MODELLO NEUROSCIENTIFICO DEL GIUDIZIO NORMATIVO NEL DIRITTO E NELLA GIUSTIZIA

Abstract
Gli odierni sviluppi delle scienze cognitive stanno fornendo una nuova comprensione della natura del giudizio normativo. Le analisi tradizionali in discipline come la filosofia, la religione, la psicologia e l’economia discordano circa il ruolo e l’utilità da attribuire alle intuizioni ed alle emozioni nel giudizio di colpevolezza. La psicologia cognitiva e la neurobiologia aggiungono nuovi strumenti e metodi di studio riguardo agli interrogativi concernenti il giudizio normativo. È acquisizione recente il consenso all’ipotesi che riconosce un importante ruolo alle emozioni ed alle intuizioni, e congettura che il giudizio morale è un processo distribuito nel cervello. Testare questo modello con studi sulle lesioni e con metodiche di scansione ha portato a collegare un insieme di regioni del cervello a questo giudizio, inclusa la corteccia prefrontale ventromediale, la corteccia orbitofrontale, la corteccia cingolata posteriore, ed il solco temporale posteriore superiore. Modelli migliori sulle emozioni e sulle
intuizioni aiuteranno a fornire un’ulteriore spiegazione dei processi coinvolti. La ricerca applicata al diritto ed alla giustizia appare meno sviluppata. Proponiamo in questo studio un modello di ‘law in the brain’ nel quale il diritto può reclutare un maggior numero di diverse sorgenti d’informazione e percorsi d’elaborazione, rispetto alla risposta morale intuitiva così com’è stata studiata fino ad ora.
Proponiamo ipotesi specifiche e linee di ricerca ulteriore che possono aiutare a testare quest’approccio.

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The Sociological Semantics of Complex Systems

The Sociological Semantics of Complex Systems | Bounded Rationality and Beyond | Scoop.it
Abstract The concept of complex systems is one of the most common and abused by sociologicalsemantics. Both complexity and system are epistemological terms which contribute toreshape the scientific research design and conceptual frames. Nevertheless, complexity andsystem are often used by everyday life in several misleading ways: for example complex isoften meant by common sense as a synonym for difficult, complicate, hard to understand,obscure and system is used by common sense as a synonym of “way “ or mechanism and is often geographically rooted (the Italian political system, for instance). Common sensegenerates misleading uses and affects public opinion about the understanding of science. This paper is not focused on the history and evolution of the concept of complex system it rather isaimed at reconstructing this concept in the current sociological depistemology to let complexsystems fully express their revolutionary and reconfigurational powers for social and politicalscience research
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Dan Ariely » Blog Archive Sports and Loss Aversion «

Dan Ariely » Blog Archive Sports and Loss Aversion « | Bounded Rationality and Beyond | Scoop.it

This analysis by the way has another interesting implication — it suggests that the value of being die hard fans is higher for games that take more time, where the fans get to enjoy the process for longer. Maybe this is why so many sports take breaks for time outs and advertisements breaks — they are not only doing it to increase their revenues, but they are also trying to give us, the fans, more time to enjoy the whole experience.

#neuroeconomy #neuroscience
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Global Brain: Web as Self-organizing Distributed Intelligence - Francis Heylighen - YouTube

Summer School in cognitive Science: Web Science and the Mind Institut des sciences cognitives, UQAM, Montréal, Canada http://www.summer14.isc.uqam.ca/

OVERVIEW: Distributed intelligence is an ability to solve problems and process information that is not localized inside a single person or computer, but that emerges from the coordinated interactions between a large number of people and their technological extensions. The Internet and in particular the World-Wide Web form a nearly ideal substrate for the emergence of a distributed intelligence that spans the planet, integrating the knowledge, skills and intuitions of billions of people supported by billions of information-processing devices. This intelligence becomes increasingly powerful through a process of self-organization in which people and devices selectively reinforce useful links, while rejecting useless ones. This process can be modeled mathematically and computationally by representing individuals and devices as agents, connected by a weighted directed network along which "challenges" propagate. Challenges represent problems, opportunities or questions that must be processed by the agents to extract benefits and avoid penalties. Link weights are increased whenever agents extract benefit from the challenges propagated along it. My research group is developing such a large-scale simulation environment in order to better understand how the web may boost our collective intelligence. The anticipated outcome of that process is a "global brain", i.e. a nervous system for the planet that would be able to tackle both global and personal problems..

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The Report - The Post-Crash Economics Society (PCES) have produced a compelling analysis of the failings in economics education and set out a road map for reform.

The Report - The Post-Crash Economics Society (PCES) have produced a compelling analysis of the failings in economics education and set out a road map for reform. | Bounded Rationality and Beyond | Scoop.it
RELEARNING ECONOMICS: The Post-Crash Economics Society (PCES) have produced a compelling analysis of the failings in economics education and set out a road map for reform. 

“This report addresses a real need, for a more pluralistic and varied approach to the economics curriculum at university level. The mainline of economics from Adam Smith onwards is diverse and often departs from the current mainstream and the way that the subject is taught needs to recognise this. I welcome this contribution to discussion about the way we should explore the living tradition of economic thought and the light it casts on the contemporary world.”

Dr Stephen Davies, Education Director at the Institute of Economic Affairs.

This is a very important Report by the Post-Crash Economics Society. They explore the existing curriculum in careful detail, displaying the narrow theoretical monoculture which characterises not only Manchester’s curriculum but most economics degree courses in the UK and, indeed, the world. They outline what they think the curriculum should be: a programme geared to the problems of the actual economy through history, using the diversity of analyses that have developed through the years. The Report is a landmark: scrupulous, well-informed, passionate, it is required reading for every head of an economics department and highly recommended for everyone interested in the future of economics.

Victoria Chick, Emeritus Professor of Economics at University College London and co-founder of the Post-Keynesian Economics Study Group.

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The fight to reform Econ 101

The fight to reform Econ 101 | Bounded Rationality and Beyond | Scoop.it

During the last weekend of June, hundreds of students, university lecturers, professors and interested members of the public descended on the halls of University College London to attend the Rethinking Economics conference. They all shared a similar belief: that economics education in most universities had become narrow, insular and detached from the real world.

For a brief period after the financial crisis of 2008, the shortcomings of the economics profession and the way it is taught were recognized. Many economists offered up mea culpas of various kinds and conceded that since they did not foresee the biggest economic event since the Great Depression, there was probably something seriously wrong with the discipline. But as time passed and many economies began to experience gradual, somewhat muted recoveries, the profession regained its confidence.

When I was completing my master’s degree at Kingston University last year, I experienced this firsthand from the more mainstream faculty there. Lecturers offered potted explanations of the crisis using old analytical tools such as supply and demand graphs that cannot incorporate expectations to explain asset price bubbles. The same economists who, just a few years ago, told us that financial markets were the conduits of perfect information began to introduce doublethink phrases in the media such as “rational bubble” (in which investors allegedly act irrationally by bidding up asset prices in full knowledge that prices are heavily inflated but think they can bail out of the market before prices fall) to explain the events of the past few years. There is nothing rational about investors’ acting this way, because they cannot know when the bubble will burst and so cannot time their exit from the market. They cannot know when the herd movement that they are part of will come to an end, so any action that they take to ride the wave will be just as irrational as those of people unaware of the bubble. The entire exercise appeared to be an ad hoc attempt to reinterpret the facts to fit the pet theory — economic agents aware of relevant information act rationally — rather than to alter the theory in light of the facts.

It was difficult not to sense the Soviet-style revisionism that had occurred within the halls of learning: The party had tossed history down the memory hole and introduced a strange, seemingly self-contradictory language that they were busy foisting upon an unwitting public. One Chicago school economist, Ray Ball, argues that the now notorious efficient market hypothesis (EMH), which states that financial markets price in all relevant information, is actually supported by the recent crisis. He argues that the capital flight that led to the bank meltdowns lends support to the EMH because it shows how rapidly financial markets react to new information. But as many will remember, investigations clearly showed that information was not being processed efficiently by market participants in the run-up to the crisis. The most colorful example of this was the Standard & Poor’s employee who, responding to a colleague who said that they should not be rating a mortgage-backed security deal because the estimations of risk were incorrect, said that cows could be estimating the risk of a product and S&P would still rate it.

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Nobel Laureate Robert Engle on High-Frequency Trading and Portfolio Management

Nobel Laureate Robert Engle on High-Frequency Trading and Portfolio Management | Bounded Rationality and Beyond | Scoop.it

n part one of my interview with Nobel laureate Robert Engle, we discussed the development of the ARCH model, the global financial crisis, systemic risk, and forecasting liquidity with ARCH models. In this part, we will cover the application of ARCH models in high-frequency trading and how he thinks risk models should be applied in portfolio management.

CFA Institute: Let’s switch gears and talk about some of the most practical ways traders and portfolio managers leverage risk modeling. How about we start with high-frequency trading?

Robert Engle: There is no reason why you can’t calculate value at risk at a millisecond interval, except that we probably need a better volatility model, a volatility model that is specific to the time frame. One way people have done this is sort of what I call the brute force approach, which is you take thousands of observations every day, then you take thousands of observations the next day, put them all together to make them a million observations long, and fit it into the GARCH model. And it turns out that doesn’t work very well because it spends most of its effort predicting time of day shapes. So the decay rates of volatility are like an hour long. It predicts two days ahead. The volatility is not affected by what we know today. And we know that is not true. We need a more complex model.

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Stirling Behavioural Science Blog : Nudging down under: article on the New South Wales Behavioural Insights Team

Stirling Behavioural Science Blog : Nudging down under: article on the New South Wales Behavioural Insights Team | Bounded Rationality and Beyond | Scoop.it
"In 2012, the New South Wales Department of Premier and Cabinet brought in one of the UK’s senior nudgers, Dr Rory Gallagher, to help establish its own taskforce, where he remains as managing adviser.The NSW Behavioural Insights Unit now claims impressive results of its own. Last month, it hosted the first ever international BI conference in Sydney. Several hundred delegates joined leading academics and practitioners in the emerging field — almost exclusively from the UK, the United States, Singapore and Australia — to discuss ways of gently nudging citizens by exploiting their cognitive biases, rather than coercing them.“What we’re trying to do is design and deliver government services around the way people actually behave,” Gallagher explained.Based on the nudge unit’s trials, the NSW Office of State Revenue is rolling out new penalty notices and reminders that are forecast to get an extra $10 million worth of fines paid on time each year, saving $80,000 in printing costs alone. The people encouraged to pay on time are expected to avoid about $4 million in extra penalties.At Westmead Hospital, the nudge unit helped increase the number of emergency in-patients who use their private health insurance by two percentage points. At Auburn Hospital, the same techniques tripled the number of patients using their private cover and, when used in two more local health districts, are expected to nudge the state’s bottom line to the tune of $11 million.A trial of ways to nudge injured employees back to work sooner finishes up this month. So far, those in the trial group have been back to full capacity 27% faster than the control group, and are three times as likely to have completed their claims within 30 days. #neuroeconomcs #behavioraleconomics
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"Nudging" Policy: Behavioral Economics in the Public Square | Institute of Politics - YouTube

Richard Thaler and Cass Sunstein, authors of Nudge: Improving Decisions About Health, Wealth, and Happiness joined moderators Nava Ashra, Associate Professor at Harvard Business School and Max Bazerman, co-director of the Center for Public Leadership for a discussion on behavioral economics. The panelists discussed how minimal changes or "nudges" can influence human behavior. Sunstein and Thaler also touched on how governments can use nudges and the perceived problems with using behavioral methods for policy purposes.
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Stirling Behavioural Science Blog : Loss aversion in penalty shootouts

Stirling Behavioural Science Blog : Loss aversion in penalty shootouts | Bounded Rationality and Beyond | Scoop.it

Kahneman discusses this phenomenon in his book Thinking Fast and Slow in the context of golf, where loss aversion actually improves performance:

"Failing to make par is a loss, but missing a birdies putt is a foregone gain, not a loss. [Devin] Pope and [Maurice] Schweitzer reasoned from loss aversion that players would try a little harder when putting for par (to avoid a bogey) than when putting for a birdie. They analyzed more than 2.5 million putts in exquisite detail to test that prediction. They were right. Whether the putt was easy or hard, at every distance from the hole, the players were more successful when putting for par [i.e. avoiding a loss] than for a birdie [i.e. achieving a gain]. The difference in their rate of success when going for par (to avoid a bogey) or for a birdie was 3.6%. 

This difference is not trivial. Tiger Woods was one of the "participants" in their study. If in his best years Tiger Woods had managed to putt as well for birdies as he did for par, his average tournament score would have improved by one stroke and his earnings by almost $1 million per season."

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A Theory of Representative Behavior in the Dictator Game

Abstract: In this paper we present a model of representative behavior in the dictator game. Individuals have simultaneous and non-contradictory preferences over monetary payoffs, altruistic actions and equity concerns. We require that these behaviors must be aggregated and founded in principles of representativeness and empathy. The model results match closely the observed mean split and replicate other empirical regularities (for instance, higher stakes reduce the willingness to give). In addition, we connect representative behavior with an allocation rule built on psychological and behavioral arguments. An approach consistently neglected in this literature. Key words: Dictator Game, Behavioral Allocation Rules, Altruism, Equity Concerns, Empathy, Self-interest JEL classification

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The Human Brain Project - Human Brain Project

The Human Brain Project - Human Brain Project | Bounded Rationality and Beyond | Scoop.it

Understanding the human brain is one of the greatest challenges facing 21st century science. If we can rise to it, we can gain profound insights into what makes us human, build revolutionary computing technologies and develop new treatments for brain disorders. Today, for the first time, modern ICT has brought these goals within reach.

 

The members of the HBP are saddened by the open letter posted on neurofuture.eu on 7 July 2014, as we feel that it divides rather than unifies our efforts to understand the brain. However, we recognize that the signatories have important concerns about the project. Here we try to clarify some of the main issues they touch on. We also invite the signatories to discuss their concerns in a direct scientific exchange with scientists leading the HBP and its subprojects.

 
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Neuromarketing: Capitalism’s Mindfuck. Maybe.Critical-Theory.com

Neuromarketing: Capitalism’s Mindfuck. Maybe.Critical-Theory.com | Bounded Rationality and Beyond | Scoop.it
Marketers are always looking for new ways to get you to buy their useless shit. It's no surprise then that the average consumer receives, on average, over 10,000 selling messages a day. But marketing, which was once an art of intuition, guessing and half-assed test groups, is becoming notably creepier. Enter neuromarketing, a rapidly growing field of study in neuroscience and marketing. Neuromarketing is the terrifying intersection between neuroscience's continued exploration of the brain and advertising's lust to exploit said exploration for profit. Neuromarketers use brain scans and neuroimaging to figure out which of those 10,000 messages will actually make us buy shit without thinking or questioning. In short, it's like if "1984" and "They Live" had a baby and named it "exactly this." The emerging field began in 1997 with an article written by Wolfram Shultz on the physiology of prediction and reward. It was Schultz's work, in conjunction with other pioneering neuroscientists,
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Neurologia e Diritto: il caso del pedriata pedofilo Mattiello

Neurologia e Diritto: il caso del pedriata pedofilo Mattiello | Bounded Rationality and Beyond | Scoop.it

Certo non tutti i giudici sono ugualmente ben disposti ad accettare che il dibattimento si sposti su un terreno neuroscientifico, ma anche grazie alle Scuole organizzate dall'Associazione Europa per le Neuroscienze e il Diritto, di cui Santosuosso è presidente, i giuristi stanno cominciando a padroneggiare la materia. NON SOLO MOLECOLE.  Le sentenze che riconoscono il valore della prova neuroscientifica pongono infatti un problema di ordine politico più ampio: se una persona ha la mutazione MAOA, ed è quindi più probabile che agisca violentemente, in che modo può essere recuperato? «Il fattore genetico o neurofisiologico sono solo alcuni degli elementi in gioco, sono importanti perché ci aiutano a capire meglio, ma non esauriscono la personalità dell'imputato», sottolinea ancora Santosuosso: «Sono gli altri pezzi del puzzle su cui posiamo agire: la storia personale, l'educazione, l'ambiente in cui la persona è vissuta e vive. Agendo su questi i risultati si ottengono, con o senza variante genetica». 

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Ikea Effect

Michael I. Norton a, Daniel Mochon, Dan Ariely

Abstract
In four studies in which consumers assembled IKEA boxes, folded origami, and built sets of Legos, we demonstrate and investigate boundary conditions for the IKEA effect—the increase in valuation of self-made products. Participants saw their amateurish creations as similar in value to experts' creations, and expected others to share their opinions. We show that labor leads to love only when labor results in successful completion of tasks; when participants built and then destroyed their creations, or failed to complete them, the IKEA effect dissipated. Finally, we show that labor increases valuation for both “do-it-yourselfers” and novices.

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‘Rational expectations’ — nonsense on stilts

‘Rational expectations’ — nonsense on stilts | Bounded Rationality and Beyond | Scoop.it

Assumptions in scientific theories/models are often based on (mathematical) tractability (and so necessarily simplifying) and used for more or less self-evidently necessary theoretical consistency reasons. But one should also remember that assumptions are selected for a specific purpose, and so the arguments (in economics shamelessly often totally non-existent) put forward for having selected a specific set of assumptions, have to be judged against that background to check if they are warranted.

This, however, only shrinks the assumptions set minimally – it is still necessary to decide on which assumptions are innocuous and which are harmful, and what constitutes interesting/important assumptions from an ontological & epistemological point of view (explanation, understanding, prediction). Especially so if you intend to refer your theories/models to a specific target system — preferably the real world. To do this one should start by applying a Real World Filter in the form of aSmell Test: Is the theory/model reasonable given what we know about the real world? If not, why should we care about it? If not – we shouldn’t apply it (remember time is limited and economics is a science on scarcity & optimization …)

 #neuroeconomy #Behavioraleconomics #neuroeconomia#boundedrationality #nudge 

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