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Legal Theory Blog: Hill on Behavioral Law & Economics & a Theory of Human Nature

Legal Theory Blog: Hill on Behavioral Law & Economics & a Theory of Human Nature | Bounded Rationality and Beyond | Scoop.it
Law and economics embeds a theory - that people are rational maximizers of their self-interest. Law and economics admits its theory is unrealistic; it touts instead its theory’s ability to predict.
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Bounded Rationality and Beyond
News on the effects of bounded rationality in economics and business, relationships and politics
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The Globe of Economic Complexity: Visualize $15 Trillion of World Exports

The Globe of Economic Complexity: Visualize $15 Trillion of World Exports | Bounded Rationality and Beyond | Scoop.it
One dot equals $100M of exports
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Inside the Nudge Unit by David Halpern | Waterstones.com

Inside the Nudge Unit by David Halpern | Waterstones.com | Bounded Rationality and Beyond | Scoop.it
Every day we make countless decisions, from the small, mundane things to tackling life's big questions, but we don't always make the right choices. Behavioural scientist Dr David Halpern heads up Number 10's 'Nudge Unit', the world's first government institution that uses behavioural economics to examine and influence human behaviour, to 'nudge' us into making better decisions. Seemingly small and subtle solutions have led to huge improvements across tax, healthcare, pensions, employment, crime reduction, energy conservation and economic growth. Adding a crucial line to a tax reminder brought forward millions in extra revenue; refocusing the questions asked at the job centre helped an extra 10 per cent of people come off their benefits and back into work; prompting people to become organ donors while paying for their car tax added an extra 100,000 donors to the register in a single year. After two years and dozens of experiments in behavioural science, the results are undeniable. And now David Halpern and the Nudge Unit will help you to make better choices and improve your life.
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Structuration Theory and Self-Organization.PDF

Structuration Theory and Self-Organization.PDF | Bounded Rationality and Beyond | Scoop.it

Social systems theory is dominated by a reductionistic individualism and a dualistic  functionalism. Especially the  latter doesn’t adequately  integrate the human being. In order to avoid dualism, mechanistic determinism and reductionism,  a dialectical concept  of  social  systems that is based on the notion  of  self-organization  seems necessary. In order to establish a dialectical theory of social self-organization it is appropriate to integrate aspects of  Anthony  Giddens’  structuration  theory.  Gidden’  acknowledges  the  importance  of  knowledgeable  human actors  in  society  and  argues  that  structures  are  medium  and outcome  of  actions.  Structures both enable and constrain social actions. This  idea corresponds  to  saying  that  social systems  are  re-creative,  i.e.  self-organising  social  systems.  Re-creativity  is  based on the creative activities of human beings. Social structures exist in and through the productive practices and relationships of human actors. The  term  evolution can be employed in a non-functionalist way that acknowledges the importance  of knowledgeable  human actors in social systems by conceiving the  historical development of society based on a dialectic of  chance and necessity and the principle of order through fluctuation in situations of instability and bifurcation.  All  self-organising  systems  are  information-generating  systems. Giddens’ concept of  storage mechanisms that allow time-space distanciation of  social relationships helps to describe the relationship of information and self-organization in social systems.

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What is neuroeconomics?

What is neuroeconomics?
The new field of neuroeconomics looks at how economic decision-making actually happens inside the brain. Jonathan Cohen, co-director of the Princeton Neuroscience Institute at Princeton University, describes insights that are emerging from the collaborative work of neuroscientists, psychologists, and economists.

Neuroeconomics tries to bridge the disciplines of neuroscience, psychology, and economics. I think of economics and psychology as really, in some sense, one discipline. I know that that's a strident statement to make, but they really are siblings separated at birth. Psychology and economics are complementary disciplines, in many cases studying the same phenomena: decision making, value-based judgment, heuristics. One side approaches it from a phenomenological, experiment-driven perspective and the other from an abstract, theoretical perspective. 

Psychologists, with exceptions, have pretty much been empiricists. Human behavior is complicated. We might have a theory but don't have enough data to test it. Any theory would make many assumptions but we don't know which ones are valid. So, the discipline, at least over much of its life, has focused largely on collecting data, deferring the development of formal theory. Economists did the opposite. It's all about theory. The experimental approach of behavioral economics is a relatively recent innovation. 

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Bentham’s Fallacies, Then and Now

Bentham’s Fallacies, Then and Now | Bounded Rationality and Beyond | Scoop.it

MELBOURNE – In 1809, Jeremy Bentham, the founder of utilitarianism, set to work on The Book of Fallacies. His goal was to expose the fallacious arguments used to block reforms like the abolition of “rotten boroughs” – electorates with so few electors that a powerful lord or landowner could effectively select the member of parliament, while newer cities like Manchester remained unrepresented.

Bentham collected examples of fallacies, often from parliamentary debates. By 1811, he had sorted them into nearly 50 different types, with titles like “Attack us, you attack Government,” the “No precedent argument,” and the “Good in theory, bad in practice” fallacy. (One thing on which both Immanuel Kant and Bentham agree is that this last example is a fallacy: If something is bad in practice, there must be a flaw in the theory.)

Bentham was thus a pioneer of an area of science that has made considerable progress in recent years. He would have relished the work of psychologists showing that we have a confirmation bias (we favor and remember information that supports, rather than contradicts, our beliefs); that we systematically overestimate the accuracy of our beliefs (the overconfidence effect); and that we have a propensity to respond to the plight of a single identifiable individual rather than a large number of people about whom we have only statistical information.

 

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Hierarchical mutual information for the comparison of hierarchical community structures in complex networks

The quest for a quantitative characterization of community and modular structure of complex networks produced a variety of methods and algorithms to classify different networks. However, it is not clear if such methods provide consistent, robust and meaningful results when considering hierarchies as a whole. Part of the problem is the lack of a similarity measure for the comparison of hierarchical community structures. In this work we give a contribution by introducing the {\it hierarchical mutual information}, which is a generalization of the traditional mutual information, and allows to compare hierarchical partitions and hierarchical community structures. The {\it normalized} version of the hierarchical mutual information should behave analogously to the traditional normalized mutual information. Here, the correct behavior of the hierarchical mutual information is corroborated on an extensive battery of numerical experiments. The experiments are performed on artificial hierarchies, and on the hierarchical community structure of artificial and empirical networks. Furthermore, the experiments illustrate some of the practical applications of the hierarchical mutual information. Namely, the comparison of different community detection methods, and the study of the the consistency, robustness and temporal evolution of the hierarchical modular structure of networks.

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The effect of decentralized behavioral decision making on system-level ris

Abstract: Certain classes of system-level risk depend partly on decentralized lay decision making. For instance, an organization's network security risk depends partly on its employees' responses to phishing attacks. On a larger scale, the risk within a financial system depends partly on households' responses to mortgage sales pitches. Behavioral economics shows that lay decision makers typically depart in systematic ways from the normative rationality of Expected Utility (EU), and instead display heuristics and biases as captured in the more descriptively accurate Prospect Theory (PT). In turn psychological studies show that successful deception ploys eschew direct logical argumentation and instead employ peripheral-route persuasion, manipulation of visceral emotions, urgency, and familiar contextual cues. The detection of phishing emails and inappropriate mortgage contracts may be framed as a binary classification task. Signal Detection Theory (SDT) offers the standard normative solution, formulated as an optimal cutoff threshold, for distinguishing between good/bad emails or mortgages. In this paper we extend SDT behaviorally by re-deriving the optimal cutoff threshold under PT. Furthermore we incorporate the psychology of deception into determination of SDT's discriminability parameter. With the neo-additive probability weighting function, the optimal cutoff threshold under PT is rendered unique under well-behaved sampling distributions, tractable in computation, and transparent in interpretation. The PT-based cutoff threshold is (i) independent of loss aversion and (ii) more conservative than the classical SDT cutoff threshold. Independently of any possible misalignment between individual-level and system-level misclassification costs, decentralized behavioral decision makers are biased toward under-detection, and system-level risk is consequently greater than in analyses predicated upon normative rationality.

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Integral Options Cafe: Biophotonic Communications and Information Encoding in Complex Systems - Implications for Consciousness?

Integral Options Cafe: Biophotonic Communications and Information Encoding in Complex Systems - Implications for Consciousness? | Bounded Rationality and Beyond | Scoop.it

How does consciousness emerge from inert matter? This may be the hardest part of the "hard problem" that is consciousness. We have developed pretty solid models for explaining how the various modules and circuits in the brain work together (often in parallel processes) to create awareness and a sense of self.

But how does the brain itself, a three pound lump of fatty acids, produce consciousness? We don't really know, but the research presented below offers the beginning of a possible explanation, but only if the various models are combined (integrated) to generate a coherent theory.

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How Markets Alleviate the Excessive Choice Effect: A Field Experiment on Craft Beer Choice

Abstract: Research in psychology suggests that, somewhat paradoxically, providing consumers more choice can reduce the likelihood of making a purchase, producing the so-called excessive choice effect (ECE). To the extent the ECE exists, firms have an incentive to alleviate the effect through a variety of consumer-focused institutions that lower search costs. This study determines the effectiveness of three consumer-focused institutions on the excessive choice effect in a field experiment focused on beer sales in a restaurant. We manipulate the number of options on the menu (6 vs. 12) in addition to the use of search cost lowering consumer-focused institutions (a control, a menu, a menu with a special prominently displayed, a menu with local options prominently highlighted, and a menu with beer advocate scores). Although we find that consumers tend to be more likely to order beer when presented 6 rather than 12 options, the differences are often not significant depending which data are used and how it is analyzed. Highlighting specials or listing beer rankings have an effect on consumer choices, and have the potential to decrease the excessive choice effect. The experiment also suggests including a special is the most effective way to increase sales of a product category, but not the specific product itself. #neuroeconomy, #nudge #behavioral_economics
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Inducing Hypothetical Bias Mitigation with Ten Commandments

Abstract: While a number of hypothetical bias mitigation methods have been proposed, the problem remains as the literature continues to debate the effectiveness and practicality of the mitigation methods (Loomis, 2011). We propose an easy to implement methods to mitigate hypothetical bias in choice experiments. The method involve asking respondents to recall the Ten Commandments prior to willingness to pay elicitation. Our result shows that the proposed method exhibit sign of hypothetical bias mitigation.

#neuroeconomy, #nudge #behavioral_economics

 
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Why Neuroscience Needs Hackers

Why Neuroscience Needs Hackers | Bounded Rationality and Beyond | Scoop.it

Brain researchers are overwhelmed with data. Hackers can help.

There was a time when neuroscientists could only dream of having such a problem. Now the fantasy has come true, and they are struggling to solve it. Brilliant new exploratory devices are overwhelming the field with an avalanche of raw data about the nervous system's inner workings. The trouble is that even starting to make sense of this bonanza of information has become a superhuman challenge.

Just about every branch of science is facing a similar disruption. As laboratory-bench research migrates into the digital realm, programming is becoming an indispensable part of the process. At the same time, previously dependable sources of financial support are drying up. The result has been a painful scarcity of jobs and grants—which, in turn, is impelling far too many gifted researchers to focus on their narrow areas of specialization rather than investing time and energy into acquiring new, computer-age skills. In fields where data growth is especially out of control, such as neuroscience, the demand for computer expertise is growing as quickly as the information itself.

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Hiring and Escalation Bias in Subjective Performance Evaluations: A Laboratory Experiment

Abstract: In many organizations the measurement of job performance can not rely on easily quantifiable information. In such cases, supervising managers often use subjective performance evaluations. We use laboratory experiments to study whether the way employees are assigned to a manager affects managers’ and co-employees’ subjective evaluations of employees. Employees can either be hired by the manager, explicitly not hired by him and nevertheless assigned to him or exogenously assigned to him. We present data from four different treatments. For all four treatments we find escalation bias by managers. Managers exhibit a positive bias towards those employees they have hired or a negative one towards those they have explicitly not hired. For three treatments we find that managers’ and employees’ biases are connected. Exogenously assigned employees are biased in favor of employees hired by the manager and against those explicitly not hired.

http://research.barcelonagse.eu/tmp/working_papers/839.pdf

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Getting Stronger through Stress: Making Black Swans Work for You

Getting Stronger through Stress: Making Black Swans Work for You | Bounded Rationality and Beyond | Scoop.it

Unanticipated events, especially extreme unanticipated events, can harm us or even destroy us. But they can also help us to grow and make us stronger. If they do the former, we tend to fear them and avoid them wherever possible. If they do the latter, our orientation shifts and we tend to welcome them. In the world of the Big Shift, as I suggested in my post last week on resilience, we all need to find ways to harness the power of randomness, volatility and extreme events to help us grow and develop more of our potential.

Focusing on Black Swans

Nassim Nicholas Taleb has been consumed by black swans over three books: Fooled by Randomness, The Black Swan and, now, Antifragile. Black Swans, in Taleb’s parlance, are “large-scale unpredictable and irregular events of massive consequence.’ The latest book focuses on approaches that enable us to thrive from high levels of volatility, and particularly those unexpected extreme events. It’s a profoundly rich and engaging book that will no doubt prove infuriating to most of our economic, educational and political elites, for he argues that these elites have played a major role in making us increasingly vulnerable to volatility and Black Swans

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Estimating the reproducibility of psychological science - Decision Science News

Reproducibility is a defining feature of science, but the extent to which it characterizes current research is unknown. We conducted replications of 100 experimental and correlational studies published in three psychology journals using high-powered designs and original materials when available. Replication effects were half the magnitude of original effects, representing a substantial decline. Ninety-seven percent of original studies had statistically significant results. Thirty-six percent of replications had statistically significant results; 47% of original effect sizes were in the 95% confidence interval of the replication effect size; 39% of effects were subjectively rated to have replicated the original result; and if no bias in original results is assumed, combining original and replication results left 68% with statistically significant effects. Correlational tests suggest that replication success was better predicted by the strength of original evidence than by characteristics of the original and replication teams.

 
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A Relationship and a Practice - On the French Sociology of Credit.pdf

A Relationship and a Practice - On the French Sociology of Credit.pdf | Bounded Rationality and Beyond | Scoop.it

This paper aims to describe the social studies of credit developed in France over the past dozen years. We argue that this French sociology of credit, mostly centered on France, can be useful for researchers analyzing other countries, with other institutional particularities, because it proposes a specific method and a specific way to raise questions: credit is mostly understood as a result of social interactions embedded in organizational and legal structures. French researchers also deeply analyze the consequences of the organization of the credit market for inequalities, social stratification, and people’s life experiences. The first part of the paper focuses on works that have examined credit as a social test, looking at the institutional, technical, and social frameworks of money lending. Then, credit is understood as a sociological experiment: how is it integrated into household economies? How do people use forms of credit? Finally, the third part concentrates on credit failure, when a bank loan becomes a debt. This aspect is mostly framed in French sociology as “over-indebtedness,” which is an administrative and a social category. Throughout the paper, we address credit as both a relationship and a practice. This approach is heuristic, as we seek to demonstrate, because it enables us to show that credit is a social and political issue.

#neuroeconomy #behavioral_economy

 
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Globalization and Self-Organization in the Knowledge-Based Society

Globalization and Self-Organization in the Knowledge-Based Society | Bounded Rationality and Beyond | Scoop.it
In this paper I suggest that a theory of self-organization can be used as a consistent background theory for explaining  the dynamics and logics of globalization. Globalization is not confined to the human realm, it  is  an attribute of all complex, self-organizing  systems. Globalization in a synchronous sense means a micro-macro-link where bottom-up-emergence of new qualities in  the  self-reproduction of complex systems takes place, it is accompanied by a macro-micro-link of  top-down-localization. A dynamic interaction between a global and a local level (glocalization)  results  in  the permanent overall self-reproduction of the system. Globalization in a diachronic  sense means  the emergence of a new, higher level of self-organization during a phase of instability and heavy fluctuations by order  through  fluctuation. Globalization is shaped by a dialectic of change and continuity: in the hierarchy that  stems  from emergent evolution there are both general aspects of globalization and aspects that are specific for each organizational level. Applying this general notion of globalization to society means  that human globalization is both a general process that can be found in all societies  and  a specific process with emergent qualities in concrete phases of societal development. Globalization processes  in  modern society  are  based  on structural antagonisms that result in uneven developments in the technosphere, the ecosphere, the economy, polity, and culture. The transition to  Postfordist, informational capitalism  has been a consequence of the development of the structural antagonisms of Fordism and has been accompanied by a new phase of  globalization  that  has transformed the subsystems of society and has resulted in new antagonism that are an expression of general antagonisms that shape modern societies. Hence we find antagonistic tendencies of  contemporary globalization  in all subsystems of society that result  in  both  risks and opportunities. Human beings have the ability to actively shape society in such a way that an alternative sustainable form of globalization can be achieved.
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The Self-Organisation of Politics, Power and the Nation State

The Self-Organisation of Politics, Power and the Nation State | Bounded Rationality and Beyond | Scoop.it

Society is self-organising or re-creative in the sense that new emergent structures result from interactions of actors, these structures enable and constrain actions and stimulate further practices. Political self-organisation is a reflexive process where political agents co-ordinate their actions in such a way that political power structures emerge and are differentiated, these structures enable and constrain political activities and stimulate further political practices. Power and the establishment of collective decisions are central aspects of the self-organisation of politics. In the modern State system laws are the most important power structures that stimulate political practices. The modern State consists of two subsystems (the system of rule and the system of civil society), it is organised around the competitive accumulation of power. Central features of the modern state include the regulation of economic autopoiesis, it organises and defends the autopoiesis of society within a bounded territory by making use of the monopoly of the means of coercion, it organises the self-observation, self-containment and self-description of modern society and is a meta-storage mechanism of social information. The Postfordist mode of development of society that is based on economic globalisation and transnationalisation has changed the role of the state. Actors such as transnational corporations, non-government organisations and non-profit organisations are gaining increased importance, the structural coupling between the economy and the State is becoming more rigid in the direction where the economy influences the state system, parts of the welfare system are either shifted to the mode of economic autopoiesis or to the system of civil society. Postfordism is shaped by an increase dominance of economic autopoiesis over political, cultural and life-world autopoiesis. This doesn’t imply a “weak state” or the end of the nation state, the latter transforms its functions and answers with measures of re-organisation to the increased globalisation and complexity of the world. Self-observation, self-containment and self-description are altered by the nation state in such a way that the closure of society increases although the openness of the world economy grows.


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The change of music preferences following the onset of a mental disorder

The change of music preferences following the onset of a mental disorder | Bounded Rationality and Beyond | Scoop.it

A psychiatric population (n=123) was examined on how music preferences had changed after the onset of a mental disorder. Most patients did not change their previous music preference; this group of patients considered music helpful for their mental state, showed more attractivity and enforcement as personality traits and used music more for emotion modulation. Patients who experienced a preference shift reported that music had impaired them during the time of illness; these patients showed less ego-strength, less confidence and less enforcement and used music less for arousal modulation. A third subgroup stopped listening to music completely after the onset of the mental disorder; these patients attribute less importance to music and also reported that music had impaired their mental state. They showed more ego-strength and used music less for emotion modulation. The results suggest that the use of music in everyday life can be helpful as an emotion modulation strategy. However, some patients might need instructions on how to use music in a functional way and not a dysfunctional one. Psychiatrists and psychotherapists as well as music therapists should be aware of emotion modulation strategies, subjective valence of music and personality traits of their patients. Due to the ubiquity of music, psychoeducative instructions on how to use music in everyday life plays an increasing role in the treatment of mental illness.

 

 

 

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Continuous Euclidean Embeddings of Incomplete Preferences

Abstract: Debreu's classic theorem asserts that when an agent's weak preference ordering is reflexive, transitive, and closed in a suitable topology, it can be represented by a continuous utility function. Of interest in some economic settings is to weaken these conditions by replacing transitivity with negative transitivity. Such preferences have been successfully modeled using multi-utility representations, ie. an order embedding into $\mathbb{R}^n$ rather than simply $\mathbb{R}$. Here we show that the topological conditions for a continuous single utility representation are sufficient to guarantee a continuous multi-utility representation, closing a conjecture of Nishimura & Ok (2015). The impossibility of a multi-utility representation consistent with Pareto improvement is also demonstrated.

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Are Survey Risk Aversion Measurements Adequate in a Low Income Context?

Abstract: Using an original dataset collected among motorcyclists in New Delhi (2011), this paper compares three different survey measures of risk attitudes: self-assessment, hypothetical lotteries and income prospect choices. While previous research on risk aversion measurement methods in developing countries mainly looked at specific groups such as rural farmers or students, the dataset I use covers a large and heterogeneous urban population. I first show that all measurements are positively and highly correlated with one another, this being even more the case within methodologies and within domains. Subsequently, I investigate the predictive power of these different individual risk-aversion measurements on occupation choices and health decisions. Most of my elicited risk preferences appear to predict risky health behaviors well. Puzzling results are found with the lotteries and may be interpreted either as evidence of risk-compensation between domains or as an incapacity to capture the desired characteristic. Finally, thanks to information on religious beliefs and practices, I am able to verify that cultural background does not impact on the relationship between risk preferences and risky conducts. Overall, this analysis highlights that elicitation of risk-aversion measurements through surveys in a developing country like India thus appears possible.

#neuroeconomy

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Bio. Quantum Physics of Sound and Music

Sound perceived by humans is produced by the brain through the stimulus of external vibration transmitted and converted into information signals, by means of the hearing organs focused in the activities of the cochlea. The brain exercises pre-attentive research functions, interactively searching to be synchronous with all frequencies that are similar to the spectrum of the human voice and their differences in tones and frequency before producing the effective sounds that we hear. Sounds in fact, are not a direct expression of external acoustic vibration but sensory simulation produced by the brain. Hence, the brain do not recognises directly the external frequencies as physical sounds or noises, but as “Information Energy” derived by the “entangling activity” of transformation of vibration waves in information signals. In fact the last information signals are not an immediate consequence of the physical vibration of air. This is because vibration, if not transduced in quantum-signals, cannot interact with the information activities of the brain neurons. 

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Informal low-cost methods for increasing enrollment of environmentally sensitive lands in farmland conservation programs: An experimental study

Abstract: In this paper we study the role of informal low-cost interventions such as providing information about behavior of one’s peer group, as a mechanism to improve the performance of farmland conservation programs. We focus on a specific policy that has high ecological significance because of its emphasis on spatially coordinated land uses – the Agglomeration Bonus. Prior research has indicated that strategic uncertainty within the economic environment of the Agglomeration Bonus (resembling a coordination game with multiple payoff ranked Nash Equilibria) can lead to coordination failure and limited spatial coordination on the payoff efficient strategy (that corresponds to the land use with higher ecosystem benefits). High levels of strategic uncertainty can be a result of large community sizes where landowners’ actions are interdependent, limited information about others’ behavior and conservative payoffs that may make coordination riskier and less attractive. In this context, we consider a laboratory experiment in which we reduce participants’ strategic uncertainty by varying the amount of information available to them. In control sessions, groups of 12 individuals (arranged on a circular local network on which every individual has 2 strategic neighbors) participate in an Agglomeration Bonus game and receive payoffs and information about both their neighbors’ actions. In the treatment sessions, in addition to this information, subjects are also informed about the choices of all members of the group (including their own and their strategic neighbors’ actions). Additionally, we reduce the group size from 12 to 8 subjects to further decrease game strategic uncertainty. Our results indicate that more information in smaller groups significantly improves the likelihood of making the efficient choice. However, repeated interaction leads to a reduction in the likelihood of choosing the efficient action unless both neighbors make the same choice. Analysis of group level spatial patterns indicate no significant treatment effect with increase in instances of coordination failure over time. Thus our treatment implementation while successful in increasing the likelihood of efficient choices, does not ensure that these choices are by adjacent individuals which is necessary for environmental successes. Thus, informal mechanisms that involve providing information about one’s social peers is not expected to improve policy performance even if individuals interact with each other in smaller groups. Additional mechanisms are needed to maintain the positive effect of information and incentivize spatially contiguous efficient land use choices in the long run.
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I Liked Everything I Saw on Facebook for Two Days. Here’s What It Did to Me

I Liked Everything I Saw on Facebook for Two Days. Here’s What It Did to Me | Bounded Rationality and Beyond | Scoop.it

THERE’S THIS GREAT Andy Warhol quote you’ve probably seen before: “I think everybody should like everybody.” You can buy posters and plates with pictures of Warhol, looking like the cover of a Belle & Sebastian album, with that phrase plastered across his face in Helvetica. But the full quote, taken from a 1963 interview in Art News, is a great description of how we interact on social media today.

Warhol: Someone said that Brecht wanted everybody to think alike. I want everybody to think alike. But Brecht wanted to do it through Communism, in a way. Russia is doing it under government. It’s happening here all by itself without being under a strict government; so if it’s working without trying, why can’t it work without being Communist? Everybody looks alike and acts alike, and we’re getting more and more that way.
I think everybody should be a machine. I think everybody should like everybody.

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environmentally sensitive lands in farmland conservation programs: An experimental study

Abstract: In this paper we study the role of informal low-cost interventions such as providing information about behavior of one’s peer group, as a mechanism to improve the performance of farmland conservation programs. We focus on a specific policy that has high ecological significance because of its emphasis on spatially coordinated land uses – the Agglomeration Bonus. Prior research has indicated that strategic uncertainty within the economic environment of the Agglomeration Bonus (resembling a coordination game with multiple payoff ranked Nash Equilibria) can lead to coordination failure and limited spatial coordination on the payoff efficient strategy (that corresponds to the land use with higher ecosystem benefits). High levels of strategic uncertainty can be a result of large community sizes where landowners’ actions are interdependent, limited information about others’ behavior and conservative payoffs that may make coordination riskier and less attractive. In this context, we consider a laboratory experiment in which we reduce participants’ strategic uncertainty by varying the amount of information available to them. In control sessions, groups of 12 individuals (arranged on a circular local network on which every individual has 2 strategic neighbors) participate in an Agglomeration Bonus game and receive payoffs and information about both their neighbors’ actions. In the treatment sessions, in addition to this information, subjects are also informed about the choices of all members of the group (including their own and their strategic neighbors’ actions). Additionally, we reduce the group size from 12 to 8 subjects to further decrease game strategic uncertainty. Our results indicate that more information in smaller groups significantly improves the likelihood of making the efficient choice. However, repeated interaction leads to a reduction in the likelihood of choosing the efficient action unless both neighbors make the same choice. Analysis of group level spatial patterns indicate no significant treatment effect with increase in instances of coordination failure over time. Thus our treatment implementation while successful in increasing the likelihood of efficient choices, does not ensure that these choices are by adjacent individuals which is necessary for environmental successes. Thus, informal mechanisms that involve providing information about one’s social peers is not expected to improve policy performance even if individuals interact with each other in smaller groups. Additional mechanisms are needed to maintain the positive effect of information and incentivize spatially contiguous efficient land use choices in the long run. 

http://purl.umn.edu/205126

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Cognitive Biases in the Assimilation of Scientific Information on Global Warming and Genetically Modified Food

Abstract: The ability of scientific knowledge to contribute to public debate about societal risks depends on how the public assimilates information resulting from the scientific community. Bayesian decision theory assumes that people update a belief by allocating weights to a prior belief and new information to form a posterior belief. The purpose of this study was to determine the effects of prior beliefs on assimilation of scientific information and test several hypotheses about the manner in which people process scientific information on genetically modified food and global warming. Results indicated that assimilation of information is dependent on prior beliefs and that the failure to update beliefs in a Bayesian fashion is a result of several factors including: misinterpreting information, illusionary correlations, selectively scrutinizing information, information-processing problems, knowledge, political affiliation, and cognitive function.

Downloads: (external link)
http://purl.umn.edu/162532

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