Is the imprecision of economic forecasts due to the judgments of ‘biased’ decision makers? This study explores decision-making among expert forecasters in Sweden using semi-structured interviews. The results indicate that forecasters’ decision
How to broaden your thinking and make better decisions.
Suppose you’re evaluating a job candidate to lead a new office in a different country. On paper this is by far the most qualified person you’ve seen. Her responses to your interview questions are flawless. She has impeccable social skills. Still, something doesn’t feel right. You can’t put your finger on what—you just have a sense. How do you decide whether to hire her?
You might trust your intuition, which has guided you well in the past, and send her on her way. That’s what most executives say they’d do when we pose this scenario in our classes on managerial decision making. The problem is, unless you occasionally go against your gut, you haven’t put your intuition to the test. You can’t really know it’s helping you make good choices if you’ve never seen what happens when you ignore it.
Warren Tryon, author of Cognitive Neuroscience and Psychotherapy, dives into computational neuropsychology, discussing emergence and synaptic reorganization.
It is not enough to call for the study of emergence as I have done in my appeal for a paradigm shift in my book,Cognitive Neuroscience and Psychotherapy: Network Principles for a Unified Theory and in some of my previous blogs. One must also provide tools and some direction for using them to get the ball rolling.
Every parallel-distributed processing connectionist neural network (PDP-CNN) model that I have encountered has focused on the properties of the fully trained “adult” model rather than the process by which these properties emerged. This is because the authors of these simulations have presented their models as demonstration proofs that artificial neural networks are capable of performing certain functions. I agree that this is a necessary first step. It would be premature to study the emergent process unless, or until, one first demonstrated that the network in question is capable of generating the desirable psychological properties. But now that so many psychological and behavioral phenomena have been effectively simulated using PDP-CNN models, it is time to ask how these properties emerge. This line of inquiry is needed to generate full scientific explanations of these psychological and behavioral phenomena.
Abstract: The brief’s key findings are: *With the shift from traditional pensions to 401(k) plans, the welfare of retirees depends increasingly on their ability to make sound financial decisions. *Using a dataset that follows a group of older individuals in the Chicago area, the analysis examines how aging affects financial decision making. *Participants who suffer cognitive decline experience a reduction in their financial literacy but no change in their confidence in managing their money. *Perhaps not surprisingly then, while they are more likely to get help with financial decisions, more than half retain primary responsibility for managing their money.
Abstract: Unethical behavior within organizations is not rare. We investigate experimentally the role of status-seeking behavior in sabotage and cheating activities aiming at improving one’s performance ranking in a flat-wage environment. We find that average effort is higher when individuals are informed about their relative performance. However, ranking feedback also favors disreputable behavior. Some individuals do not hesitate to incur a cost to improve their rank by sabotaging others’ work or by increasing artificially their own performance. Introducing sabotage opportunities has a strong detrimental effect on performance. Therefore, ranking incentives should be used with care. Inducing group identity discourages sabotage among peers but increases in-group rivalry.
The following deck was used by @tjalve in our internal #teachme session. It covers 15 lessons from Behavioural Economics you can apply to your ongoing projects. The concepts covered are: 1. The Endowment Effect 2. Hyperbolic Discounting 3. The IKEA effect 4. Anchoring Bias 5. The Von Restorff Effect 6. Loss Aversion 7. Hedonic Adaption 8. The Bandwagon Effect 9. The Inaction inertia effect 10. The Zeigarnik Effect 11. The Framing Effect 12. The Goal Gradient Effect 13. The Choice Paradox 14. Round Pricing Preference 15. Reciprocity
Cloud computing has become an important means to speed up computing. One problem influencing heavily the performance of such systems is the choice of nodes as servers responsible for executing the users' tasks. In this article we report how complex networks can be used to model such a problem. More specifically, we investigate the performance of the processing respectively to cloud systems underlain by Erdos-Renyi and Barabasi-Albert topology containing two servers. Cloud networks involving two communities not necessarily of the same size are also considered in our analysis. The performance of each configuration is quantified in terms of two indices: the cost of communication between the user and the nearest server, and the balance of the distribution of tasks between the two servers. Regarding the latter index, the ER topology provides better performance than the BA case for smaller average degrees and opposite behavior for larger average degrees. With respect to the cost, smaller values are found in the BA topology irrespective of the average degree. In addition, we also verified that it is easier to find good servers in the ER than in BA. Surprisingly, balance and cost are not too much affected by the presence of communities. However, for a well-defined community network, we found that it is important to assign each server to a different community so as to achieve better performance.
Search Engines have greatly influenced the way we experience the web. Since the early days of the web, users have been relying on them to get informed and make decisions. When the web was relatively small, web directories were built and maintained using human experts to screen and categorize pages according to their characteristics. By the mid 1990’s, however, it was apparent that the human expert model of categorizing web pages does not scale. The first search engines appeared and they have been evolving ever since, taking over the role that web directories used to play. But what need makes a search engine evolve? Beyond the financial objectives, there is a need for quality in search results. Search engines know that the quality of their ranking will determine how successful they are. Search results, however, are not simply based on well-designed scientific principles, but they are influenced by web spammers. Web spamming, the practice of introducing artificial text and links into web pages to affect the results of web searches, has been recognized as a major search engine problem. It is also a serious users problem because they are not aware of it and they tend to confuse trusting the search engine with trusting the results of a search. In this paper, we analyze the influence that web spam has on the evolution of the search engines and we identify the strong relationship of spamming methods on the web to propagandistic techniques in society. Our analysis provides a foundation for understanding why spamming works and offers new insight on how to address it. In particular, it suggests that one could use social anti-propagandistic techniques to recognize web spam.
The General Manager (GM) of a municipal department was repeatedly getting bad press for the all-too apparent failings in maintaining city roads, drainage, sewage, and water. Continuous breakdowns in water supply, blockages in main drains and sewers were inconveniencing city residents and creating high costs in property damage. City Council was being taken to court for several cases of significant damage exacerbated by its insurer’s reluctance to settle claims promptly or on a reasonable basis.
The GM was being accused and abused by the press, the residents, his superiors, elected councilors and by his managers and staff who were taking much of the heat. He fell seriously ill. While on sick leave the Mayor called him to discuss what he was going to do to address the growing storm of protest that was negatively affecting his chances of re-election. What did he have to say?
Up until now, his decisions were based on his lengthy experience with how to fix issues. In this new dilemma he was expected to come up with a ‘silver bullet’. But how?
The astonishingly well-targeted advertisements users see on Facebook are proof enough that the social networking giant is tracking you. Now the siteadmits that those who don’t have a profile are being tracked as well, but only due to a bug.
The revelation that Facebook tracks the web browsing activity of all visitors comes courtesy of a new report by group of European researchers. The report found that Facebook places a cookie in browsers that visit any page within Facebook’s domain, including ones that do not require an account. Cookies are a common method of tracking browser habits on the web.
In 1861, French physician Paul Broca was introduced to a man named Louis-Victor Leborgne. While his comprehension and mental functioning remained relatively normal, Leborgne progressively lost the ability to produce meaningful speech over a period of 20 years. Like Hodor, the man was nicknamed Tan because he only spoke a single word: “Tan.”
Just a few days after meeting Broca, Leborgne passed away. Broca’s autopsy determined tissue damage, or a “lesion,” in the frontal lobe of Leborgne’s left brain hemisphere, just next to a brain fold called the lateral sulcus. Over the next two years, Broca acquired brains from 12 more patients with Leborgne’s symptoms—all of the autopsy evidence was strikingly consistent.
Neuroscientists are still examining this small region of the brain, now often referred to as “Broca’s area” to work out its many functions. While most research has focused on a patient’s inability to form syntactically complex sentences when this area is damaged, more recent work using functional magnetic resonance imaging (fMRI) has also reported that Broca’s area is active during language comprehension
Default options significantly influence individualsÕ tendencies to comply with public policy goals such as organ donation. We extend that notion and explore the role defaults can playin encouraging (im)moral conduct in two studies. Building on previous research into omissionand commission we show that individuals cheat most when it requires passively accepting adefault, incorrect answer (Omission). More importantly, despite equivalent physical effort,individuals cheat less when it requires
overriding a default, correct answer (Super-Commission)than when simply giving an incorrect answer (Commission) Ð because the former is psychologically harder. Furthermore, while people expect physical and psychological costs toinfluence cheating, they do not believe that it takes a fundamentally different moral character toovercome either cost. Our findings support a more nuanced perspective on the implication of thedifferent types of costs associated with default options and offer practical insights for policy,such as taxation, to nudge honesty.
Social Scientists traditionally regard people's beliefs about the future to be exogenous to their desires and wishes. It's one thing to want something to happen, but it doesn't suppose to affect our beliefs that it will. My grandfather's German passport which I found among my dad's documents (see photo) shows how beliefs can be intermingled with wishes. Hugo Winter, a Jewish businessman from Koenigsberg, escaped Nazi Germany in 1934 to Palestine, leaving behind a flourishing business, a huge villa, and many friends and relatives. He never wanted to replace his fancy lifestyle in Germany
At the Summer Institute on Bounded Rationality junior researchers discuss how people make everyday decisions. This forum for PhD students and postdocs took place from July 3 2012 at the Max Planck Institute for Human Development in Berlin. In his talk Konstantinos Katsikopoulos, professor at the Max Planck Institute for Human Development, argues that standard decision theory should be combined with rules of thumb and how this can be achieved.
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What Works Cities is designed to accelerate Cities’ use of data and evidence to improve people’s lives. Bloomberg Philanthropies has assembled an unparalleled group of leading practitioners to focus on your goals and your citizens. They are, simply, world-class partners for world-class cities. Behavioural Insights Team Harvard Kennedy School Government Performance Lab Results for America …
Abstract: Socially destructive behavior in a public good environment - like damaging public goods - is an underexposed phenomenon in economics. In an experiment we investigate whether such behavior can be influenced by the very nature of an environment. To that purpose we use a Fragile Public Good (FPG) game which puts the opportunity for destructive behavior (taking) on a level playing field with constructive behavior (contributing). We find substantial evidence of destructive decisions, sometimes leading to sour relationships characterized by persistent hurtful behavior. While positive framing induces fewer destructive decisions, shifting the selfish Nash towards minimal taking doubles its share to more than 20%. Female subjects are found to be more inclined to use destructive decisions. Finally, subjects’ social value orientation turns out to be partly predictive of (at least initial) destructive choices.
Abstract: Smith et al. (1988) reported large bubbles and crashes in experimental asset markets, a result that has been replicated by a large literature. Here we test whether the occurrence of bubbles depends on the experimental subjects' cognitive sophistication. In a two-part experiment, we rst run a battery of tests to assess the subjects' cognitive sophistication and classify them into low or high levels of cognitive sophistication. We then invite them separately to two asset market experiments populated only by subjects with either low or high cognitive sophistication. We observe classic bubble- crash patterns in the sessions populated by subjects with low levels of cognitive sophistication. Yet, no bubbles or crashes are observed with our sophisticated subjects. This result lends strong support to the view that the usual bubbles and crashes in experimental asset markets are caused by subjects' confusion and, therefore, raises some doubts about the external validity of this type of experiments.Downloads: (external link) http://sfb649.wiwi.hu-berlin.de/papers/pdf/SFB649DP2015-006.pdf ;
In the first large-scale review of 400 research papers in the neurochemistry of music, a team led by Prof. Daniel J. Levitin of McGill University’s Psychology Dept. has been able to show that playing and listening to music has clear benefits for both mental and physical health. In particular, music was found both to improve the body’s immune system function and to reduce levels of stress. Listening to music was also found to be more effective than prescription drugs in reducing anxiety prior to surgery.
“We’ve found compelling evidence that musical interventions can play a health care role in settings ranging from operating rooms to family clinics,” says Prof. Levitin. “But even more importantly, we were able to document the neurochemical mechanisms by which music has an effect in four domains: management of mood, stress, immunity and as an aid to social bonding.”
The use of intelligent systems for stock market predictions has been widely established. In this paper, we investigate how the seemingly chaotic behavior of stock markets could be well represented using several connectionist paradigms and soft computing techniques. To demonstrate the different techniques, we considered Nasdaq-100 index of Nasdaq Stock MarketS and the S&P CNX NIFTY stock index. We analyzed 7 year's Nasdaq 100 main index values and 4 year's NIFTY index values. This paper investigates the development of a reliable and efficient technique to model the seemingly chaotic behavior of stock markets. We considered an artificial neural network trained using Levenberg-Marquardt algorithm, Support Vector Machine (SVM), Takagi-Sugeno neuro-fuzzy model and a Difference Boosting Neural Network (DBNN). This paper briefly explains how the different connectionist paradigms could be formulated using different learning methods and then investigates whether they can provide the required level of performance, which are sufficiently good and robust so as to provide a reliable forecast model for stock market indices. Experiment results reveal that all the connectionist paradigms considered could represent the stock indices behavior very accurately.
Electoral prediction from Twitter data is an appealing research topic. It seems relatively straightforward and the prevailing view is overly optimistic. This is problematic because while simple approaches are assumed to be good enough, core problems are not addressed. Thus, this paper aims to (1) provide a balanced and critical review of the state of the art; (2) cast light on the presume predictive power of Twitter data; and (3) depict a roadmap to push forward the field. Hence, a scheme to characterize Twitter prediction methods is proposed. It covers every aspect from data collection to performance evaluation, through data processing and vote inference. Using that scheme, prior research is analyzed and organized to explain the main approaches taken up to date but also their weaknesses. This is the first meta-analysis of the whole body of research regarding electoral prediction from Twitter data. It reveals that its presumed predictive power regarding electoral prediction has been rather exaggerated: although social media may provide a glimpse on electoral outcomes current research does not provide strong evidence to support it can replace traditional polls. Finally, future lines of research along with a set of requirements they must fulfill are provided.
In the United States, social media sites—such as Facebook, Twitter, and YouTube—are currently being used by two out of three people (1), and search engines are used daily (2). Monitoring what users share or search for in social media and on the Web has led to greater insights into what people care about or pay attention to at any moment in time. Furthermore, it is also helping segments of the world population to be informed, to organize, and to react rapidly. However, social media and search results can be readily manipulated, which is something that has been underappreciated by the press and the general public.
In times of political elections, the stakes are high, and advocates may try to support their cause by active manipulation of social media. For example, altering the number of followers can affect a viewer's conclusion about candidate popularity. Recently, it was noted that the number of followers for a presidential candidate in the United States surged by over 110 thousand within one single day, and analysis showed that most of these followers are unlikely to be real people (3).
As counter intuitive as it may seem, many financial advisors have achieved substantial breakthroughs on a multitude of levels by disassociating from certain clients who were no longer a good fit. Especially for an advisor who has hit a plateau with his or her business, often the best way to increase the amount of money they were managing was to decrease the number of relationships they were managing. And in the process, these same advisors were able to project scarcity to their clients and prospective clients and ensure those people focus on what the advisors are worth rather than what they c
A new study has thrown light on how people can become killers in certain situations, showing how brain activity varies according to whether or not killing is seen as justified.
The study, led by Monash researcher Dr Pascal Molenberghs, School of Psychological Sciences, is published in the journal Social Cognitive and Affective Neuroscience.
Participants in the study played video games in which they imagined themselves to be shooting innocent civilians (unjustified violence) or enemy soldiers (justified violence). Their brain activity was recorded via functional magnetic resonance imaging (fMRI) while they played.
Dr Molenberghs said the results provided important insights into how people in certain situations, such as war, are able to commit extreme violence against others.
Renowned behavioral economist and 2013 Nobel Laureate in Economic Sciences Robert J. Shiller delivered the inaugural Paul Volcker Lecture in Behavioral Economics on Thursday, March 19, at 4 p.m. in Maxwell Auditorium. The lecture, “Speculative Prices, Inflation, and Behavioral Economics,” was sponsored by Syracuse University’s Maxwell School of Citizenship and Public Affairs and the Center for Policy Research.
I want the best for myself and my children—naturally. Why settle for less? We live in a society of plenty, so we often simply go for it and ask for exactly what we want. An almost inaudible, but powerful voice inside of us might tell us to reach for the best and only the best.
Is this always a good choice though?
Malcolm Gladwell, who madeunconscious decisions a popular topic with his book Blink, insists that people who have their individual taste buds satisfied are happier for it. Researchers, he pointed out, have found that there is no such thing as a perfect Pepsi or coffee type or tomato sauce. There are only perfect Pepsis, coffee types and tomato sauces. There are clusters of people who like a particular taste of a given product; for example, a cluster liking sodas very sweet, another medium sweet, and yet another a tad sweet1. When food corporations honored these more varied ideas of “perfect,” they beat their competitors by large margins and made fortunes. So, corporations get richer and individuals happier with the perfect choice—a win-win situation.
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