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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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‘Behavioral economics’ can cut unhealthy fat

‘Behavioral economics’ can cut unhealthy fat | Bounded Rationality and Beyond | Scoop.it

Since 1960, a lot fewer Americans have been dying of tobacco and car accidents, and a lot more have been dying of diseases related to obesity. That is the conclusion of a new study by Harvard economist David Cutler and National Bureau of Economic Research scholar Susan Stewart.

The U.S. obesity problem is staggering. In 1960, 14 percent of the population was obese; in 2010 it was 36 percent. Even though overall life expectancy rose by about seven years in that time, it would have been eight if not for the rise in obesity.

That’s old news by now. But the comparison with smoking is very interesting. It tells us a lot about why these two public health trends have gone in opposite directions, and how the obesity problem might be defeated.

 

The fight against smoking might be the biggest public-health success story of the past half century. The percentage of Americans who smoke fell from about 40 percent in the mid-20th century to about 20 percent today.

 

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Teaching Behavioral Economics

You’re considering teaching behavioral economics to undergraduates? Or, you’ve been told to? Either way, great! In the hope that you and your students will enjoy the experience just as much as I have, here are some tips to get you off to a flying
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20Q: Noise, Aging and the Brain: How Experience and Training can Nina Kraus

20Q: Noise, Aging and the Brain: How Experience and Training can Nina Kraus | Bounded Rationality and Beyond | Scoop.it
An overview of research investigating hearing in noise and brain training using the cABR.
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Raising Awareness of Unconscious Assumptions and Their Influence on Evaluation of Candidates » Faculty Development | Boston University

Although we all like to think that we are objective scholars who judge people based entirely on merit and on the quality of their work and the nature of their achievements, copious research shows that every one of us brings with us a lifetime of experience and cultural history that shapes our evaluations of others.

Studies show that people who have strong egalitarian values and believe that they are not biased may nevertheless unconsciously or inadvertently behave in discriminatory ways (Dovidio 2001). A first step toward ensuring fairness in the search and screen process is to recognize that unconscious biases, attitudes, and other influences not related to the qualifications, contributions, behaviors, and personalities of candidates can influence our evaluations, even if we are committed to egalitarian principles.

The results from controlled research studies in which people were asked to make judgments about human subjects demonstrate the potentially prejudicial nature of our many implicit or unconscious assumptions. Examples range from physical and social expectations or assumptions to those that have a clear connection to hiring, even for faculty positions.

It is important to note that in most of these studies, the gender of the evaluator was not significant, indicating that both men and women share and apply the same assumptions about gender. Recognizing biases and other influences not related to the quality of candidates can help reduce their impact on your search and review of candidates. Spending sufficient time on evaluation (15–20 minutes per application) can also reduce the influence of assumptions.

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acyon's curator insight, June 10, 12:26 PM

Connaître ses différents biais inconscients et leurs risques d'impact sur l'évaluation des candidats, pour mieux les maîtriser et mieux les limiter : un article intéressant qui reprend les résultats de différentes études à ce sujet

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Unconscious Bias

Exploring Unconscious Bias by Howard Ross, Founder & Chief Learning Officer, Cook Ross, Inc. Consider this: Less than 15% of American men are over six foot tall, yet almost 60% of corporate CEOs are over six foot tall. Less than 4% of American men are over six foot, two inches tall, yet more than 36% of corporate CEOs are over six foot, two inches tall.1 Why does this happen? Clearly corporate boards of directors do not, when conducting a CEO search, send out a message to “get us a tall guy,” and yet the numbers speak for themselves. In fact, when corrected for age and gender, an inch of height is worth approximately $789 per year in salary!2 Similar patterns are true for Generals and Admirals in the Military, and even for Presidents of the United States. The last elected President whose height was below average was William McKinley in 1896, and he was “ridiculed in the press as ‘a little boy.’” 

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What's behind our music tastes? Some common perceptions

Metal heads, jazz purists and folkies may have more in common musically than you imagined. A new study sheds light on the shared ways in which humans perceive music.

What do we really hear when we listen to music? Researchers from Sweden's KTH Royal Institute of Technology have attempted to close in on the answer by boiling our perception of music down to nine basic elements -- or what they call "perceptual features."

Their findings could help improve computational models that the music industry uses for predicting the individual tastes of listeners.

So-called music information retrieval (MIR) models combine audio signal processing measurements with analysis of musical elements, which are usually drawn from concepts of music theory and music perception, such as beat strength, rhythmic regularity, meter and mode. The models also include analysis of musical genre (for example, punk, dance, experimental), emotion (sad, happy, tender) and other contextual qualities.

But a big limitation arises from how consistently music is perceived by listeners with different backgrounds and varying familiarity with music, not to mention their individual biases and cultural references.

http://www.sciencedaily.com/releases/2014/11/141120081957.htm 

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Everyday music listening The importance of individual and situational factors fo musical emotions and stress reduction

Music listening primarily evokes positive emotions in listeners. Research has shown that positive emotions may be fundamental for improving both psychological and physical aspects of well-being. Besides from the music itself it is essential to consider individual and situational factors when studying emotional experiences to music. Everyone does not respond in the same way to a piece of music and one individual may respond differently to a piece of music at different times. The main aim with the four papers in this thesis was to explore the effects of everyday music listening on emotions, stress and health. By using the Day Reconstruction Method (DRM), a new approach was taken to study the prevalence of musical emotions in everyday life. In the DRM the previous day is divided into episodes, in terms of activity, experienced emotions, and time of day. The results from study I showed that music occurred in 30 % of the episodes and that positive emotions were more often and more intensively experienced in musical episodes than in non-musical episodes. Music was also related to lower stress levels and higher health scores. The results from study II showed that if music occurred in the episode after a particularly stressful episode, the stress level was lower in both that episode and in the next one compared to if music did not occur. A mediation analysis suggested that the positive emotions induced by the music were mediating the effect of music on stress. The results did also show that liking of the music affected the level of stress. In study III, an experiment group who listened to their selfchosen music on mp3-players when arriving home from work every day for 30 minutes for two weeks’ time was compared to a control group who relaxed without music and with a baseline week when the experiment group relaxed without music. The results showed that although no significant differences were found between the groups, the experiment group showed an increase in intensity of positive emotions and decrease in perceived stress level and cortisol levels over time. No such changes were found within the control group. In study IV, data from study I and III was reanalysed with the purpose of exploring the associations between personality and emotional responses to music. The results showed that the associations between personality and intensity of positive emotions, perceived stress, and use of emotion regulation strategies differed in the two datasets and these inconsistencies indicate that personality is not the main contributor to emotional responses to music. Overall, the results from this thesis indicate that everyday music listening is an easy and effective way of improving well-being and health by its ability to evoke positive emotions and thereby reduce stress. But not just any music will do since the responses to music are influenced by individual and situational factors.

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Got good ideas for crowdsourcing? Attend the IARPA Proposers' Day conference - Decision Science News

Got good ideas for crowdsourcing? Attend the IARPA Proposers' Day conference - Decision Science News | Bounded Rationality and Beyond | Scoop.it

The Intelligence Advanced Research Projects Activity (IARPA) will host a Proposers’ Day Conference for the Crowdsourcing Evidence, Argumentation, Thinking and Evaluation (CREATE) Program on June 30, 2015, in anticipation of the release of a new solicitation in support of the Program. The Conference will be held from 9:00 AM to 4:00 PM EDT in the Washington, DC metropolitan area. The purpose of the Conference will be to provide introductory information on CREATE and the research problems that the Program aims to address, to respond to questions from potential proposers, and to provide a forum for potential proposers to present their capabilities and identify potential team partners. This announcement serves as a pre-solicitation notice and is issued solely for information and planning purposes. The Proposers’ Day Conference does not constitute a formal solicitation for proposals or proposal abstracts. Conference attendance is voluntary and is not required to propose to future solicitations (if any) associated with this Program. IARPA will not provide reimbursement for any costs incurred to participate in this Proposers’ Day.

 
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David Kreps: Choice, Dynamic Choice, and Behavioral Economics - YouTube

Economist David Kreps argues that traditional economic models of “rational decision making” fail to capture the complexity of how real people make important choices.

David Kreps joined the faculty of the Graduate School of Business in 1975, after completing a PhD in Operations Research in the Stanford School of Engineering. He has been a full professor since 1980, and today is the Adams Distinguished Professor of Management, with a courtesy appointment in the Department of Economics. From 2000 to 2009, he served as Senior Associate Dean.
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Anotações sobre o lugar da ética na economia comportamental

Note sul posto dell'etica in economia comportamentale

Parte di economia comportamentale e sperimentale sviluppato oggi si spegne considerazioni etiche. Questo non è sempre stato così, però, come dimostrerò qui. Tra i testi ispiratori di questo programma di ricerca è nella prova in cui Amartya Sen critica le microeconomia ortodossi. L'economista indiano, che nel 1998 ha vinto il premio Nobel, era dietro recuperare l'origine etnica dell'Economia. Si trova in classici come David Hume e Adam Smith, che è entrato nel gruppo di britannici filosofi morali del XVIII secolo.

Il paradosso della razionalità

Nel 1977 Amartya Sen ha pubblicato per la prima volta un documento fondamentale, quindi più volte riprodotto, dal titolo "sciocchi razionali:. Una critica dei fondamenti comportamentali della teoria economica" Articolo uno degli assi è la questione del privilegio sotto dell'Economia alla nozione di un essere umano egoista, il cui comportamento è guidato da interessi personali. L'autore ritiene che il predominio assoluto di questa concezione impoverita teoria economica, che ostacolano la sua capacità di vedere le molteplici forme di comportamento umano nel mercato e all'estero.

La razionalità teoria tradizionale ridotto alla consistenza di scelta. Si può vedere la persona come qualcuno che persegue il suo interesse personale per ogni scelta che facciamo, qualunque sia l'oggetto della scelta. Se l'agente preferisce x per y, la scelta si rivela nel comportamento e l'uso personale è una rappresentazione numerica di questa preferenza. Le successive scelte dei singoli sono "razionale" se e solo se possono essere assegnati a un ordinamento delle preferenze che sono coerenti. In questo modo, dice A. Sen, nessun agente sfugge a massimizzare la propria utilità.

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The next revolution will be psychological not technological - YouTube

The 2013 FFWD Advertising & Marketing Week Shaw Media Opening Lunch keynote was Rory Sutherland, Executive Creative Director and Vice-Chairman, OgilvyOne London and Vice-Chairman, Ogilvy & Mather UK.

Innovation in the future won't be about continually making new iterations of products but about finding new ways to make people value and want. A better understanding of what people value, how they behave and how they choose could generate just as much economic value as the invention of a hovering car or some new form of electronics.

Rory is known as a strong proponent of behavioural economics, Author of "The Wiki Man" (2011), and TED speaker. He stands at the center of an advertising revolution in brand identities, designing cutting-edge, interactive campaigns that blur the line between ad and entertainment.
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NudgeFrance | Rejoignez-nous

NudgeFrance | Rejoignez-nous | Bounded Rationality and Beyond | Scoop.it

Si vous êtes, comme nous, a la recherche d’une plus grande efficacité des politiques publiques, des actions d’intérêt général développées par les organisations humanitaires et les associations caritatives ou simplement intéressés à mieux connaitre le potentiel (et les limites) de l’approche Nudge, alors n’hésitez pas à rejoindre notre Change tank.

Si vous souhaitez participer à notre travail de promotion et vous engager personnellement, vous êtes le bienvenu !

L’adhésion à NudgeFrance est soumise à l’agrément du bureau qui statue lors de chacune de ses réunions, après étude du dossier (Art. 6 des statuts de l’association) que vous pouvez télécharger sur le site.

 
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Paul Craven - Behavioural Finance - From Biases to Bubbles - Nudgestock 24 May 2013 - YouTube

Paul Craven - Behavioural Finance - From Biases to Bubbles - Nudgestock 24 May 2013
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Why You Should Be True To Yourself - PsyBlog

Why You Should Be True To Yourself - PsyBlog | Bounded Rationality and Beyond | Scoop.it
The psychological reason you should avoid denying your true self. 

Violating true values and emotions makes people feel distressed and morally impure, new research finds.

Being inauthentic could be something as simple as faking an interest to fit in with others.

The study found that the sense of impurity can motivate good deeds to try and repair the moral damage.

 
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The Cultural Origins of Human Cognition

The Cultural Origins of Human Cognition | Bounded Rationality and Beyond | Scoop.it
Book. Michael Tomasello argues that the roots of the human capacity for symbol-based culture, and the kind of psychological development that takes place within it, are based in a cluster of uniquely human cognitive capacities that emerge early in human ontogeny. These include capacities for sharing attention with other persons; for understanding that others have intentions of their own; and for imitating, not just what someone else does, but what someone else has intended to do. In his discussions of language, symbolic representation, and cognitive development, Tomasello describes with authority and ingenuity the “ratchet effect” of these capacities working over evolutionary and historical time to create the kind of cultural artifacts and settings within which each new generation of children develops. He also proposes a novel hypothesis, based on processes of social cognition and cultural evolution, about what makes the cognitive representations of humans different from those of other primates. Ambitious and elegant, this book builds a bridge between evolutionary theory and cultural psychology. Michael Tomasello is one of the very few people to have done systematic research on the cognitive capacities of both nonhuman primates and human children. “The Cultural Origins of Human Cognition” identifies what the differences are, and suggests where they might have come from. Lucid, erudite, and passionate, “The Cultural Origins of Human Cognition” will be essential reading for developmental psychology, animal behavior, and cultural psychology.
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Come Superare i Pregiudizi Nascosti e Inconsci

Come Superare i Pregiudizi Nascosti e Inconsci | Bounded Rationality and Beyond | Scoop.it
I pregiudizi e i preconcetti seppelliti nell’inconscio sono sorprendentemente forti e influenzano le nostre decisioni, intaccano i nostri sentimenti e di conseguenza le nostre azioni. A volte non riusciamo a riconoscere il loro potere su di noi, diventando ancora più pericolosi. Per poter superare i preconcetti prima di tutto è importante capirli, e questo articolo contiene alcune indicazioni per riuscire nell’intento.
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Richard Thaler "Misbehaving: The Making of Behavioral Economics" | Talks at Google - YouTube

Richard Thaler, in conversation with Hal Varian, Google's Chief Economist Richard Thaler, co-author of Nudge, will discuss his new book, Misbehaving: The Mak...
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Rob Duke's curator insight, June 9, 2:24 PM

We all do it.  Who leaves tips at restaurants to which you will never return?  According to economists, leaving tips is often irrational.  What other kinds of irrational behavior has Thaler found?  You'll have to listen to the video.  BTW, Thaler is a colleague of the late great Gary Becker....

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How (Un)ethical Are You?

Good managers often make unethical decisions—and don’t even know it. Bias That Emerges from Unconscious Beliefs

Most fair-minded people strive to judge others according to their merits, but our research shows how often people instead judge according to unconscious stereotypes and attitudes, or “implicit prejudice.” What makes implicit prejudice so common and persistent is that it is rooted in the fundamental mechanics of thought. Early on, we learn to associate things that commonly go together and expect them to inevitably coexist: thunder and rain, for instance, or gray hair and old age. This skill—to perceive and learn from associations—often serves us well.

But, of course, our associations only reflect approximations of the truth; they are rarely applicable to every encounter. Rain doesn’t always accompany thunder, and the young can also go gray. Nonetheless, because we automatically make such associations to help us organize our world, we grow to trust them, and they can blind us to those instances in which the associations are not accurate—when they don’t align with our expectations.

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F35, confermare i 90 aerei è una neuro-decisione? | News by web 24 Italia

F35, confermare i 90 aerei è una neuro-decisione? | News by web 24 Italia | Bounded Rationality and Beyond | Scoop.it

La neuroeconomia è un ambito di ricerca altamente interdisciplinare per costruire un modello neurobiologico dei processi decisionali. Si occupa, tra le altre cose, di come dovremmo prendere (razionalmente o no) e invece effettivamente prendiamo le decisioni. Quali sono i fattori che influenzano la presa di decisione sana o patologica. Come si colloca secondo voi la decisione della Difesa di ignorare il Parlamento italiano sul dimezzamento del budget per l’acquisto dei caccia F 35? Sana o patologica? Il Documento programmatico pluriennale della Difesa per il triennio 2015-2017 conferma 90 aerei, 30 nei prossimi sei anni. Solo una riduzione del 10% su contratti 2015. La motivazione: “Il programma (F35, ndr) necessita una stabilità in termini finanziari che è funzionale ad evitare di perdere le risorse sino ad oggi investite”.

Il tipico errore mentale che può influenzare il processo decisionale è l’eccessiva preoccupazione per il “potenziale rimpianto” una volta presa una decisione. (Accade spesso con le decisioni mediocri o con le “buone” decisione che si rivelano essere mediocri. Questo tipo di errore è proprio quello (esempio da manuale!) che costituisce la principale motivazione, il senso, dato dalla Difesa all’acquisto degli F35: “Proseguire nell’investimento è funzionale ad evitare di perdere le risorse sino ad oggi investite”. Nei manuali di psicologia del primo anno si riporta, di solito, l’esempio della coppia che, in partenza per le vacanze e avendo già dato una “caparra” per alloggio e volo, si trova davanti a un problema che li costringe a posticipare la partenza. A quel punto la nostra coppia ha davanti a se una scelta: perdere una parte dei soldi della caparra annullando la vacanza oppure aggiungere altri soldi per non perdere una parte di quelli già spesi. La soluzione economica migliore è annullare la vacanza. Per analogia dovrebbe valere pure per la Difesa. Siamo sicuri che è meglio proseguire nell’acquisto piuttosto che perdere le risorse già impiegate? Non sarebbe stato meglio il contrario? Non è più utile utilizzare i fondi per la scuola? Per le pensioni? (magari per riempire il “buco”) Per la la sanità? Quante belle cose utili per tutti si potrebbero realizzare con 13 miliardi di euro?

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Sleep: When Brain Cells Shrink & Neuro Trash Is Flushed Away - Facts So Romantic - Nautilus

Sleep: When Brain Cells Shrink & Neuro Trash Is Flushed Away - Facts So Romantic - Nautilus | Bounded Rationality and Beyond | Scoop.it

For humans, sleep is an absolute requirement for survival, almost on par with food and water. When we don’t get it, we not only feel terrible, but our cognitive abilities go downhill, and in extreme cases sleeplessness can lead to seizures and contribute to death. And while we share with many other animals this intense commitment to spending much of our lives unconscious, we don’t really know why we do it. A paper published in Science last monthsuggests that the answer may lie in part with a recently discovered plumbing system that drains waste from the brain. Scientists essentially found that the brain likes to wait till sleep comes before taking out the garbage.

The study follows up on the discovery last year by the same team, based at University of Rochester, that the brain’s waste is removed by a network of channels that run alongside blood vessels. The channels work like the lymphatic system that operates in the rest of the body, collecting and draining what isn’t needed, but they are made of brain cells called glia, instead of the membrane cells that form lymphatic vessels. The channels were effectively invisible to biologists until the development of methods to watch a living brain under the microscope—mouse brains, in these experiments. The discovery of these channels suggested that diseases like Alzheimer’s, in which waste products build up in the brain, might be linked to problems with drainage.

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The start of the rebellion?

The start of the rebellion? | Bounded Rationality and Beyond | Scoop.it

THORSTEIN VEBLEN, an economist who dabbled in sociology, reckoned that the best-off members of a community established the standards that everyone else followed. Less-well-to-do individuals, he reckoned, tried to emulate the well-off and signal their worth through things like "conspicuous consumption" or "conspicuous leisure".

In Veblen's day, leisure was a badge of honour. But as we have argued in the past, these days work is rather modish. Hanging around at home is not seen as a sign of success, as it was for Veblen, but a sign of uselessness. Devising whizzy computer code, or solving complex financial problems, now has social status. Such work is also paid really well. All this means that over time, working hard has become cool. The share of college-educated American men regularly working more than 50 hours a week rose from 24% in 1979 to 28% in 2006, but fell for high-school dropouts. Highly educated people take less leisure time than they did fifty years ago.

All this suggests that as people at the top do better and better, those at the bottom will want to work harder too, in order to emulate them. One study indeed found a "Veblen effect", which showed that as income inequality rose, working hours for the less-well-to-do rose too.

But a new paper, from two economists at Monash Business School, suggests that the tide may be turning. Using relatively recent data on workers in Australia's six states and two territories, it finds the opposite. As income inequality rose, it finds, Australians decided to work fewer hours. A 1% rise in the Gini coefficient, a measure of economic inequality, ends up resulting in a 0.2% decline in working hours.

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How porn can hinder your financial decision-making – The Investor

How porn can hinder your financial decision-making – The Investor | Bounded Rationality and Beyond | Scoop.it

Regulators around the world are worried about new innovations at the intersection of psychology and financial services. But they need to relax. Behavioural science and neuroeconomics can be used for good provided we keep up with the findings.

Like any new technology, it is easy to let caution worry us more than opportunity. From nuclear technology to genetically modified foods, we can focus on the potential harms, rather than the benefits. Behavioural economics has developed theories about why people make bad financial decisions. Neuroeconomics studies brain anatomy and chemistry to understand how economic decisions are made. Both fields are providing powerful insights that can be used for good or for ill.

 
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Malcolm Gladwell at University of Pennsylvania 2/14/2013 - YouTube

This lecture was presented as part of the University of Pennsylvania's "Year of Proof" program.

Mr. Gladwell is the author of four books, including The Tipping Point: How Little Things Make a Big Difference (2000) and Outliers: The Story of Success (2008). All four books were New York Times Bestsellers.

Gladwell's books and articles often deal with the unexpected implications of research in the social sciences and make frequent and extended use of academic work, particularly in the areas of sociology, psychology, and social psychology.
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Prof. Daniel Kahneman talks Behavioural Economics with Rory Sutherland. - YouTube

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How does the preference for increasing payments depend on the size and source of the payments?

Abstract: It is well-known that subjects can exhibit a preference for increasing payments. Smith (2009a) makes a related prediction that the difference between the preference increasing wage payments and the preference for increasing non-wage payments will be largest for intermediate payments. We find evidence consistent with this prediction. Consistent with previous experiments, we find that the preference for increasing payments is increasing in the size of the payments. Also consistent with the literature, we find that the preference for increasing wage payments is stronger than the preference for non-wage payments.
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