He has been called the “the most dangerous man in America”. His scientific articles, newspaper contributions, and books predictably arouse emotional responses and his most recent book “Why Nudge?” is no exception. Cass Sunstein wrote Why Nudge? as a response to various attacks on nudging and behaviourally informed regulation. Based on earlier books, such as Kahneman’s Thinking Fast and Slow and Thaler and Sunstein’sNudge, Why Nudge? presents several new and important contributions, some of which are summarised below. The book classifies paternalism along 2 dimensions; soft versus hard and means versus ends. The distinction between soft and hard paternalism describes how costly a paternalistic intervention is for the individual. For example, while tobacco packaging warning messages are soft paternalism, a large fine if you are caught smoking in an illegal zone is a hard intervention. The distinction between means paternalism and ends paternalism refers to whether interventions should tell people what to do or prioritize helping them to achieve what they want themselves. An example is discouraging obesity by posting calorie labels (means) or banning large sized sugary drinks (ends). 'Nudges', of which there are many examples in the Nudge Database on this website, are (i) soft, in that they are relatively low-cost, and (ii) means-oriented, in that they do not override individuals' goals.
Letters: A nudge works best when its target doesn't realise it's being nudged.
There are a number of issues in Cass Sunstein's article on nudging that need addressing (We should be nudging people, not shoving, 25 April) First, a nudge works best when its target doesn't realise it's being nudged – think of the architecture of a supermarket, for example, which encourages us to buy one thing rather than another. This undermines Sunstein's claim that a nudge maintains "freedom of choice". It's true that there are plenty of things on the shelves, but a nudge will have failed if it doesn't make us choose one of those things in preference to others.
Second, Sunstein has it in for public officials, who he says have limited information and do not always have the purest of motivations. Unlike nudgers, of course, who, we are to suppose, possess perfect information and are unerringly saintly.
Guardian journalist Shiv Malik revealed the grubby side of nudging when he exposed the bogus psychometric tests inflicted on jobseekers by the Department for Work and Pensions – whatever answers were entered, the subject ended up with the same psychometric profile (Jobseekers made to carry our bogus psychometric tests, 30 April 2013). This hardly amounts to treating people with dignity – another core nudge value, according to Sunstein.
Third, for nudgers, people are not citizens involved in the co-creation of policy, but experimental subjects to be prodded and poked in the petri dish of the behavioural economist's imagination. Sunstein has defined nudging as "libertarian paternalism" – an oxymoron rooted in the self-fulfilling prophecy that people are incapable of sound judgment. In sum, nudging is anti-democratic and anti-political, the latest in a long line of attempts to bypass the messy business of engaging citizens in grown-up debate.
The academic power couple On Amir and Orly Lobel report on a clever experiment on non-compete agreements in a recent Harvard Business Review article:
We recruited 1,028 participants to complete an online task for pay. Half of them were asked to do a purely effort-based activity (searching matrices for numbers that added up to 10), and the other half, a creative activity (thinking of words closely associated with other words). Some subjects in each group were placed under restrictions that mimicked a noncompete agreement: They were told that although they would later be invited to perform another paid task, they’d be barred from accepting the same type of task. The remaining subjects were used as a control group and given no restrictions.
Sixty-one percent of the subjects in the noncompete group gave up on their task (thus forgoing payment), compared with only 41% in the control group. Among the subjects who completed the matrix task, people with noncompete conditions were twice as likely to make mistakes as people in the control group. Those who were restricted also skipped more items and spent less time on the task—further indications of low motivation.
The finding seems to fit the theme of Orly Lobel’s book Talent Wants to Be Free: Why We Should Learn to Love Leaks, Raids, and Free Riding. When the authors replaced the matrix task with the more enjoyable creative activity, the differences went away. As the authors say “Prior research had shown that in creative endeavors, people are primarily driven by intrinsic motivations. So it made sense that subjects working on the word associations would be less affected by a negative external incentive than people working on math tasks would be.”
Abstract Using unique panel data, we compare cognitive performance and wagering behavior of children (10-11 years) with adults playing in the Swedish version of the TV-shows Jeopardy and Junior Jeopardy. Although facing the same well-known high-stakes game, and controlling for performance differences, there is no gender gap in risk-taking among girls and boys in contrast with adults, and, while girls take more risk than women, boys take less risk than men. We also find that female behavior is differently sensitive to social context. While women wager more, girls perform worse and employ inferior wagering strategies when randomly assigned male opponents.
The myth of rational investors is long gone broken but great number of finance theorists andmainstream orthodox economists are still advocating the theory ofhomo economicus. In this paper, we take closer look at susceptibility of investors to heuristics and biases, in general,and looking at some individual differences. We found that average investor is susceptible toheuristics and biases. From the perspective of individual differences, we found that professional investor status interacts with the length of investors trading experience, meaningthat professional investors through years of investing get more susceptible to heuristics/biaseswhile non- professional investors get more “rational”.
Harvard University announced today that New York–based The Pershing Square Foundation (PSF), founded by alumni Bill Ackman ’88, M.B.A. ’92, and his wife, Karen Ackman, M.L.A. ’93, has awarded the University $17 million to catalyze the work of its Foundations of Human Behavior Initiative.
Despite the social importance of decisions taken in the ‘‘heat of the moment,’’ very little research has examined the effect of sexual arousal on judgment and decision making. Here we examine the effect of sexual arousal, induced by self-stimulation, on judgments and hypothetical decisions made by male college students. Students were assigned to be in either a state of sexual arousal or a neutral state and were asked to: (1) indicate how appealing they find a wide range of sexual stimuli and activities, (2) report their willingness to engage in morally questionable behavior in order to obtain sexual gratification, and (3) describe their willingness to engage in unsafe sex when sexually aroused. The results show that sexual arousal had a strong impact on all three areas of judgment and decision making, demonstrating the importance of situational forces on preferences, as well as subjects’ inability to predict these influences on their own behavior.
Theory of Mind (ToM) is involved in decision making in strategic games with adults, while its results with children are still controversial, probably because the literature to date has not directly assessed children’s concept of fairness. The goal of this research is to investigate what constitutes fairness across different age groups (children aged seven, eight and nine years) by assessing both their judgements and their decisions concerning the offers made by a social partner and then to relate this to ToM understanding by using second-order false-belief tasks. Results show that, across age groups, the concept of fairness evolves from divisions in one’s advantage towards those of equality; although ToM is not related to the concept of fairness, it plays a role in the strategic behaviour that orients children to accept more equal divisions and to reject hyperfair divisions.
Dan Ariely is a people hacker. A professor of behavioral economics at Duke University and MIT as well as director of MIT’s Center for Advanced Hindsight, Ariely deconstructs human behavior to find the hidden ways we deceive ourselves about the things we do and to construct better ways of resolving some of life’s issues.
Ariely, who was born in the U.S. and raised in Israel, wrote a book called Predictably Irrational, which showed how people are irrational in calculable and dependable ways. He’s also conducted tests on cheating that produced some interesting results.
In his research, Ariely gave test subjects 20 math problems to solve and told them they’d be paid cash for each correct answer. The subjects were given only five minutes to do the exam, ensuring that no one would complete it. When the time was up, the control subjects were told to count their correct answers and collect their pay.
Social cognition, as a field, can be characterized as a distinct subarea of social psychology that examines all of the countless cognitive complexities, mental representations, and processes implicated in interaction, as well as an approach to studying interactions in the context of the groups, cultures, and societies to which they belong. Together these two facets of social cognition create one of the most influential and important social sciences to come along in some time. Providing a comprehensive review of major topics in the field of social cognition, The Oxford Handbook of Social Cognition expresses that excitement and fascination in describing the content and approach that constitute the field today. The 43 chapters included in this handbook cover: central aspects of the field of social cognition, including its history and historically important foundational research areas (attribution, attitudes, impression formation, and prejudice/stereotyping), along with methodology – core issues relating to social cognitive representationsand processes (including those that are visual, implicit, or automatic) and the stages of information processing (attention, perception, memory, and judgment, along with simulation and thought suppression) – applications of the social cognition approach to areas of social psychology, general psychology, and other disciplines, such as marketing, law, health and politics. After more than 30 years, the vibrant field of social cognition continues to reign as one of psychology’s most dominant approaches. The impressive chapters collected in this volume define the field and contribute enormously to our understanding of what social cognition is today.
Not surprisingly, the 2008–2009 global financial crisis sent many financial professionals looking to history for a sense of appropriate context and perspective to understand the magnitude of such a catastrophic financial shock.
Why study financial history? For historical context that helps to make sense of the current world.
Not surprisingly, the 2008–2009 global financial crisis sent many financial professionals looking to history for a sense of appropriate context and perspective to understand the magnitude of such a catastrophic financial shock. This, in turn, sparked a general interest in financial history but with few professional sources to turn to. At the 2014 Middle East Investment Conference, professor Adrian R. Bell, head of the ICMA Centre at the University of Reading’s Henley Business School, considered the question of whether modern finance existed in the Middle Ages.
Bell hesitated, but nonetheless conceded, that finance seems to be as old as the agricultural revolution in Mesopotamia more than 3,000 years ago. It was then that forward contracts carved into cuneiform tablets — one for barley (at an interest rate of 33.33%) and the other for silver (at an interest rate of 20%) — were entered into between a person and a god (at least the god’s intermediary, a priest). Put another way, finance seems to be an inevitable consequence of human activity, and its invention was predetermined.
The paper analyses the social conditions of a disciplinary evolution and paradigmatic shift. It is based on the history of economics at the EHESS from 1948 to 2005. An analysis of the PhD committees database enables us to trace the importance and evolution of different economic paradigms within this institution. In the early eighties, the traditional interdisciplinary humanist economics was challenged by a new generation of neoclassical engineer-economists. Far from being a mere declination of a general trend in the discipline, this paradigmatic shift was largely contingent, resting on local context and the influence of a few key persons. The exhibition of international capital and the building of political alliances within the assembly were also key elements for the change and for the survival of the new lineage in a rather hostile environment.
In the last 400 years physics has achieved great success, in theory and experimentation, determining the structure of matter and energy. The next great step in the evolution of science will be exploring the role of mind and consciousness in the universe, employing mathematics and fundamental theoretical constructs to yield specific predictions. Based on recent findings in biological autonomy, we propose to approach consciousness from the key aspect of decision-making. This approach allows us to develop a quantitative theory of consciousness as manifested in information processing. Since decision-making occurs at a certain level of organization, natural relations are obtained between consciousness at one level of organization and unconsciousness at another. By following this chain of argument, we also consider the possibility that levels of consciousness and unconsciousness form a self-closing hierarchy. This line of reasoning has led us to theoretically formulate the possible relationships between mind, cellular activity (both neuronal and non-neuronal), and the universe, working with the categories of consciousness, self-consciousness, and unconsciousness. What we propose in the present paper is a natural and straightforward extension of information theory to quantitative measures of consciousness at different levels and scales. A framework that integrates data from multiple disciplines can help us develop a broader theory of consciousness than what is possible from any single field alone. We present quantitative estimations for the rates of information processing at the global and cellular levels of the human organism and suggest values at the level of the universe. Our picture yields a new, quantitative picture of the mental capabilities of Homo sapiens and a reformulation of our place in the universe.
Recent research has shown that the degree to which speakers and listeners exhibit similar brain activity patterns during human linguistic interaction is correlated with communicative success. Here, we used an intersubject correlation approach in fMRI to test the hypothesis that a listener's ability to predict a speaker's utterance increases such neural coupling between speakers and listeners. Nine subjects listened to recordings of a speaker describing visual scenes that varied in the degree to which they permitted specific linguistic predictions. In line with our hypothesis, the temporal profile of listeners' brain activity was significantly more synchronous with the speaker's brain activity for highly predictive contexts in left posterior superior temporal gyrus (pSTG), an area previously associated with predictive auditory language processing. In this region, predictability differentially affected the temporal profiles of brain responses in the speaker and listeners respectively, in turn affecting correlated activity between the two: whereas pSTG activation increased with predictability in the speaker, listeners' pSTG activity instead decreased for more predictable sentences. Listeners additionally showed stronger BOLD responses for predictive images before sentence onset, suggesting that highly predictable contexts lead comprehenders to preactivate predicted words.
Abstract: This study test whether social reference points impact individual risk taking. In a laboratory experiment, decision makers observe the earnings of a peer subject before making a risky choice. We exogenously manipulate the peer earnings across two treatments. We find a signicant treatment effect on risk taking: decision makers vary their risk taking in order to surpass or stay ahead of their peer. Our findings are consistens with a social-comparison-based, reference-dependent preference model that formalizes relative concerns via social loss aversion. Additionally, we relate our findings to the impact of private reference points on risk taking.
People are wrong about the type of goals that will make them happiest. New research suggests that certain concrete goals for happiness work better than abstract goals.The study, published in the Journal of Experimental Social Psychology, may answer one of the paradoxes of happiness: why trying to be happy sometimes makes us less happy (Rudd et al., 2014).
SFI Professor Sam Bowles and External Professor Herb Gintis were among the "young radical economists" at Harvard in the late 1960s whose ideas were rejected by mainstream economists, ideas that have since gained credibility, according to a feature in Adbusters magazine on the value of diverse perspectives.
These young academics "called for a politicization of economics, accusing fellow economists of ignoring the important questions and being 'instrumental to the elite’s attainment of its unjust ends.'...A campaign ensued the next few years to eradicate the young radicals from top positions. Contract after contract and tenure after tenure were denied, including to the Harvard four."
"Among them, the most notable case was that of Sam Bowles, one of the brightest economists of his generation, as confirmed by his later work. His tenure candidacy was rejected by a nineteen to five vote in 1973."
Read the article in Adbusters magazine (May 1, 2014)
Social expectations play a critical role in everyday decision-making. However, their precise neuro-computational role in the decision process remains unknown. Here we adopt a decision neuroscience framework by combining methods and theories from psychology, economics and neuroscience to outline a novel, expectation-based, computational model of social preferences. Results demonstrate that this model outperforms the standard inequity-aversion model in explaining decision behavior in a social interactive bargaining task. This is supported by fMRI findings showing that the tracking of social expectation violations is processed by anterior cingulate cortex, extending previous computational conceptualizations of this region to the social domain. This study demonstrates the usefulness of this interdisciplinary approach in better characterizing the psychological processes that underlie social interactive decision-making.
Near Death Experiences: A New Algorithmic Approach to Verifying Consciousness Outside the Brain Quantum mechanics arose to explain 'wobbles' in predicted effects of Newtonian physics, such as the stability of electron orbitals. Similarly, scientifically verified phenomena in the field of neuroscience which contradict known theories of brain function, could give weight and credibility to neuroquantology, stimulating new research and discovery. The existence of consciousness outside the physical brain, often recounted anecdotally in various forms, if verified, could be such a phenomenon. Accounts of ‘Out of Body Experiences’ (OBEs), often incorporating ‘Near Death Experiences’ (NDEs) have accumulated over many years, with believers in the empirical actuality of the OBE/NDE, and sceptics entrenched. After an overview of explanations and theories on both sides, with counter-arguments, we make the case for a new approach, for identifying verifiable cases, if any. This would allow critical appraisal of evidence, according to scientific methodology, though with certain inescapable limitations. Using a specific, much-cited case, we show how distorted accounts of NDEs may be used to support supposedly ‘scientific’ arguments. We propose an algorithm, to discount unsuitable cases, identify verifiable features, and allow further reputable scientific study, and an online cache, of suitable cases. Verifying out-of-brain consciousness would stimulate new technology, for medical science, and even communication between brains – and new science to explain it, conceivably using quantum models, as it’s impossible according to current neuroscience. It would advance arguments about defining death, even survival after death. However slim the chance of verifying OBEs, the potential benefits and advances in scientific and biomedical knowledge make the attempt worthwhile.
a b s t r a c t Decision-makers show an increased risk appetite when they gamble with previously won money, the house money effect, and when they have a chance to make up for a prior loss, the break even effect. To explore the origins of these effects, we use functional magnetic resonance imaging to record the brain activities of subjects while they make sequential risky choices. The behavioral data from our experiment conﬁrm the path dependence of choices, despite the short trial duration and the many task repetitions required for neuroimaging. The brain data yield evidence that the increased risk appetite after gains and losses is related to an increased activity of affective brain processes and a decreased activity of deliberative brain processes.
Social insects--ants, bees, termites, and wasps--can be viewed as powerful problem-solving systems with sophisticated collective intelligence. Composed of simple interacting agents, this intelligence lies in the networks of interactions among individuals and between individuals and the environment. A fascinating subject, social insects are also a powerful metaphor for artificial intelligence, and the problems they solve--finding food, dividing labor among nestmates, building nests, responding to external challenges--have important counterparts in engineering and computer science. This book provides a detailed look at models of social insect behavior and how to apply these models in the design of complex systems. The book shows how these models replace an emphasis on control, preprogramming, and centralization with designs featuring autonomy, emergence, and distributed functioning. These designs are proving immensely flexible and robust, able to adapt quickly to changing environments and to continue functioning even when individual elements fail. In particular, these designs are an exciting approach to the tremendous growth of complexity in software and information. Swarm Intelligence draws on up-to-date research from biology, neuroscience, artificial intelligence, robotics, operations research, and computer graphics, and each chapter is organized around a particular biological example, which is then used to develop an algorithm, a multiagent system, or a group of robots. The book will be an invaluable resource for a broad range of disciplines.
Julia Galef's talk at EA in Melbourne, Australia - Ever made a mistake? Missed an opportunity? Cognitive scientists have found that even highly educated and successful people make predictable errors in judgement, and just knowing about these experimental results often isn't enough to fix the problem. But with practice and exercises, you can. At our workshops, you can learn about newly discovered failure patterns in human decision-making, and get trained to overcome them...
--- Part of a meetup in Melbourne titled 'The Mind and Altruism':
The challenges we face in making the world a better place are more complex than even the smartest human brains evolved to handle. To actually eliminate poverty, cure disease, and stop war, we need to make the best decisions we can. To do that, we must understand both the strengths and limitations of our minds.
Who knows what I want to do? Who knows what anyone wants to do? How can you be sure about something like that? Isn’t it all a question of brain chemistry, sign
The birth of neuroeconomics
Much work has been done on the affective neuroscience of desire,1 but I am less interested with desire as an emotion than I am with desire as a cause of decisions under uncertainty. This latter aspect of desire is mostly studied by neuroeconomics,2 not affective neuroscience.
From about 1880-1960, neoclassical economics proposed simple, axiomatic models of human choice-making focused on the idea that agents make rational decisions aimed at maximizing expected utility. In the 1950s and 60s, however, economists discovered some paradoxes of human behavior that violated the axioms of these models.3In the 70s and 80s, psychology launched an even broader attack on these models. For example, while economists assumed that choices among objects should not depend on how they are described ('descriptive invariance'), psychologists discovered powerful framing effects.4
In response, the field of behavioral economics began to offer models of human choice-making that fit the experimental data better than simple models of neoclassical economics did.5 Behavioral economists often proposed models that could be thought of as information-processing algorithms, so neuroscientists began looking for evidence of these algorithms in the human brain, and neuroeconomics was born.
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