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.
Intuition is challenging to define, despite the huge role it plays in our everyday lives. Steve Jobs called it, for instance, "more powerful than intellect." But however we put it into words, we all, well, intuitively know just what it is. Pretty much everyone has experienced a gut feeling -- that unconscious reasoning that propels us to do something without telling us why or how. But the nature of intuition has long eluded us, and has inspired centuries' worth of research and inquiry in the fields of philosophy and psychology. "I define intuition as the subtle knowing without ever having any idea why you know it," Sophy Burnham, bestselling author of The Art of Intuition, tells The Huffington Post. "It's different from thinking, it's different from logic or analysis ... It's a knowing without knowing."
Our intuition is always there, whether we're aware of it or not. As HuffPost President and Editor-in-Chief Arianna Huffington puts it in her book Thrive:
Even when we're not at a fork in the road, wondering what to do and trying to hear that inner voice, our intuition is always there, always reading the situation, always trying to steer us the right way. But can we hear it? Are we paying attention? Are we living a life that keeps the pathway to our intuition unblocked? Feeding and nurturing our intuition, and living a life in which we can make use of its wisdom, is one key way to thrive, at work and in life.......
Be more productive, sleep better, and have deeper insights with a few simple precautions and regular treatments.
The latest Gallup poll (2012) revealed that 87 percent of employees are “not engaged” or are “actively disengaged” from their jobs worldwide. This means that, on average, burnt out employees outnumber the engaged employees 2 to 1.
Traditional theories teach us that burnout is caused by working too many hours or enduring too much stress, but that’s a gross oversimplification of the matter. Not every person feels overwhelmed at the thought of delving into an inbox 96 new emails deep, and some people actually rely on pressure at work to perform at a high level.
There’s also no one-size-fits-all cure for burnout: Some people reach for junk food when stressed, while others may find themselves unable to sleep properly. At 99U, we’ve long explored the best strategies for coping with, treating, and preventing burnout. Here are 11 of our favorites to help you create your own escape plan:
In this book we build up an ‘integral’ approach to social and economic systems that we have been developing for four decades, in fact over the same time period that the neoliberal model has predominated. It enables us to jointly reframe economics in a way that accommodates nature and culture, science and enterprise, across the whole world. According to our integral approach, every social system needs to find, in order to be and stay sustainable, a dynamic balance between its four mutually reinforcing and interdependent ‘worlds’ and its ‘center’. In other words, a living social system consists of a: Center: the realm of religion and humanity -South: the realm of nature and community -East: the realm of culture and spirituality -North: the realm of science and technology -West: the realm of finance and enterprise. This integral perspective is applicable for all types of social systems, from the individual to the organization, from community to society. On an individual level, for example we are seeking a dynamic balance between heart, spirit, mind, body and soul; or, in other words between our ‘Southern’ being (heart), ‘Eastern’ becoming (spirit), ‘Northern’ thinking (mind), ‘Western’ doing (body) and the inspirational and integrating center (soul). A sustainable ‘integral’ society, to bring another example, would have found dynamic balance between its ‘Southern’ environmental or animate sector encompassing nature and community; its ‘Eastern’ civic sector encompassing culture and spirituality; its ‘Northern’ public sector encompassing governance, science and technology; its private sector encompassing finance and enterprise; and, finally, its moral center, encompassing religion and humanity. The same then applies to a sustainable approach to economics. In this book we introduce the five elements of the integral economy, and we present transformational paths that can support the renewal of society and economy. An Integral Economy comprises as well of four ‘worlds’ and a center, articulated as: - Center: Moral Economic Source, founded in religion and humanity - South: Self-sufficient Economy, founded in nature and community - East: Developmental Economy, founded in culture and spirituality - North: Social Economy, founded in science and technology - West: Living Economy, founded in finance and enterprise.
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.
Deborah Gordon spent the morning of August 27 watching a group of harvester ants foraging for seeds outside the dusty town of Rodeo, N.M. Long before the first rays of sun hit the desert floor, a group of patroller ants was already on the move. Their task was to find out whether the area near the nest was free from flash floods, high winds, and predators. If they didn’t return to the nest, departing foragers would know it wasn’t safe to go search for food.
When the patrollers returned and the first foragers did leave, they scattered in all directions, hunting for the fat-laden, energy-rich seeds on which the colony depends. Other foragers waited in the entrance of the nest for the first wave to return. If lots of food were nearby, foragers would return and depart quickly, creating a massive chain reaction. If food was scarce, however, the second group of foragers might not leave the nest at all.
“It’s a brilliant system. The ants can take advantage of sudden windfalls of food but they don’t waste energy and resources if there’s nothing there,” said Gordon, who is an ecologist at Stanford University.
The behavior of each individual in the group is set by the rate at which it meets other ants and a set of basic rules. Its behavior alters that of its neighbors, which in turn affects the original ant, in a classic example of feedback. The result is astonishing, complex behavior. “Individually, an ant is dumb,” Gordon says. She gazes off into the distance and inhales sharply. “But the colony? That’s where the intelligence is.”
Death of homo economicus, rise of behavioral economics
HOW ECONOMICS GOT IT WRONG AND WHAT TO DO ABOUT ITThe time has come for the end of the economics as we know it. It seems thatacademic economics amplified with its intellectual vanity failed to realize the humansas they truly are. Or at least they kept quiet about it and hoped“it” would go away.Recent economic crisis triggered a tsunami of critics pointed at economists, bankers,politicians and regulators as well as world‟s most prominent business schoolfor leading the same world into crisis instead of taking care of sustainability of the currentliving conditions. How did economics fail? Well, this is a simple question so I will trywith a simple answer. It all began when economic mathematicians decided to revealhuman nature and explain human behavior. The legacy they left us got materializedin certain assumptions and theories which turned out to be completely ignorant of thefact how do people really think and behave. These theories are filtered down to theeconomics education system (business schools) creating thereby very closed andrigid environment that lacks interdisciplinary and academic diversity. In this paper I‟lltry to detect origins and process of economics becomingtroublesome in today‟ssociety. Giving insight in some historical precedents and development of some newscientific disciplines, I‟ll conclude that time has come to change the way economics istaught. Great responsibility that is put on business school to create individuals withpower to create global policies needs to be (re)justified. Business schools need torethink how to shape business education for the future. A business education that willbe based on multidisciplinarity and taking a bigger picture in perspective. This doesnot exclude present body of economics knowledge but it implies incorporating some“new stuff that‟s been on the street” for some time
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