Bounded Rationality and Beyond
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News on the effects of bounded rationality in economics and business, relationships and politics
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Psychologists Have Uncovered a Troubling Feature of People Who Seem Nice All the Time

Psychologists Have Uncovered a Troubling Feature of People Who Seem Nice All the Time | Bounded Rationality and Beyond | Scoop.it
Being affable and pleasant can come with some serious drawbacks.

In 1961, curious about a person's willingness to obey an authority figure, social psychologist Stanley Milgram began trials on his now-famous experiment. In it, he tested how far a subject would go electrically shocking a stranger (actually an actor faking the pain) simply because they were following orders. Some subjects, Milgram found, would follow directives until the person was dead.

The news: A new Milgram-like experiment published this month in the Journal of Personality has taken this idea to the next step by trying to understand which kinds of people are more or less willing to obey these kinds of orders. What researchers discovered was surprising: Those who are described as "agreeable, conscientious personalities" are more likely to follow orders and deliver electric shocks that they believe can harm innocent people, while "more contrarian, less agreeable personalities" are more likely to refuse to hurt others.

 
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Nudging parental health behavior with and without children's pestering power: fat tax, subsidy or both?

Abstract: We study the effect of several food fiscal policies as a way of nudging consumers towards a healthier way of eating. Our experimental design varies prices of healthier and unhealthier alternatives of food products for children. We also examine the interplay of children’s pestering power. Results from our lab experiment suggest that (a) implementing a fat tax and a subsidy simultaneously can nudge parents to choose healthier products, (b) providing information regarding the fiscal policies in place can further increase the impact of the intervention, and (c) kid’s pestering power is one of the causes of the policies’ moderate effectiveness.

 
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Digit ratio and risk taking: Evidence from a large, multi-ethnic sample

Abstract: Using a large (n=543) multi-ethnic sample of laboratory subjects, we systematically investigate the link between the digit ratio (the ratio of the length of the index finger to the length of the ring finger, also called 2D:4D ratio) and two measures of individual risk taking: (i) risk preferences over lotteries with real monetary incentives and (ii) self-reported risk attitude. Previous studies have found that the digit ratio, a proxy for pre-natal testosterone exposure, correlates with risk taking in some subject samples, but not others. In our sample, we find, first, that the right-hand digit ratio is significantly associated with risk preferences: subjects with lower right-hand ratios tend to choose more risky lotteries. Second, the right-hand digit ratio is not associated with self-reported risk attitudes. Third, there is no statistically significant association between the left-hand digit ratio and either measure of individual risk taking.
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Branding insights: an interdisciplinary journey from perception to action

Abstract: Our interdisciplinary study examines the brand's perceived intentions and ability, as predictors of consumer behavior. In an attempt of answering a call for research in the branding area, we found out contradictory views, both of them based on strong arguments, including empirical results. Each view has been examined by the lens of branding, social cognition and behavioral theory. We found convergent findings from cognitive psychology and behavioral theory to support one of the two views and to extract a hypothesis. Thus, we hypothesized that an effective branding process, meant to achieve both consumer trust and sales objectives, should address the brand's perceived intentions before ability. We suggest that further empirical studies are needed to test the hypothesis, although for some particular cases, tests confirmed the priority of intentions. Overall, our paper offers an integrative view of consumer underlying behaviors revealed by results of other social sciences and how should be used in brand construction process. The benefits of updating branding theories by integrating results confirmed by other social sciences are discussed.

 
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Humans are wired for prejudice, research shows — but they don’t have to be

Humans are wired for prejudice, research shows — but they don’t have to be | Bounded Rationality and Beyond | Scoop.it
Humans are highly social creatures. Our brains have evolved to allow us to survive and thrive in complex social environments.

Via Jocelyn Stoller
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The Critical Few

The Critical Few | Bounded Rationality and Beyond | Scoop.it

To maintain stability yet retain the flexibility to adapt to changing circumstances, social systems must strike a balance between the maintenance of a shared reality and the survival of minority opinion. A computational model is presented that investigates the interplay of two basic, oppositional social processes—conformity and anticonformity—in promoting the emergence of this balance. Computer simulations employing a cellular automata platform tested hypotheses concerning the survival of minority opinion and the maintenance of system stability for different proportions of anticonformity. Results revealed that a relatively small proportion of anticonformists facilitated the survival of a minority opinion held by a larger number of conformists who would otherwise succumb to pressures for social consensus. Beyond a critical threshold, however, increased proportions of anticonformists undermined social stability. Understanding the adaptive benefits of balanced oppositional forces has implications for optimal functioning in psychological and social processes in general.

 

The Critical Few: Anticonformists at the Crossroads of Minority Opinion Survival and Collapse
by Matthew Jarman, Andrzej Nowak, Wojciech Borkowski, David Serfass, Alexander Wong and Robin Vallacher
http://jasss.soc.surrey.ac.uk/18/1/6.html


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Evolution of Integrated Causal Structures in Animats Exposed to Environments of Increasing Complexity

Evolution of Integrated Causal Structures in Animats Exposed to Environments of Increasing Complexity | Bounded Rationality and Beyond | Scoop.it
Natural selection favors the evolution of brains that can capture fitness-relevant features of the environment's causal structure. We investigated the evolution of small, adaptive logic-gate networks (“animats”) in task environments where falling blocks of different sizes have to be caught or avoided in a ‘Tetris-like’ game. Solving these tasks requires the integration of sensor inputs and memory. Evolved networks were evaluated using measures of information integration, including the number of evolved concepts and the total amount of integrated conceptual information. The results show that, over the course of the animats' adaptation, i) the number of concepts grows; ii) integrated conceptual information increases; iii) this increase depends on the complexity of the environment, especially on the requirement for sequential memory. These results suggest that the need to capture the causal structure of a rich environment, given limited sensors and internal mechanisms, is an important driving force for organisms to develop highly integrated networks (“brains”) with many concepts, leading to an increase in their internal complexity.

Via Ashish Umre, Jocelyn Stoller
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Dr. Sean Orr – Brain Fitness For The NeuroEconomy - YouTube

Neurologist, Dr. Sean Orr, talks about his focus on brain enhancement for optimal performance in the current financial culture he’s coined the NeuroEconomy. ...
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Center for Neuropolicy

Background

For decades, neuroscientists, psychologists, and economists have studied human decision making from different perspectives. Although each has approached the problem with different theories and techniques, the basic question is common to many fields: why do humans make the choices that they do? And, given that humans sometimes exercise poor judgment in their decisions, what can we do about it?

Economists have developed simple theories of decision-making, for example, that are used to understand the movement of asset prices in markets. The basic theory says that people make decisions in such a way as to achieve outcomes that maximize their benefit. Although more mathematically precise, it has much in common with psychological theories that say that people tend to maximize pleasure and minimize pain. Although these theories describe basic tendencies of all animals, they often fail to account for decisions in common circumstances. For example, when individuals must make decisions in which an immediate benefit must be weighed against long-term consequences, they usually choose immediate gratification. Diet and preventive health care often fall prey to this temporal myopia. So do retirement savings.

The idea behind neuroeconomics is simple. The brain is responsible for carrying out all of the decisions that humans make, but because it is a biophysical system that evolved to perform specific functions, understanding these physical constraints may help explain why people often fail to make good decisions.

The emphasis in neuroeconomics has been on individual decision making. There is, however, potential for taking these techniques to a much larger, globally important level: collective action.

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Frontiers | Toward a general theoretical framework for judgment and decision-making | Decision Neuroscience

Over the past 30 years, behavioral and experimental economists and psychologists have made great strides in identifying phenomena that cannot be explained by the classical model of rational choice–anomalies in the discounting of future wealth, present bias, loss aversion, the endowment effect, and aversion to ambiguity, for example. In response to these findings, there has been an enormous amount of research by behavioral scientists aimed at modeling and understanding the nature of these biases. However, these models, typically assuming situation-specific psychological processes, have shed limited light on the conditions for and boundaries of the different biases, substantially neglecting their relative importance and joint effect. Much less attention has been paid to the investigation of the links between different biases. As a consequence of this approach, it is not always clear which model should be used to predict behavior in a new setting, and maybe a more general theory is needed. We believe that the field of neuroeconomics, which has experienced a rapid growth over the past decade, can play an important role in bridging these gaps, contributing to the building of a general theoretical framework for judgment and decision-making behaviors.

Apparently inconsistent biases
One of the main insights from decision-making studies is that people tend to overweight small probability events in risky one-shot decisions (Kahneman & Tversky, 1979). This tendency can explain why, for example, people buy lottery tickets and insurance. However, one might wonder, for instance, why in most Western Countries driving insurance is compulsory (how many drivers would spontaneously ensure?); Why the enforcement of safety rules at the workplace and of safe medical procedures have become social issues of primary importance, causing massive public and private investments (Erev et al., 2010); or why only a small share of people actually participate in lotto games on a regular basis (Pérez & Humphreys, 2011). 

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Learn Languages Better With This Psychological Tip — PsyBlog

Learn Languages Better With This Psychological Tip — PsyBlog | Bounded Rationality and Beyond | Scoop.it

Boost language learning with this tip.

Using gestures while trying to learn a new language can help boost memory, a new study finds. The motor system, the part of the brain controlling movements, seems to be particularly important in language learning.

While many language learning systems already incorporate pictures to help people learn, this is one of the first studies to show the importance of gesture.

In the experiment, published in the journal Current Biology, participants tried to learn a made-up language called ‘Vimmish’, chosen so that people would never have heard it before (Mayer et al., 2015).

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Self-regulatory organizations under the shadow of governmental oversight: an experimental investigation

Self-regulatory organizations under the shadow of governmental oversight: an experimental investigation | Bounded Rationality and Beyond | Scoop.it

Abstract: Self-regulatory organizations (SROs) can be found in education, healthcare, and other not-for-profit sectors as well as in the accounting, financial, and legal professions. DeMarzo et al. (2005) show theoretically that SROs can create monopoly market power for their affiliated agents, but that governmental oversight, even if less efficient than oversight by the SRO, can largely offset the market power. We provide an experimental test of this conjecture. For carefully rationalized parameterizations and implementation details, we find that the predictions of DeMarzo et al. (2005) are borne out.

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NeuroLogica Blog » Gravity Waves and Science Self-Correction

NeuroLogica Blog » Gravity Waves and Science Self-Correction | Bounded Rationality and Beyond | Scoop.it

In 2011 scientists tentatively reported that they may have detected neutrinos traveling faster than the speed of light in apparent contradiction to the theory of relativity. By early 2012 the technical error that led to the apparent discovery was revealed.

Also in 2012 scientists reported that, using the Large Hadron Collider, they probably found the Higgs boson, the particle responsible for mass. However they were still not completely sure so they kept testing, and then last year they announcedthat indeed they did identify the Higgs as predicted by the standard model of particle physics.

In March of 2014, in what was definitely the biggest science news story of the year scientists reported detected gravity waves from the Big Bang, confirming the theory called the “inflationary universe.” The discovery was hailed as a “smoking gun.” Space.com at the time wrote:

If it holds up, the landmark discovery — which also confirms the existence of hypothesized ripples in space-time known as gravitational waves — would give researchers a much better understanding of the Big Bang and its immediate aftermath.

In those four little words, “if it holds up,” lies the essence of science. This is just a sample of recent big science news stories that reveal the process of science – skeptical questioning of all claims and testing those claims against objective evidence.

 

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big data challenge of the human brain

big data challenge of the human brain | Bounded Rationality and Beyond | Scoop.it

In order to address the big data challenge of the human brain, researchers at the SPECS lab lead by Paul Verschure, have recently developed BrainX3, a platform for visualization, simulation, analysis and interaction of large data, that combines computational power with human intuition in representing and interacting with large complex networks. BrainX3 serves as a hypotheses generator of big data. As is often the case with complex data, one might not always have a specific hypothesis to start with. Instead, discovering meaningful patterns and associations in big data might be a necessary incubation step for formulating well-defined hypotheses.

On this platform, the researchers reconstructed a large-scale simulation of human brain activity in a 3D virtual reality environment. Using the brain’s known connectivity along with detailed biophysics, the researchers reconstruct neuronal activity of the entire cortex in the resting-state. Users can interact with BrainX3 in real-time by perturbing brain regions with transient stimulations to observe reverberating network activity, simulate lesion dynamics or implement network analysis functions from a library of graph theoretic measures. Within the immersive mixed/virtual reality space of BrainX3 users can explore and analysis dynamical activity patterns of brain networks, both at rest or during task, or for discovering of signaling pathways associated to brain function and/or dysfunction or as a tool for virtual neurosurgery.

 
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Factors influencing the purchase and consumers’ willingness to pay for ground bison

Abstract: A consumer preference study that included willingness to pay and consumer sensory experiments was conducted for ground bison versus ground beef. A total of 82 subjects completed the study. The initial statistical analysis suggest that there is consistent consumer behavior with respect to consumer preference and frequency of consumption within species consumption options, but consistent consumer behavior appears to weaken when across species consumption preferences is compared to across species frequency of consumption patterns. 
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Brain-injury data used to map intelligence in the brain

A new study found that specific structures, primarily on the left side of the brain, are vital to general intelligence and executive function (the ability to regulate and control behavior). Brain regions that are associated with general intelligence and executive function are shown in color, with red indicating common areas, orange indicating regions specific to general intelligence, and yellow indicating areas specific to executive function.

April 10, 2012
University of Illinois at Urbana-Champaign

Scientists report that they have mapped the physical architecture of intelligence in the brain. This is one of the largest and most comprehensive analyses so far of the brain structures vital to general intelligence and to specific aspects of intellectual functioning, such as verbal comprehension and working memory.


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This is Your Brain on Twitter

This is Your Brain on Twitter | Bounded Rationality and Beyond | Scoop.it
To demonstrate the power of tweets, Twitter’s ad researchers turned to neuroscience. Here’s what happened.

Twitter’s senior director of market research, Jeffrey Graham is always looking for ways to show the effectiveness of ad campaigns on Twitter — surveys, home visits, data models.

One of the more interesting studies involved two groups of people watching the NCAA basketball tournament on television. One group was permitted to bring their phones and tweet all they wanted. The other had to leave their phones outside and somehow manage without a second screen. Both groups had sweat monitors on their wrists and foreheads, a pulse rate monitor, and eye tracking goggles, to track how engaged they were. In comparison with the no-device crowd, the metrics went wild for the group permitted to tweet. “For people able to do Twitter and TV at the same time, there was a huge lift versus people who were just watching TV,” says Twitter’s global president of revenue and partnerships, Adam Bain.

 
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Understanding the Beer Game

Understanding the Beer Game | Bounded Rationality and Beyond | Scoop.it

The Beer Game illustrates how difficult it is to manage dynamic systems. It was originally developed in the late 1950 s by Jay Forrester at MIT to introduce the concepts of dynamical systems. This blog post investigates the effect of different playing strategies.


Via Jürgen Kanz, Philippe Vallat
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Researchers use games to evolve AI brains | Games | Geek.com

Researchers use games to evolve AI brains | Games | Geek.com | Bounded Rationality and Beyond | Scoop.it

The current complexity of the human brain is impressive enough on its own, but to imagine that humanity’s defining organ reached this peak through generations of evolution is even more mind-boggling. Neuroscientists are learning more about the brain all the time through new kinds of research, and at the University of Wisconsin-Madison’s School of Medicine and Public Health, researchers are studying how neural networks evolve by teaching computers to play video games.

The team describes how they created simple systems called “animats” and observed how the systems changed across generations in the paper “Evolution of Integrated Causal Structures Animats Exposed to Environments of Increasing Complexity.” Using a process not unlike natural evolution, the researcher team studied how the AI grew more complex in the hopes that the data could better our understanding of our brains’ complexity.

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On the Incompleteness of Science

On the Incompleteness of Science | Bounded Rationality and Beyond | Scoop.it

By now we know that empirical research can be more effective than scientific research when studying the social sciences, but what can we do when the problem we are trying to address is too large and complex, and how can we make sure that our assumptions always map to physical reality?

In an earlier article, I wrote about physical reality as the reification of an abstract concept. I did not mean that physical reality itself is abstract. I was giving an illustration of physical reality as a concept that would be assumed in science in order to avoid ontological discourses and make progress (hidden complexity on the firm grounds of generally accepted human beliefs).

Science requires the assumption of basic premises, in order to conduct rational inquiry. In propositional logic, we can think of these premises as facts, truth statements, or axioms that can be inserted into a rulebase, to then have a reproducible, axiomatic set of truths for reasoning. The elements in this axiomatic set depend on the inquiry being undertaken.

Scientific theories are necessarily incomplete if we accept imperfect cognition as a premise. We must assume that human cognition is imperfect; otherwise, the underlying truths that make up the entirety of our knowledge would be intolerably paradoxical and subject to reasoning dilemmas, such as infinite regress.Therefore, by modus ponendo ponens, scientific theories are incomplete.


Via Philippe Vallat
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Sean Orr MD The Neuroeconomy Brain Enhancing Innovations - YouTube

Sean Orr Md speaks of the #Neuroeconomy and how it is impacting society, creating changes in many sectors. Digitalization allows the patient to be educated, a...

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How to Handle the Vaccine Skeptics

How to Handle the Vaccine Skeptics | Bounded Rationality and Beyond | Scoop.it

THE alarming number of measles cases — a record 644 last year, and 102 last month, the most since the disease was declared eliminated in the United States in 2000 — has focused scrutiny on parents who refuse vaccinations for their children. There are some who want state and local governments to sue, or even criminally charge, such parents. A bill in California would end all nonmedical exemptions to immunization requirements.

For epidemiologists like me, eliminating exemptions may seem satisfying, but it is not the wisest policy for protecting kids. Instead, we should borrow a concept from behavioral economics, and use administrative rules and procedures to “nudge” parents to immunize their kids, rather than trying to castigate or penalize these parents.

Currently, all states allow medical exemptions, since some children — for example, those getting chemotherapy or who have certain types of immune disorders — cannot safely receive vaccines. All but two states (Mississippi and West Virginia) allow exemptions for religious reasons. Nineteen states allow exemptions based on personal (or “philosophical”) beliefs. Such beliefs are increasingly cited by parents whose misplaced skepticism is not really principled but premised, rather, on false notions like that of a link between autism and the measles vaccine.

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Homer Economicus or Homer Sapiens? Behavioral Economics in The Simpsons

Do It With Models September 2013 Behavioral economists study the ways in which people act irrationally (i.e. at odds with their objective long-term best interests), and behavioral economics research has identified and characterized a number of consistent biases in decision making. An interesting feature of the characters in The Simpsons is that they illustrate many of the specific biases that behavioral economists study, including timeinconsistency, loss aversion, bounded rationality, and susceptibility to framing effects. Despite these “human” characteristics, however, none of the characters can be viewed as purely rational or irrational, and this feature contributes to the relevancy and longevity of the show.

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An individualistic approach to institution formation in public good games

Abstract: In a repeated public goods setting, we explore whether individuals, acting unilaterally, will provide an effective sanctioning institution. Subjects first choose unilaterally whether they will participate in a sanctioning stage that follows a contribution stage. Only those who gave themselves the “right†to punish can do so. We find that the effectiveness of the institution may not require provision of the institution at the level of the group. Individuals acting unilaterally are able to provide sanctioning institutions that effectively raise cooperation. The effectiveness of the institution, however, depends on whether the “right†to sanction entails a monetary cost or not.
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Socioemotional processing of morally-laden behavior and their consequences on others in forensic psychopaths

Abstract: A large body of evidence supports the view that psychopathy is associated with anomalousemotional processing, reduced guilt and empathy, which are important risk factors for criminal behav-iors. However, the precise nature and specificity of this atypical emotional processing is not wellunderstood, including its relation to moral judgment. To further our understanding of the pattern of neural response to perceiving and evaluating morally-laden behavior, this study included 155 criminalmale offenders with various level of psychopathy, as assessed with the Psychopathy Check List-Revised. Participants were scanned while viewing short clips depicting interactions between two indi-viduals resulting in either interpersonal harm or interpersonal assistance. After viewing each clip, theywere asked to identify the emotions of the protagonists. Inmates with high levels of psychopathy weremore accurate than controls in successfully identifying the emotion of the recipient of both helpful andharmful actions. Significant hemodynamic differences were detected in the posterior superior temporalsulcus, amygdala, insula, ventral striatum, and prefrontal cortex when individuals with high psychopa-thy viewed negative versus positive scenarios moral scenarios and when they evaluated the emotionalresponses of the protagonists. These findings suggest that socioemotional processing abnormalities inpsychopathy may be somewhat more complicated than merely a general or specific emotional deficit.Rather, situation-specific evaluations of the mental states of others, in conjunction with sensitivity tothe nature of the other (victim vs. perpetrator), modulate attention to emotion-related cues. Such atypi-cal processing likely impacts moral decision-making and behavior in psychopaths.
 
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