This article explores how experienced regret and relief evoked in a risky gambling task influence subsequent intertemporal pro-social behavior. We apply a dictator game experiment with delayed rewards to investigate the effect on donating behavior by simultaneously the time delay when the recipient accepts the donation and the emotions experienced by the participant. We examine this effect using a choice titration procedure. The results reveal that independent of the prior experienced emotions, participants’ donations decrease as the time delay rises; the (...) hyperbolic model provides a better explanation of this finding. Significantly, experienced regret impacts the shape of the social discount function with delayed rewards, which is reflected in notably different discount rates. Participants who experienced regret exhibit a lower discount rate than those in the relief condition. Note that this distinct type of generosity differs significantly at the 14-day delay but not at the shortest and longest. It follows that regret can promote future altruism and intertemporal pro-social behavior, depending on the delay. (shrink)

Informed consent to medical procedures tends to be construed in terms of principle-based ethics and one or other form of expected utility theory. These constructions leave problems created by imperfect communication; subjective distress and other emotions; imperfect knowledge and incomplete understanding; complexity, and previous experience or the lack of it. There is evidence that people giving consent to therapy or to research participation act intuitively and assess consequences holistically, being influenced more by the magnitude of outcomes than their probability. People (...) avoid decisions they may regret, but modern regret theory has received little attention in discussions of informed consent. This essay suggests ways in which regret may be acknowledged in the consent process and in the assessment of the information that is an intrinsic part of it. (shrink)

A central question in many debates on paternalism is whether a decision analyst can ever go against the stated preference of a client, even if merely intending to improve the decisions for the client. Using four gedanken-experiments, this paper shows that this central question, so cleverly and aptly avoided by libertarian paternalism (nudge), cannot always be avoided. The four thought experiments, while purely hypothetical, serve to raise and specify the critical arguments in a maximally clear and pure manner. The first (...) purpose of the paper is, accordingly, to provide a litmus test on the readers’ stance on paternalism. We thus also survey and organize the various stances in the literature. The secondary purpose of this paper is to argue that paternalism cannot always be avoided and consumer sovereignty cannot always be respected. However, this argument will remain controversial. (shrink)

Why does performing certain tasks cause the aversive experience of mental effort and concomitant deterioration in task performance? One explanation posits a physical resource that is depleted over time. We propose an alternative explanation that centers on mental representations of the costs and benefits associated with task performance. Specifically, certain computational mechanisms, especially those associated with executive function, can be deployed for only a limited number of simultaneous tasks at any given moment. Consequently, the deployment of these computational mechanisms carries (...) an opportunity cost – that is, the next-best use to which these systems might be put. We argue that the phenomenology of effort can be understood as the felt output of these cost/benefit computations. In turn, the subjective experience of effort motivates reduced deployment of these computational mechanisms in the service of the present task. These opportunity cost representations, then, together with other cost/benefit calculations, determine effort expended and, everything else equal, result in performance reductions. In making our case for this position, we review alternative explanations for both the phenomenology of effort associated with these tasks and for performance reductions over time. Likewise, we review the broad range of relevant empirical results from across sub-disciplines, especially psychology and neuroscience. We hope that our proposal will help to build links among the diverse fields that have been addressing similar questions from different perspectives, and we emphasize ways in which alternative models might be empirically distinguished. (shrink)

The model proposed by Redish et al. considers vulnerabilities within decision systems based on expectancy-value assumptions. Further understanding of processes leading to addiction can be gained by considering other inputs to decision-making, particularly affective associations with behaviors. This consideration suggests additional decision-making vulnerabilities that might explain addictive behaviors.

Research in recent years suggests that fairness concerns could mitigate hold-up problems. In this study, we report theoretical analysis and experimental evidence on an opposite possibility: that fairness concerns could also induce hold-up problems. In our setup, hold-up problems will not occur with purely self-interested agents, but theoretically could be induced by demand for distributional fairness among agents without sufficiently strong counteracting factors such as intention-based reciprocity. We observe a widespread occurrence of hold-up in our experiment. Relationship-specific investments occurred less (...) than half of the time, resulting in significant inefficiencies. Moreover, whenever a relationship-specific investment was made: (a) it was typically not reciprocated by the partner; (b) nor did the investor’s offers at the bargaining stage exhibit expectations for reciprocity. Consequently, the partner extracted all the additional expected payoff from relationship-specific investments. Further experimentation suggested that our results were driven by a fundamental lack of intention-based reciprocity in fairness concerns, rather than self-serving bias. (shrink)

In the WebSurf task, humans forage for videos paying costs in terms of wait times on a time-limited task. A variant of the task in which demands during the wait time were manipulated revealed the role of attention in susceptibility to sunk costs. Consistent with parallel tasks in rodents, previous studies have found that humans preferred shorter delays, but waited longer for more preferred videos, suggesting that they were treating the delays economically. In an Amazon Mechanical Turk sample, we replicated (...) these predicted economic behaviors for a majority of participants. In the lab, participants showed susceptibility to sunk costs in this task, basing their decisions in part on time they have already waited, which we also observed in the subset of the mTurk sample that behaved economically. In another version of the task, we added an attention check to the wait phase of the delay. While that attention check further increased the proportion of subjects with predicted economic behaviors, it also removed the susceptibility to sunk costs. These findings have important implications for understanding how cognitive processes, such as the deployment of attention, are key to driving re-evaluation and susceptibility to sunk costs. (shrink)

This paper reports an experiment which investigates a possible cognitive antecedent of event-splitting effects (ESEs) experimentally observed by Starmer and Sugden (1993) and Humphrey (1995) – the learning of absolute frequency of event category impacting on the learning of probability of event category – and reveals some evidence that it is responsible for observed ESEs. It is also suggested and empirically substantiated that stripped-down prospect theory will accurately predict ESEs in some decision making tasks, but will not perform well in (...) others. This contention, it is argued, is indicative of fundamental descriptive shortcomings in the economic conception of choice under uncertainty and may entail implications beyond the direct concerns of this paper. (shrink)

From the viewpoint of the independence axiom of expected utility theory, an interesting empirical dynamic choice problem involves the presence of a “global risk,” that is, a chance of losing everything whichever safe or risky option is chosen. In this experimental study, participants have to allocate real money between a safe and a risky project. Treatment variable is the particular decision stage at which a global risk is resolved: (i) before the investment decision; (ii) after the investment decision, but before (...) the resolution of the decision risk; (iii) after the resolution of the decision risk. The baseline treatment is without global risk. Our goal is to investigate the isolation effect and the principle of timing independence under the different timing options of the global risk. In addition, we examine the role played by anticipated and experienced emotions in the choice problem. Main findings are a violation of the isolation effect, and support for the principle of timing independence. Although behavior across the different global risk cases shows similarities, we observe clear differences in people’s affective responses. This may be responsible for the conflicting results observed in earlier experiments. Dependent on the timing of the global risk different combinations of anticipated and experienced emotions influence decision making. (shrink)

This article analyzes the business ethics of digital games, using Ayn Rand’s philosophy of Objectivism. It identifies different types of monetization options as virtuous or nonvirtuous, based on Rand’s views on rational self-interest. It divides the options into ethical Mover and unethical Looter designs, presents those logics in relation to an illustrative case example, Zynga, and then discusses a view on the role of players in relation to game monetization designs. Through our analysis of monetization options in the context of (...) Objectivist ethics, the article contributes to discussions on game revenue ethics. It also expands the still understudied area of applying Rand’s ethics to business, in the context of a new sector, game development, and business. This research enables ethicists to apply a wider-than-before perspective on virtue ethics to online business, and helps game developers act in a virtuous manner, which provides them with a long-term business advantage. (shrink)

Ethical decision-making research has centered on Rest’s framework that represents a rational, nonaffective model for ethical decision making. However, research in human cognition suggesting a “dual-processing” framework, composed of both rational and affective components, has been relatively ignored in the ethical decision-making literature. Examining dual-processing literature, it seems affect might be an important factor in decision making when a person’s mood is congruent with the task or situational context frame. Given that ethical decisions are serious and complex tasks, it is (...) proposed here that inducing a negative affective state might produce mood congruence, reinforce the salience of emotion for ethical decision makers, and lead to differences in decision processing. Evidence is presented documenting differences in the decisions made by ethical decision makers in a negative affective state as compared to those in either a positive or neutral affective state. (shrink)

We examine how opinion on a controversial real-world issue shifts as a function of reading relevant arguments and engaging in a specific mental simulation about a future, fictional state of affairs involving the target issue. Individuals thought either counterfactually about a future event (“if only X had not happened …”) or semifactually about it (“even if X had not happened …”). In Experiment 1, as expected, individuals became more in favour of a course of action (the electronic tagging of children) (...) after reading relevant supporting arguments. They also became more in favour after they thought counterfactually how a negative future event could have been avoided if only electronic tagging had not been banned some years earlier. The effects of argument relevance and type of mental simulation were additive. Using a similar procedure but a different target issue (whether the UK should join the Economic Monetary Union), Experiment 2 confirmed that the type of mental simulation exerts a substantial effect on the impact of relevant arguments. Much weaker effects arose when the mental simulation was not relevant to the target issue. We set and discuss our results in terms of dual-processing theory. (shrink)

The various behavioral disciplines model human behavior in distinct and incompatible ways. Yet, recent theoretical and empirical developments have created the conditions for rendering coherent the areas of overlap of the various behavioral disciplines. The analytical tools deployed in this task incorporate core principles from several behavioral disciplines. The proposed framework recognizes evolutionary theory, covering both genetic and cultural evolution, as the integrating principle of behavioral science. Moreover, if decision theory and game theory are broadened to encompass other-regarding preferences, they (...) become capable of modeling all aspects of decision making, including those normally considered “psychological,” “sociological,” or “anthropological.” The mind as a decision-making organ then becomes the organizing principle of psychology. (Published Online April 27 2007) Key Words: behavioral game theory; behavioral science; evolutionary theory; experimental psychology; gene-culture coevolution; rational actor model; socialization. (shrink)

This paper generalizes the simple regret model by Bell in Operations Research 30(5), 961-981 and Loomes and Sugden in The Economic Journal 92(368), 805-824 to cope with the situation in which decision outcomes are multi-attributed. We propose a model that combines the simple regret model for ex ante preferences and the additive difference representation for ex post preferences. We first present a necessary and sufficient axiomatization of our model in Savage’s framework. The proposed model is composed of three types of (...) functions. One is a value function for each attribute. The others are attribute-dependent and holistic regret-rejoicing functions that capture trade-offs among value-differences of chosen and forgone outcomes for each attribute and among all attributes, respectively. We then provide constructive procedures for those functions and methods for consistency checks of the procedures. We, finally, conduct an experiment to estimate those functions in the two attributes case by means of the constructive procedure and give an application of the model and our findings. (shrink)

Individual differences on a variety of framing and conjunction problems were examined in light of Slovic and Tversky's (1974) understanding/acceptance principle-that more reflective and skilled reasoners are more likely to affirm the axioms that define normative reasoning and to endorse the task construals of informed experts. The predictions derived from the principle were confirmed for the much discussed framing effect in the Disease Problem and for the conjunction fallacy on the Linda Problem. Subjects of higher cognitive ability were disproportionately likely (...) to avoid each fallacy. Other framing problems produced much more modest levels of empirical support. It is conjectured that the varying patterns of individual differences are best explained by two-process theories of reasoning (e.g. Evans, 1984, 1996; Sloman, 1996) conjoined with the assumption that the two processes differentially reflect interactional and analytic intelligence. (shrink)

Should one trust experts? My answer to this question is a qualified ‘no’. In this paper I explore the conditions under which it is rational to trust and defer to experts, and those under which it may be rational to refrain from doing so. I draw on two important factors for an actor’s trust in a partner: trust depends on the partner’s competence and on the partner’s interests. I propose that the conditions under which it is rational to trust and (...) defer to experts depend on the competences of the layperson and the expert, and the degree of interest alignment. I present a model that demonstrates that it can be practically infeasible and even logically impossible to determine the expert’s level of competence and the degree of interest alignment. Although it may sound pessimistic that one can rationally refrain from trusting experts, I will also explore some more optimistic conclusions. (shrink)

This PhD thesis focuses on the philosophical foundations of Neuroeconomics, an innovative research program which combines findings and modelling tools from economics, psychology and neuroscience to account for human choice behaviour. The proponents of Neuroeconomics often manifest the ambition to foster radical modifications in the accounts of choice behaviour developed by its parent disciplines. This enquiry provides a philosophically informed appraisal of the potential for success and the relevance of neuroeconomic research for economics. My central claim is that neuroeconomists can (...) help other economists to build more predictive and explanatory models, yet are unlikely to foster revolutionary modifications in the economic theory of choice. The contents are organized as follows. In chapters 1-2, I present neuroeconomists’ investigative tools, distinguish the most influential approaches to neuroeconomic research and reconstruct the case in favour of a neural enrichment of economic theory. In chapters 3-7, I combine insights from neuro-psychology, economic methodology and philosophy of science to develop a systematic critique of Neuroeconomics. In particular, I articulate four lines of argument to demonstrate that economists are provisionally justified in retaining a methodologically distinctive approach to the modelling of decision making. My first argument points to several evidential and epistemological concerns which complicate the interpretation of neural data and cast doubt on the inferences neuroeconomists often make in their studies. My second argument aims to show that the trade-offs between the modelling desiderata that neuroeconomists and other economists respectively value severely constrain the incorporation of neural insights into economic models. My third argument questions neuroeconomists’ attempts to develop a unified theory of choice behaviour by identifying some central issues on which they hold contrasting positions. My fourth argument differentiates various senses of the term ‘revolution’ and illustrates that neuroeconomists are unlikely to provide revolutionary contributions to economic theory in any of these senses. (shrink)

How much value can our decisions create? We argue that unless our current understanding of physics is wrong in fairly fundamental ways, there exists an upper limit of value relevant to our decisions. First, due to the speed of light and the definition and conception of economic growth, the limit to economic growth is a restrictive one. Additionally, a related far larger but still finite limit exists for value in a much broader sense due to the physics of information and (...) the ability of physical beings to place value on outcomes. We discuss how this argument can handle lexicographic preferences, probabilities, and the implications for infinite ethics and ethical uncertainty. (shrink)

A decision maker (DM) selects a project from a set of alternatives with uncertain productivity. After the choice, she observes a signal about productivity and decides how much effort to put in. This paper analyzes the optimal decision problem of the DM who rationally filters information to deal with her post-decision cognitive dissonance. It is shown that the optimal effort level for a project can be affected by unchosen projects in her choice set, and the nature of the choice set-dependence (...) is determined by the signal structure. Some comparative statics of choice set-dependence is also provided. Finally, based on the results, the optimal choice set design is also explored. This paper offers a simple framework to explain the experimental finding in psychology that people’s effort level for a project can be enhanced when the project is chosen by themselves rather than by others. (shrink)