Behavioral paternalism raises deep concerns that do not arise in traditional welfare economics. These concerns stem from behavioral paternalism’s acceptance of the defining axioms of neoclassical rationality for normative purposes, despite having rejected them as positive descriptions of reality. We argue that behavioral paternalists have indeed accepted neoclassical rationality axioms as a welfare standard; that economists historically adopted these axioms not for their normative plausibility, but for their usefulness in formal and theoretical modeling; that broadly rational individuals might fail to (...) satisfy the axioms for various reasons, making them unpersuasive as normative criteria; and that even if their violation did constitute irrationality, that would not justify paternalists’ choosing among inconsistent preferences to define an individual’s “true” preferences. (shrink)

We analyze the dynamics of repeated interaction of two players in the Prisoner's Dilemma under various levels of interdependency information and propose an instance-based learning cognitive model to explain how cooperation emerges over time. Six hypotheses are tested regarding how a player accounts for an opponent's outcomes: the selfish hypothesis suggests ignoring information about the opponent and utilizing only the player's own outcomes; the extreme fairness hypothesis weighs the player's own and the opponent's outcomes equally; the moderate fairness hypothesis weighs (...) the opponent's outcomes less than the player's own outcomes to various extents; the linear increasing hypothesis increasingly weighs the opponent's outcomes at a constant rate with repeated interactions; the hyperbolic discounting hypothesis increasingly and nonlinearly weighs the opponent's outcomes over time; and the dynamic expectations hypothesis dynamically adjusts the weight a player gives to the opponent's outcomes, according to the gap between the expected and the actual outcomes in each interaction. When players lack explicit feedback about their opponent's choices and outcomes, results are consistent with the selfish hypothesis; however, when this information is made explicit, the best predictions result from the dynamic expectations hypothesis. (shrink)

We formulate and investigate experimentally a model of how individuals choose between time sequences of monetary outcomes. The model assumes that a decision maker uses, sequentially, two criteria to screen options. Each criterion only permits a decision between some pairs of options, while the other options are incomparable according to that criterion. When the first criterion is not decisive, the decision maker resorts to the second criterion to select an alternative. We find that: (1) traditional economic models based on discounting (...) alone cannot explain a significant (almost 30%) proportion of the data no matter how much variability in the discount functions is allowed; (2) our model, despite considering only a specific (exponential) form of discounting, can explain the data much better solely thanks to the use of the secondary criterion; (3) our model explains certain specific patterns in the choices of the “irrational” people. We reject the hypothesis that anomalous behavior is due simply to random “mistakes” around the basic predictions of discounting theories: deviations are not random and there are clear systematic patterns of association between “irrational” choices. (shrink)

We propose a theoretical model to explain the usage of time-inconsistent behavior as a strategy to exploit others when reputation and trust have secondary effects on the economic outcome. We consider two agents with time-consistent preferences exploiting common resources. Supposing that an agent is believed to have time-inconsistent preferences with probability p, we analyze whether she uses this misinformation when she has the opportunity to use it. Using the model originally provided by Levhari and Mirman (Bell J Econ 11(1):322–334, 1980), (...) we determine the optimal degree of present bias that the agent would like to have while pretending to have time-inconsistent preferences and we provide the range of present-bias parameter under which deceiving is optimal. Moreover, by allowing the constant relative risk aversion class of utility form, we characterize the distinction between pretending to be naive and sophisticated. (shrink)

Some scholars see interdisciplinarity as a special case of a broader unificationist program. They accept the unification of the sciences as a regulative ideal, and derive from this the normative justification of interdisciplinary research practices. The crucial link for this position is the notion of integration: integration increases the cohesion of concepts and practices, and more specifically of explanations, ontologies, methods and data. Interdisciplinary success then consists in the integration of fields or disciplines, and this constitutes success in the sense (...) that unification is epistemically desirable. In contrast to this account, I defend the thesis that successful interdisciplinary interaction does not necessarily imply the integration of these disciplines. I show this at the hand of two cases. In both the case of evolutionary game theory and the case of hyperbolic discounting, genuine interdisciplinary exchange took place. From both exchanges, the respective economic fields emerged substantially altered – it wasn’t just a juxtaposition of disciplines in which disciplinary identities remained unchanged. Yet in neither case did the disciplines integrate. Rather, they developed their own concepts and methods, their own explanations, own ontologies, and their own views of what proper data standards were. Furthermore, the fields that emerged from these exchanges were very successful, if measured at the hand of properties like explanatory success, increase of control, bibliometrics and grant yields. Thus, I argue, there are cases of interdisciplinary success without integration. (shrink)

We introduce an Absolute (Relative) Time-consistent Axiom of Revealed Preference which characterizes the consistency of a choice function with the property of absolute (relative) time-consistency and impatience. The axiom requires that the absolute (relative) time-consistent and impatient closure of the revealed preference relation does not conflict with the strict revealed preference relation.

In recent years, a disagreement has erupted between two camps of philosophers about the rationality of bias toward the near and bias toward the future. According to the traditional hybrid view, near bias is rationally impermissible, while future bias is either rationally permissible or obligatory. Time neutralists, meanwhile, argue that the hybrid view is untenable. They claim that those who reject near bias should reject both biases and embrace time neutrality. To date, experimental work has focused on future-directed near bias. (...) The primary aim of this paper is to shed light on the debate by investigating past-directed near bias. If people treat the past and future differently with respect to near bias, by being future-directed but not past-directed near biased, then this supports a particular version of the hybrid view: temporal metaphysic hybridism. If people treat the past and future the same with respect to near bias, then this supports a simple version of time neutralism, which explains both future bias and near bias in terms of the functioning of a single mechanism: the anticipatory/retrospectory mechanism. Our results undermine the claim that people are future-directed, but not past-directed, near biased, and hence do not support temporal metaphysic hybridism. They also fail to support simple time-neutralism; instead, they suggest that there are multiple mechanisms that differently shape future- and past-directed preferences. (shrink)

This paper axiomatizes a recursive utility model that captures both intertemporal utility smoothing defined across time and ambiguity aversion defined over states. The resulting representation adapts Wakai model of intertemporal utility smoothing as an aggregator function, where the utility of the certainty equivalent of future uncertainty is computed by Gilboa and Schmeidler multiple-priors utility. The model also permits the separation of intertemporal utility smoothing from ambiguity aversion.

By the late 1990s, several converging trends in economics, psychology, and neuroscience had set the stage for the birth of a new scientific field known as “neuroeconomics”. Without the availability of an extensive variety of experimental designs for dealing with individual and social decision-making provided by experimental economics and psychology, many neuroeconomics studies could not have been developed. At the same time, without the significant progress made in neuroscience for grasping and understanding brain functioning, neuroeconomics would have never seen the (...) light of day. The paper is an overview of the main significant advances in the knowledge of brain functioning by neuroscience that have contributed to the emergence of neuroeconomics and its rise over the past two decades. These advances are grouped over three non-independent topics referred to as the “emo-rational” brain, “social” brain, and “computational” brain. For each topic, it emphasizes findings considered as critical to the birth and development of neuroeconomics while highlighting some of prominent questions about which knowledge should be improved by future research. In parallel, it shows that the boundaries between neuroeconomics and several recent sub-fields of cognitive neuroscience, such as affective, social, and more generally, decision neuroscience, are rather porous. (shrink)

When making a decision, humans consider two types of information: information they have acquired through their prior experience of the world, and further information they gather to support the decision in question. Here, we present evidence that data from search engines such as Google can help us model both sources of information. We show that statistics from search engines on the frequency of content on the Internet can help us estimate the statistical structure of prior experience; and, specifically, we outline (...) how such statistics can inform psychological theories concerning the valuation of human lives, or choices involving delayed outcomes. Turning to information gathering, we show that search query data might help measure human information gathering, and it may predict subsequent decisions. Such data enable us to compare information gathered across nations, where analyses suggest, for example, a greater focus on the future in countries with a higher per capita GDP. We conclude that search engine data constitute a valuable new resource for cognitive scientists, offering a fascinating new tool for understanding the human decision-making process. (shrink)

Choice modellers are frequently criticized for failing to provide accurate representations of the neuro-psychological substrates of decisions. Several authors maintain that recent neuro-psychological findings enable choice modellers to overcome this alleged shortcoming. Some advocate a realistic interpretation of neuro-psychological models of choice, according to which these models posit sub-personal entities with specific neuro-psychological counterparts and characterize those entities accurately. In this article, I articulate and defend three complementary arguments to demonstrate that, contrary to emerging consensus, even the best available neuro-psychological (...) models of choice cannot be justifiably given this realistic interpretation. Moreover, I explicate what challenges will continue to hamper neuro-psychological modellers’ attempts to substantiate a realistic interpretation of their models. In doing so, I draw on the literature on scientific modelling to advance the ongoing philosophical discussion concerning the ontological status of the sub-personal entities posited in distinct decision sciences, the resemblance relations that supposedly connect choice models and the neuro-psychological substrates of decisions, and what conditions these models must satisfy to be regarded as realistic representations of their target systems. (shrink)

Following from life history and attachment theory, individuals are predicted to be sensitive to variation in environmental conditions such that risk and uncertainty are internalized by cognitive, affective, and psychobiological mechanisms. In turn, internalizing of environmental uncertainty is expected to be associated with attitudes toward risk behaviors and investments in education. Native American youth aged 10–19 years (n = 89) from reservation communities participated in a study examining this pathway. Measures included family environmental risk and uncertainty, present and future time (...) perspective, adolescent attachment, attitudes toward risk, investments in education, and salivary cortisol. Results support the idea that environmental risk and uncertainty are internalized during development. In addition, internalizing mechanisms significantly predicted attitudes toward risk and education: (1) lower scores on future time perspective and higher cortisol predicted higher scores on risk attitudes, and (2) higher scores on future time perspective and lower scores on problems with attachment predicted higher self-reported school performance. Gender differences were seen, with males anticipating a shorter lifespan than females, which predicted higher scores on risk attitudes and lower school performance. Implications for research on adolescent problem behavior and academic achievement are discussed. (shrink)

This study proposes a model of non-unitary time discounting and examines its welfare implications. A key feature of our model lies in the disparity of time discounting between multiple distinct goods, which induces an individual’s preference reversals even though she normally discounts her future utilities for each good. After characterizing the time-consistent decision-making by such an individual, we compare welfare achieved in the market economy and welfare in the planner’s allocation from the perspective of all selves across time. Under certain (...) situations, the selves in early periods strictly prefer the social planner’s allocation, whereas the selves in future periods strictly prefer the market equilibrium. Therefore, the welfare implications of our model are quite different from those in the canonical discounting model and in models of other time-inconsistent preferences. (shrink)

Experimental studies suggest that individuals exhibit more risk aversion in choices among prospects when the payment and resolution of uncertainty are immediate relative to when it is delayed. This leads to preference reversals that cannot be attributed to discounting. When data suggest that utility is time-independent, probability weighting functions, such as those used to model prospect theory preferences, can accommodate such reversals. We propose a simple descriptive model with a two-parameter probability weighting function where one of these parameters depends on (...) the time at which a prospect is resolved. The time-dependent parameter is responsible for the curvature of the probability weighting function and is regarded as an index of sensitivity towards changes in probabilities. We provide conditions that characterize increased sensitivity towards more distant probabilities; this can account for the observed relatively less risk aversion towards delayed prospects. In our framework, the discount function is unrestricted, such that the model is compatible with empirical findings of non-constant discounting. In a simple application to bargaining we illustrate when it is advantageous for an individual to advance or delay the bargaining resolution time if an opponent displays increased sensitivity towards probability changes with delay. (shrink)

Recent research indicates that compensation structure can be used by firms to discourage their employees from whistleblowing. We extend the ethics literature by examining how compensation structures and financial rewards work together to influence managers’ decisions to blow the whistle. Results from an experiment indicate that compensation with restricted stock, relative to stock payments that lack restrictions, can enhance the likelihood that managers will blow the whistle when large rewards are available. However, restricted stock can also threaten the effectiveness of (...) whistleblowing systems without the presence of large financial rewards for whistleblowing. Thus, the large potential rewards for whistleblowing enacted by the Dodd–Frank Act appear timely as firms are moving toward compensation agreements that include greater proportions of restricted stock. (shrink)

Ecological weed management (EWM) is a scientifically established management approach that uses ecological patterns to reduce weed seedbanks. Such an approach can save organic farmers time and labor costs and reduce the need for repeated cultivation practices that may pose risks to soil and water quality. However, adoption of effective EWM in the organic farm community is perceived to be poor. In addition, communication and collaboration between the scientific community, extension services, and the organic farming community in the US is (...) historically weak. In order to uncover the most persistent obstacles to promoting effective weed management in organic agroecosystems, we use the mental models approach to generate an expert model based on interviews with experts (e.g., weed scientists, weed ecologists, and extension personnel) and theories from the behavioral sciences. The expert model provides two main insights: (1) EWM is a complex strategy that may cause farmers to use heuristics in management decisions and (2) the long-term benefits of EWM, rather than the risks, need to be emphasized in communication with and outreach to organic farmers. The basis for new research topics and outreach material that incorporates these insights from the expert model are discussed. We briefly explain how the expert model is an incomplete picture of on-farm practices, but provides the basis for the second step of our mental models research, the farmer interviews and farmer decision model development. (shrink)

Using the behavioral agency model, we analyze how two compensation design characteristics, pay-performance sensitivity and duration of CEO compensation, affect corporate social performance. We find that the performance sensitivity of CEO pay is negatively associated with poor social performance but also negatively affects strong social performance. These results suggest that pay-performance sensitivity increases the relevance of potential negative consequences of poor social performance. However, the ‘insurance’ benefits of strong social performance may also become less relevant. With respect to the duration (...) of CEO compensation, we find that it reduces poor social performance. This finding confirms arguments that a long-term compensation time horizon increases the perceived threat that the negative effects of poor social performance will become visible. With our findings, we integrate behavioral agency theory with the traditional stakeholder views. (shrink)

In his enormously influentialThe Modularity of Mind, Jerry Fodor (1983) proposed that the mind was divided into input modules and central processes. Much subsequent research focused on the modules and whether processes like speech perception or spatial vision are truly modular. Much less attention has been given to Fodor's writing on the central processes, what would today be called higher‐level cognition. In “Fodor's First Law of the Nonexistence of Cognitive Science,” he argued that central processes are “bad candidates for scientific (...) study” and would resist attempts at empirical analysis. This essay evaluates his argument for this remarkable claim, concluding that although central processes may well be “messier” than input modules, this does not mean that they cannot be studied and understood. The article briefly reviews the scientific progress made in understanding central processes in the 35 years since the book was published, showing that Fodor's prediction is clearly falsified by massive advances in topics like decision making and analogy. The essay concludes that Fodor's Law was not based on a clear argument for why the complexities of central systems could not be studied but was likely based on intuitions and preferences that were common in psychology at the time. (shrink)

Other-perspective taking, distancing, time discounting as well as risk and loss aversion highly affect decision-making. Even though they influence each other, so far these cognitive processes have been unrelated or only partly related to each other in neuroscience. This article proposes a philosophical interpretation of these cognitive processes that is elaborated in the updated theory of Adam Smith’s prudence. The UTSP is inspired by Smith’s account of prudence and is in line with the neuroscientific and behavioral studies on OPT, distancing, (...) time discounting as well as risk and loss aversion. The UTSP represents a framework aiming to interpret and connect these cognitive processes and providing a consistent and empirically sound account of a “Smithianly” prudent style of decision-making. The two pillars of the UTSP are the shift of perspective in space and time and loss aversion. On the basis of this theory, a normative updated theory of Smithian prudence is outlined. The latter is useful for moral philosophy for two reasons: firstly, according to preliminary evidence, it is effective in guiding the agent in decisional contexts in which her well-being is at stake and she can affect other people with her actions. Secondly, since the NUTSP is based on neuroscientific findings on decision-making, it has a sound empirical basis that prevents a source of alienation for the agent. (shrink)

The current research applied a mid-level evolutionary theory that has been successfully employed across numerous animal species—life history theory—in an attempt to understand the Dark Triad personality trait cluster (narcissism, psychopathy, and Machiavellianism). In Study 1 (N = 246), a measure of life history strategy was correlated with psychopathy, but unexpectedly with neither Machiavellianism nor narcissism. Study 2 (N = 321) replicated this overall pattern of results using longer, traditional measures of the Dark Triad traits and alternative, future-discounting indicators of (...) life history strategy (a smaller-sooner, larger-later monetary dilemma and self-reported risk-taking behaviors). Additional findings suggested two sources of shared variance across the Dark Triad traits: confidence in predicting future outcomes and openness to short-term mating. (shrink)

There are two kinds of time bias: near bias and future bias. While philosophers typically hold that near bias is rationally impermissible, many hold that future bias is rationally permissible. Call this normative hybridism. According to arbitrariness objections, certain patterns of preference are rationally impermissible because they are arbitrary. While arbitrariness objections have been leveled against both near bias and future bias, the kind of arbitrariness in question has been different. In this article we investigate whether there are forms of (...) arbitrariness that are common to both kinds of preferences and, hence, whether there are versions of the arbitrariness objection that are objections to both near bias and future bias. If there are, then this might go some way toward undermining normative hybridism and to defending thoroughgoing time-neutralism. (shrink)

The purpose of this study is to explore the influence of consumers’ choice deferral behavior on their intertemporal choice preference. The empirical study shows that consumers’ choice deferral behavior can significantly affect their intertemporal decision preference through the level of hopefulness. Compared with non-choice deferral behavior, choice deferral behavior can improve the level of consumers’ sense of hopefulness, which then makes them prefer larger-longer interests in intertemporal decision-making. The effect of consumers’ sense of hopefulness on their intertemporal choice preference is (...) moderated by their perceived information integrity. When the perceived information integrity is low, the effect of hopefulness on intertemporal decision preference will be enhanced, but when the perceived information integrity is high, the effect of hopefulness on intertemporal decision preference will not be affected. In addition, the theoretical and practical significance of this study and the prospect of future research are also discussed. (shrink)

In this article, I survey four key questions about willpower: How is willpower possible? Why does willpower fail? How does willpower relate to other self-regulatory processes? and What are the connections between willpower and weakness of will? Empirical research into willpower is growing rapidly and yielding some fascinating new findings. This survey emphasizes areas in which empirical progress in understanding willpower helps to advance traditional philosophical debates.

Financial misconduct has come into the spotlight in recent years, causing market regulators to increase the reach and severity of interventions. We show that at times the economic benefits of illicit financial activity outweigh the costs of litigation. We illustrate our argument with data from the US Securities and Exchanges Commission and a case of investment misconduct. From the neoclassical economic paradigm, which follows utilitarian thinking, it is rational to engage in misconduct. Still, the majority of professionals refrain from misconduct, (...) foregoing economic rewards. We suggest financial activity could be reimagined taking into account intrinsic and prosocial motivations. A virtue ethics framework could also be applied, linking financial behavior to the quest for moral excellence and shared flourishing. By going beyond utilitarian thinking and considering alternative models, we offer a fuller account of financial behavior and a better perspective from which to design deterrence methods. (shrink)

IntroductionThis title is an important collection of articles on the principles, methods, and facts of human reasoning. It is of interest to argumentation theorists, philosophers, psychologists, cognitive scientists, and researchers in related fields. Out of the 53 articles, 16 were written specifically for this volume by prominent representatives of their fields, and it makes an important contribution to the research on reasoning. The size of the collection enables it to include papers from classic philosophical articles to important new theorizing on (...) the psychology of reasoning, so it can be used as material for a variety of courses with different emphases and levels of expertise. The “comingling” of the empirical and the philosophical keeps the reading experience refreshing for readers of different academic denominations. Both the philosophical and the empirical develop their mutual and distinct debates, though the selection of philosophical texts naturally favors those that link wi .. (shrink)

Some recent arguments for paternalist government interventions have been based in empirical results in psychology and behavioral economics that would seem to show that adult human beings are far removed from the ideals of rationality presupposed by much of philosophical and economic theory. In this paper it is argued that we need to move to a different conception of human decision-making competence than the one that lies behind that common line of philosophical and economic thinking, and which actually still lies (...) in the background of some of these recent approaches to paternalist interventions. An alternative picture of human decision-making competence is outlined and four criteria for identifying areas where paternalist interventions have a basic moral and political legitimacy are then identified on the basis of this picture. (shrink)

In business settings, decision makers facing moral issues often experience the challenges of continuous changes. This dynamic process has been less examined in previous literature on moral decision making. We borrow theories on learning strategies and computational models from decision neuroscience to explain the updating and learning mechanisms underlying moral decision processes. Specifically, we present two main learning strategies: model-free learning, wherein the values of choices are updated in a trial-and-error fashion sustaining the formation of habits and model-based learning, wherein (...) the brain updates more general cognitive maps and associations, thus sustaining flexible and state-dependent behaviors. We then summarize studies explaining the neuro-computational processes of both learning strategies—the calculation of prediction errors and valuation. We conclude by emphasizing how the incorporation of dynamic aspects in moral decision making could open new avenues for understanding moral behaviors in a changing world. (shrink)

Discounted utility theory and its generalizations use discount functions for weighting utilities of outcomes received in different time periods. We propose a new simple test of convexity–concavity of discount function. This test can be used with any utility function and any preferences over risky lotteries. The data from a controlled laboratory experiment show that about one third of experimental subjects reveal a concave discount function and another one third of subjects reveal a convex discount function.

In this paper, we present a time-varying and non-stationary but non-hyperbolic discount function that explains dynamic preference reversal. The new discount function emerges from an analysis of intertemporal consumption and savings choices with mortality risk and an altruistic factor. Our analysis shows that the process of updating survival information may also account for dynamic preference reversal.

Several studies on time preference have found time inconsistency in both gain and loss preferences. However, the relationship between the two within the same person remains unclear; that is, does an individual who demonstrates time inconsistency for gain outcomes do so for losses as well? This paper reports on individuals’ time inconsistency for gains and losses in a laboratory setting. To obtain a precise comparison of individuals’ time inconsistency for gains and losses, we used Rohde’s “DI -index” :1700–1716, 2018) and (...) measured the level of time inconsistency, rather than merely identifying whether TI was present. This index represents how strongly a person exhibits present bias, and easily extends to the comparison between gain and loss preferences within the same person. Further, it allows the experiment to test for so-called future bias, which has been a focus area in recent time inconsistency literature. It is elicited through a non-parametric method, which avoids any specification errors in the analysis. Our findings are as follows: first, we found future bias in preferences for not only gains but also losses, and we confirmed that this tendency is consistent with previous findings on preferences for gains. Second, a positive correlation between time inconsistency for gains and losses was found at the individual level. Indeed, we could not find a significant difference between the two in most cases. (shrink)

To function well in an unpredictable environment using unreliable components, a system must have a high degree of robustness. Robustness is fundamental to biological systems and is an objective in the design of engineered systems such as airplane engines and buildings. Cognitive systems, like biological and engineered systems, exist within variable environments. This raises the question, how do cognitive systems achieve similarly high degrees of robustness? The aim of this study was to identify a set of mechanisms that enhance robustness (...) in cognitive systems. We identify three mechanisms that enhance robustness in biological and engineered systems: system control, redundancy, and adaptability. After surveying the psychological literature for evidence of these mechanisms, we provide simulations illustrating how each contributes to robust cognition in a different psychological domain: psychomotor vigilance, semantic memory, and strategy selection. These simulations highlight features of a mathematical approach for quantifying robustness, and they provide concrete examples of mechanisms for robust cognition. (shrink)

ABSTRACTNew trends in behavioral decision research see researchers attempting to integrate multiple-self models of behavioral economics with dual-process and dual-system theories of cognitive psych...

This study experimentally tests our proposed extended present bias hypothesis—discount factor increases over the proximate future and eventually approaches constancy, but remains distinct from unity in the remote future. Using front-end delay and a post-dated check for payment, discount factors are elicited for three seven-day durations: between 2 and 9 days later, between 31 and 38 days later, and between 301 versus 308 days later. We find support for diminishing discounting between the proximate and intermediate comparisons, but not between the (...) intermediate and the remote comparisons. The findings validate our extended present bias hypothesis. (shrink)

This paper examines collective decision-making with an infinite-time horizon setting. First, we establish a result on the collection of decisive sets: if there are at least four alternatives and Arrow’s axioms are satisfied on the selfish domain, then the collection of decisive sets forms an ultrafilter. Second, we impose generalized versions of stationarity axiom for social preferences, which are substantially weaker than the standard version. We show that if any of our generalized versions are satisfied in addition to Arrow’s axioms, (...) then some generation is dictatorial. Moreover, we specify a very weak stationarity axiom that guarantees a possibility result. (shrink)