Generalized stochastic dominance and bad outcome aversion

Incomplete preferences over lotteries on a finite set of alternatives satisfying, besides independence and continuity, a property called bad outcome aversion are considered. These preferences are characterized in terms of their specific multi-expected utility representations (cf. Dubra et al., J Econ Theory, 115:118–133, 2004), and can be seen as generalized stochastic dominance preferences.     

Small-Group Learning and Hypothetical Families in a Large Introductory Course

Abstract

Increased university enrollments and large class sizes, especially at the introductory level, demand creative approaches to promote learning and engagement in the classroom. Small-group work can help achieve these goals, creating a positive and memorable student experience. We propose a small-group exercise that can supplement the traditional lecture format in an introductory marriage and families course. Students are assigned to small groups as members of hypothetical families and are presented with real-life situations over the course of the semester (e.g., job loss or promotion, illness, or extended absence of a family member). Students write about each new situation's effects on their individual character and discuss the implications and potential adjustments for the family. To ensure participation, students who miss class can complete an online version of the assignment. This exercise encourages a critical imagination, promotes interaction and participation, and challenges students to think critically by applying course concepts.     

DIRECT TESTS OF INDIVIDUAL PREFERENCES FOR EFFICIENCY AND EQUITY

Departures from “economic man” behavior in many games in which fairness is a salient characteristic are now well documented in the experimental economics literature. These data have inspired the development of models of social preferences that assume agents have preferences for equity and efficiency as well as their own material payoffs. Empirical failure of the economic man model comes from experiments that provide direct tests of its distinguishing characteristic: indifference to the payoffs of others. This paper reports an experiment that subjects popular social preferences models to the same type of empirical challenge. We report direct tests of the distinguishing characteristics of these models: preference for allocations that have higher efficiency and greater equity. (JEL A12, A13, B49, C70, C91, D63)     

Solidarity in choosing a location on a cycle

We study the implications of two solidarity conditions on the efficient location of a public good on a cycle, when agents have single-peaked, symmetric preferences. Both conditions require that when circumstances change, the agents not responsible for the change should all be affected in the same direction: either they all gain or they all loose. The first condition, population-monotonicity, applies to arrival or departure of one agent. The second, replacement-domination, applies to changes in the preferences of one agent. Unfortunately, no Pareto-efficient solution satisfies any of these properties. However, if agents’ preferred points are restricted to the vertices of a small regular polygon inscribed in the circle, solutions exist. We characterize them as a class of efficient priority rules.     

REVIEWS

Bigner, J. J., & Wetchler, J. L. (Eds.). (2004). Relationship therapy with same-sex couples .
Cling, B. J. (Ed.). (2004). Sexualized violence against women and children: A psychology and law perspective .
Folberg, J., Milne, A., & Salem, P., (Eds.). (2004). Divorce and family mediation: Models, techniques and applications .
Rholes, S. W., & Simpson, J. A. (Eds.). (2004). Adult attachment: Theory, research and clinical implications .
Sperry, L. (Ed.). (2004). Assessment of couples and families: Contemporary and cutting edge strategies .     

Students’ preference for grading rules: The role of ratio bias

Ratio bias exists if people perceive the likelihood of an event to be greater when it is presented as a ratio with large numbers (e.g., 10 in 100) than when it is presented as a ratio with small numbers (e.g., 1 in 10). This study shows the prevalence of ratio bias by examining students’ preference for grading rules at a college that uses a relative grading system. The study was conducted in an institution allowing instructors who teach multiple classes of the same course to grade students as if they are enrolled in a single class by pooling students of different classes (pooled grading, or PG). The other (default) alternative was to grade students separately based on each class (separate grading, or SG). We find that students strongly prefer PG to SG, which indicates that students’ preferences are affected by ratio bias. We also find that preference for PG is not affected by gender, but older students are less likely to choose PG than younger ones. Lastly, by conducting an additional experiment, we confirmed that students’ preference for grading rules in the original survey is not likely to be affected by overconfidence or social bias, nor could it be affected by the type of questionnaires.     

GENDER DIFFERENCES IN EXAMINATION BEHAVIOR

A unique examination strategy in first‐year microeconomics courses is used to test for gender differences in examination behavior. Students have the possibility of attaining a seminar bonus on the final exam for near‐perfect seminar attendance and are given two voluntary initial quizzes during the semester. At the final exam, the scores received on initial quizzes can either be accepted as is, or students can attempt to improve their marks by answering similar quiz questions on the exam. Results suggest that female students are more likely to take initial quizzes and receive a seminar bonus but are less likely to re‐take quiz questions on the final exam. These results suggest higher risk aversion, less overconfidence, and more self‐discipline or less procrastination among female students relative to male students. Our estimated behavioral differences may have important implications in terms of final grades on the course. (JEL I21, J16, A12, A14)     

Are Americans and Indians more altruistic than the Japanese and Chinese? Evidence from a new international survey of bequest plans

This paper discusses three alternative assumptions concerning household preferences (altruism, self-interest, and a desire for dynasty building) and shows that these assumptions have very different implications for bequest motives and bequest division. After reviewing some of the literature on actual bequests, bequest motives, and bequest division, the paper presents data on the strength of bequest motives, stated bequest motives, and bequest division plans from a new international survey conducted in China, India, Japan, and the United States. It finds striking inter-country differences in bequest plans, with the bequest plans of Americans and Indians appearing to be much more consistent with altruistic preferences than those of the Japanese and Chinese and the bequest plans of the Japanese and Chinese appearing to be much more consistent with selfish preferences than those of Americans and Indians. These findings have important implications for the efficacy and desirability of stimulative fiscal policies, public pensions, and inheritance taxes.     

Behavioral economic phenomena in decision-making for others

We examine whether biases identified in the behavioral-economics literature apply in decision-making for others (DMfO). We conduct a laboratory experiment in which subjects make decisions on behalf of themselves and others in eighteen tasks that measure the following biases: present-bias in time preferences, reflection effect in risk preferences, compound risk aversion, decoy effect, anchoring bias, endowment effect, and identifiable-victim bias. In our experiment, DMfO is DMfO simpliciter: unincentivized decisions made by one individual on behalf of another–the individual making decisions faces no direct costs or benefits when engaging in DMfO (as she would in a principal-agent framework or with bequest motives), and DMfO is not framed as giving advice or guessing others’ behavior. Although we find that DMfO is by and large statistically indistinguishable from decisions for oneself, we identify the following self-other discrepancies: (i) willingness to pay (i.e., bids to procure goods and donations to charity) is higher in DMfO than in decisions for oneself in tasks associated with the anchoring bias, end owment effect, and identifiable-victim bias; and (ii) the propensity to give uninterpretable responses is higher in DMfO than in decisions for oneself. We also find order effects, with DMfO more similar to decisions for oneself when DMfO follows decision making for oneself. Lastly, in response to open-ended items soliciting self-reports of subjects’ approach to DMfO, most subjects report having followed some version of the “Golden Rule” (e.g., deciding for others as they would for themselves) or having tried to maximize the other subject’s payment or utility; very few subjects report motivations that can be construed as rivalrous.     

Experience with research paradigms relates to infants’ direction of preference

Interpreting and predicting direction of preference in infant research has been a thorny issue for decades. Several factors have been proposed to account for familiarity versus novelty preferences, including age, length of exposure, and task complexity. The current study explores an additional dimension: experience with the experimental paradigm. We reanalyzed the data from 4 experiments on artificial grammar learning in 12-month-old infants run using the head-turn preference procedure (HPP). Participants in these studies varied substantially in their number of laboratory visits. Results show that the number of HPP studies is related to direction of preference: Infants with limited experience with the HPP setting were more likely to show familiarity preferences than infants who had amassed more experience with this paradigm. This evidence has important implications for the interpretation of experimental results: Experience with a given method or, more broadly, with the laboratory environment may affect infants’ patterns of preferences.     

A COMMON PROPERTY EXPERIMENT WITH A RENEWABLE RESOURCE

This series of three classroom experiments demonstrates the tragedy of the commons and suggests two possible solutions: communication and individual property rights. In the first and second experiments, students jointly own a renewable resource in the form of a plate of M&Ms. Communication is not allowed in the first experiment, whereas in the second experiment students may try to influence each other's desired harvest. The third experiment divides the plate to establish individual property rights.     

Do fixed payments affect effort? Examining relative thinking in mixed compensation schemes

Several earlier studies have shown that people exhibit “relative thinking”: they consider relative price differences even when only absolute price differences are relevant. The article examines whether relative thinking exists when people face mixed compensation schemes that include both fixed and pay-for-performance components. Such compensation schemes are prevalent in many occupations (e.g., salespeople and managers) and therefore are an important practical issue. Surprisingly, the ratio between the pay-for-performance and the fixed compensation does not affect effort, meaning that no relative thinking is found. Another experiment shows that this is not due to reciprocity that cancels out relative thinking. In a third experiment subjects make similar decisions without incentives and the results suggest that the different context (compensation schemes instead of price comparisons) and not the introduction of financial incentives (which were not used in previous studies) is the reason that relative thinking disappears. The results have implications for designing incentive schemes in firms and for designing experiments.     

Searching for preference stability in a state dependent world

We evaluate stability of preference using a randomized intervention that exogenously changes the income opportunity set of participants. We use a unique panel data, comprising of surveys and lab-in-the-field experiments conducted before and after the intervention, to examine whether our elicited measures of preferences (risk, competitiveness, and confidence) remain stable. We find that after accounting for the change in the income opportunity set, the elicited preferences indeed appear to be temporally stable under a state dependent framework. Consequently, even though we find across subject variation in preferences, the average measure of preferences remain temporally stable, providing support to a representative agent model of decision-making with temporally stable preferences.     

Eliciting Donor Preferences

Most charity organizations depend on contributions from the general public, but little research is conducted on donor preferences. Do donors have geographical, recipient, or thematic preferences? We designed a conjoint analysis experiment in which people rated development aid projects by donating money in dictator games. We find that our sample show strong age, gender, regional, and thematic preferences. Furthermore, we find significant differences between segments. The differences in donations are consistent with differences in donors’ attitudes toward development aid and their beliefs about differences in poverty and vulnerability of the recipients. The method here used for development projects can easily be adapted to elicit preferences for other kinds of projects that rely on gifts from private donors.     

WHAT MOTIVATES POLITICAL PREFERENCES? SELF‐INTEREST,IDEOLOGY, AND FAIRNESS IN A LABORATORY DEMOCRACY

Substantial prior literature has established that subjects in laboratory experiments are typically willing to sacrifice their own well being to make financial allocations more equal among participants. We test the applicability of this result in an environment that contains some of the key contextual issues that are usually excluded from more abstract games, but which might be important in situations involving income redistribution. Our general finding is that votes for a redistributive tax are almost entirely in accordance with self‐interest: above‐average earners vote for low tax rates and below‐average earners vote for high tax rates. A measure of subjects' preferences for fairness or equality, their self‐reported economic ideology, is not directly related to their voting behavior in this experiment. Because the ideology measure should be correlated with any intrinsic preferences regarding inequality aversion, we conclude that any preferences for fairness or inequality that our subjects possess are not strong enough to overcome self‐interest in this context. We do, however, find evidence for a possible indirect effect of ideology on choice behavior in that more conservative subjects tend to be more responsive to their self‐interest than the more liberal subjects. (JEL C90, D63)     

Abstracts

Davenport, Y. B., Ebert, M. H., Adland, M. L. & Goodwin, F. K. Couples group therapy as an adjunct to Lithium maintenance of the manic patient.
Erickson, M. H. & Rossi, E. L. Autohypnotic experiences of Milton H. Erickson.
Goldman, J. & Coane, J. Family therapy after the divorce: Developing a strategy.
Kinney, J. McC, Masden, B., Fleming, T. & Haapala, D. A. Homebuilders: Keeping families together.
Power, P. W. The adolescent's reaction to chronic illness of a parent: Some implications for family counseling.
Ro-trock, G. K., Wellisch, D. K. & Schoolar, J. C. A family therapy outcome study in an inpatient setting.
Sager, C. J. A typology of intimate relationships.
Schuman, S. H., Jabaily, G. C. & Samuelson, D. C. Life events in a family with life threatening illness.
Soper, P. H. & L'Abate, L. Paradox as a therapeutic technique: A review.
Weisfeld, D. & Laser, M. S. Divorced parents in family therapy in a residential treatment setting.     

Environmental Factors in the Choice of EGMs: A Discrete Choice Experiment

EGMs are a form of entertainment, and the gambling environment is an important contributor to the overall experience. Logically, to select a play-environment, EGM gamblers must choose the platform through which to access the EGM (e.g., internet, mobile application or land-based venue), a particular provider (e.g., specific website, app vendor or branded casino), and the game itself (e.g., based on graphical theme or bonus features; Thorne et al. in J Gambl Stud, 2016. doi: 10.1007/s10899-016-9601-2). A discrete choice experiment was conducted to identify the features of the platform, provider and game that are most strongly preferred by EGM gamblers. Participants were 245 EGM gamblers from clubs in Victoria, Australia and 7516 EGM gamblers from an Australian online panel. Results indicate that the ideal environment for the average gambler consists of: gambling at a club that is close to home; with a group of friends; in a relatively quiet place that has air conditioning, cheap food and a large space to play in; on a classic game with quality animations and small bet sizes; where you feel safe and secure; and where there is a wide variety of other games to play when you are done. Segmenting these results by problem-gambler status highlights important differences in preferences between problem and non-problem gamblers. Problem gamblers are less likely to give weight to the company they share and have a preference for larger venues. Using a powerful paradigm from marketing research, the present study was able to determine the relative value of different features of the EGM gambling environment, and also contributes important insight towards what constitutes a safer environment for recreational play.     

BOOK REVIEWS

Book reviewed in this article:
Pittman, Frank S. Turning points.
Steinglass, P. with Bennett, L. A., Wolin, S. J. & Reiss, D. The alcoholic family.
Glick, I., Clarkin, J. & Kessler, D. Marital and family therapy: Third edition.
Nichols, Michael P The self in the system: Expanding the limits of family therapy.
Hahlweg, K. & Goldstein, M. J. (Eds.). Understanding major mental disorder: