SELECTIVE ATTENTION AND LEARNING

What do we notice and how does this affect what we learn and come to believe? I present a model of an agent who learns to make forecasts on the basis of readily available information, but is selective as to which information he attends to: he chooses whether to attend as a function of current beliefs about whether such information is predictive. If the agent does not attend to some piece of information, it cannot be recalled at a later date. He uses Bayes' rule to update his beliefs given attended‐to information, but does not attempt to fill in missing information. The model demonstrates how selective attention may lead the agent to persistently fail to recognize important empirical regularities, make systematically biased forecasts, and hold incorrect beliefs about the statistical relationship between variables. In addition, it identifies factors that make such errors more likely or persistent. The model is applied to shed light on stereotyping and discrimination, persistent learning failures and disagreement, and the process of discovery.     

ON THE RELATIVE EFFICIENCY OF PERFORMANCE PAY AND NONCONTINGENT INCENTIVES

We report evidence from a large field experiment that compares the effectiveness of contingent and noncontingent incentives in eliciting costly effort for a large range of payment levels. The company with which we worked sent 7,250 letters asking customers to complete a survey. Some letters promised to pay amounts ranging from $1 to $30 upon compliance (contingent incentives), whereas others already contained the money in the request envelopes (noncontingent incentives). Compared to no payment, very small contingent payments lower the response rate while small noncontingent payments raise the response rate. As expected, response rates rise with the size of the incentive offered. The response rate in the noncontingent incentives rises more rapidly for low amounts of incentive, but then flattens out and reaches lower levels than under contingent payments. We discuss how the optimal policy regarding the use of each size and type of incentives crucially depends on firms’ objectives.     

CONVERGENCE: AN EXPERIMENTAL STUDY OF TEACHING AND LEARNING IN REPEATED GAMES

Nash equilibrium can be interpreted as a steady state where players hold correct beliefs about the other players’ behavior and act rationally. We experimentally examine the process that leads to this steady state. Our results indicate that some players emerge as teachers—those subjects who, by their actions, try to influence the beliefs of their opponent and lead the way to a more favorable outcome—and that the presence of teachers appears to facilitate convergence to Nash equilibrium. In addition to our experiments, we examine games, with different properties, from other experiments and show that teaching plays an important role in these games. We also report results from treatments in which teaching is made more difficult. In these treatments, convergence rates go down and any convergence that does occur is delayed.     

My Loss Is Your Loss … Sometimes: Loss Aversion and the Effect of Motivational Biases

Findings from previous studies of individual decision-making behavior predict that losses will loom larger than gains. It is less clear, however, if this loss aversion applies to the way in which individuals attribute value to the gains and losses of others, or if it is robust across a broad spectrum of policy and management decision contexts. Consistent with previous work, the results from a series of experiments reported here revealed that subjects exhibited loss aversion when evaluating their own financial gains and losses. The presence of loss aversion was also confirmed for the way in which individuals attribute value to the financial gains and losses of others. However, similar evaluations within social and environmental contexts did not exhibit loss aversion. In addition, research subjects expected that individuals who were unknown to them would significantly undervalue the subjects' own losses across all contexts. The implications of these findings for risk-based policy and management are many. Specifically, they warrant caution when relying upon loss aversion to explain or predict the reaction of affected individuals to risk-based decisions that involve moral or protected values. The findings also suggest that motivational biases may lead decisionmakers to assume that their attitudes and beliefs are common among those affected by a decision, while those affected may expect unfamiliar others to be unable to identify and act in accordance with shared values.     

MONITORING IN TEAMS: USING LABORATORY EXPERIMENTS TO STUDY A THEORY OF THE FIRM

Alchian and Demsetz’s influential explanation of the classical business firm (The American Economic Review, 1972, 62, 777–795) argues that there is need for a concentrated residual claim in the hands of a central agent, to motivate the monitoring of workers. We model monitoring as a way to transform team production from a collective action dilemma with strong free riding incentives to a productivity‐enhancing opportunity with strong private marginal incentives to contribute effort. In an experiment, we have subjects experience team production without monitoring, team production with a central monitor, and team production with peer monitoring. Then subjects vote on whether to employ the central monitor, who gets to keep a fixed share of the team output, or to rely on peer monitoring, which entails a coordination or free riding problem. Our subjects usually prefer peer monitoring but they switch to the specialist when unable to successfully self‐monitor. We provide evidence for situations in which team members resist the appointing of a central monitor and succeed in overcoming coordination and free riding problems as well as for a situation in which an Alchian–Demsetz‐like firm grows in the laboratory.     

An Experimental Study of Belief Learning Using Elicited Beliefs

This paper investigates belief learning. Unlike other investigators who have been forced to use observable proxies to approximate unobserved beliefs, we have, using a belief elicitation procedure (proper scoring rule), elicited subject beliefs directly. As a result we were able to perform a more direct test of the proposition that people behave in a manner consistent with belief learning. What we find is interesting. First to the extent that subjects tend to “belief learn,” the beliefs they use are the stated beliefs we elicit from them and not the “empirical beliefs” posited by fictitious play or Cournot models. Second, we present evidence that the stated beliefs of our subjects differ dramatically, both quantitatively and qualitatively, from the type of empirical or historical beliefs usually used as proxies for them. Third, our belief elicitation procedures allow us to examine how far we can be led astray when we are forced to infer the value of parameters using observable proxies for variables previously thought to be unobservable. By transforming a heretofore unobservable into an observable, we can see directly how parameter estimates change when this new information is introduced. Again, we demonstrate that such differences can be dramatic. Finally, our belief learning model using stated beliefs outperforms both a reinforcement and EWA model when all three models are estimated using our data.     

IS THE ENDOWMENT EFFECT AN EXPECTATIONS EFFECT?

A hallmark result within behavioral economics is that individuals' choices are affected by current endowments. A recent theory due to Kőszegi and Rabin ( 2006 , Quarterly Journal of Economics, 121, 1133–1165) explains such endowment effect with a model of expectations‐based reference‐dependent preferences. Departing from past work, we conduct complementary experiments to disentangle expectations—verified probabilistic beliefs held by subjects—from other features of endowment—such as “assignment” to a good—hence allowing us to compare the effect of expectations with that of other variations. While mere assignment can affect choices, we do not find a large role in the effect for Kőszegi–Rabin expectations.     

Indiscriminate,Irrelevant, and Sometimes Wrong: Causal Misconceptions about Climate Change

Prior research demonstrates widespread persistence of beliefs about climate change causes and risks that are arguably misconceptions. They include believing pollution causes climate change, believing ozone depletion causes climate change, the combination of these two “green beliefs,” referred to as environmental problems, and believing natural climate variation significantly contributes to current climate trends. Each of these causal beliefs has the potential to weaken or divert support away from effective climate change risk mitigation policies. To assess this potential, we explore the nature and prevalence of these beliefs in the United States with a national sample of interviews (N = 77) and two national surveys (N = 1,013, N = 1,820), and apply regression and mediation analyses to explore whether they explain any of the variation in individuals’ concern or support for policy to mitigate climate change. Adherence to these beliefs—which reflect a variety of misconceptions illustrated in the interviews—differs by political ideology but is common, with over a third of interviewees mentioning one or more. Controlling for general knowledge, political ideology, and other factors, misconceptions about environmental problems are still associated directly with support for climate change policies. On average adherence to the belief that environmental problems cause climate change is associated with a 25% higher probability of policy support. In contrast, believing natural climate variability is a major recent cause of climate change is associated with a 7% lower probability of supporting climate policy, even after controlling for political ideology and other knowledge about climate change.     

Abschlussprüferhaftung bei unpräzisen Sorgfaltsstandards und Ambiguitätsaversion

The Ellsberg-paradox suggests that individuals are subject to ambiguity aversion. When the standard of due care is not precisely defined, the context of auditor’s liability can be considered as an ambiguity situation. The paper shows that compared to an Expected Utility framework an ambiguity-averse auditor will exert less care with low damage payments but higher care with high damage payments. Hence, it might be advisable to put a liability cap. With strict liability there is no ambiguity situation and thus, there are no distortions from ambiguity aversion.     

Contract design and insurance fraud: an experimental investigation

This paper experimentally examines the impact of contract design on insurance fraud. We test how fraud behavior varies for insurance contracts with full coverage, a straight deductible or claim-dependent premiums (bonus-malus contracts), in a setup where rational and selfish individuals have an incentive to always claim the maximum possible indemnity. We find a substantial impact of contractual arrangements: Deductible contracts lead to a greater extent to claim build-up than full coverage contracts. In contrast, bonus-malus contracts that entail the same net gains from fraud as deductible contracts do not increase claim build-up. Thus, our results indicate that bonus-malus contracts may be superior to deductible contracts for behavioral reasons.     

一种基于时差的工期索赔分析方法

工期索赔问题是目前项目管理中的一类重要问题，针对这一问题出现了多种分析方法，但都不能被普遍接受，一个关键的难点在于多个工序发生延误时工序间相互作用的原理及其对总工期造成的影响尚未研究清楚，导致时差所有权不合理、延误责任分担不公平、索赔分析结果与实际情况不一致等问题。针对这些问题，本文基于时差理论提出了一种分析工期索赔的新方法。本文首先提出了工期延误中的"组合效应"，指多个工序延误时总工期实际延误总量经常不等于每个延误工序单独推迟总工期的分量之和的现象，以组合效应研究为入手点，本文利用CPM网络的时差特性分析了延误工序间相互影响的原理，进而揭示了多工序延误时"组合效应"的规律；然后在此基础上根据组合效应的影响因素确定组合效应在各延误工序中的分摊比例，进一步得出各工序在工期索赔中应承担的责任，由此提出了基于时差的工期索赔分析方法；最后通过一个项目算例将这种方法与目前常用方法进行了比较。由于组合效应清晰地反映了延误工序之间的相互影响及其对总工期影响的内在规律，因此本文提出的方法责任分摊更加公平合理，更加符合实际情况，且借助时差参数实现程序化使其免于频繁的网络更新更便于应用，能够有效弥补目前工期索赔分析方法的不足，为项目管理人员提供一种工期索赔分析的有力工具。     

EXPONENTIAL‐GROWTH BIAS AND LIFECYCLE CONSUMPTION

Exponential‐growth bias (EGB) is the tendency for individuals to partially neglect compounding of exponential growth. We develop a model wherein biased agents misperceive the intertemporal budget constraint, and derive conditions for overconsumption and dynamic inconsistency. We construct an incentivized measure of EGB in a US‐representative population and find substantial bias, with approximately one third of subjects estimated as the fully biased type. The magnitude of the bias is negatively associated with asset accumulation, and does not respond to a simple graphical intervention.     

What do we Expect from our Friends?

We conduct a field experiment in a large real‐world social network to examine how subjects expect to be treated by their friends and by strangers who make allocation decisions in modified dictator games. Although recipients' beliefs accurately account for the extent to which friends will choose more generous allocations than strangers (i.e., directed altruism), recipients are not able to anticipate individual differences in the baseline altruism of allocators (measured by giving to an unnamed recipient, which is predictive of generosity toward named recipients). Recipients who are direct friends with the allocator, or even recipients with many common friends, are no more accurate in recognizing intrinsically altruistic allocators. Recipient beliefs are significantly less accurate than the predictions of an econometrician who knows the allocator's demographic characteristics and social distance, suggesting recipients do not have information on unobservable characteristics of the allocator. (JEL: C73, C91, D64)     

The ethics of health care system reform

The United States is now engaged in a momentous national debate about health care. How can we provide the best care possible while simultaneously containing cost (to promote the general economic integrity of society) and somehow maintain a semblance of a free health care marketplace. This is not just a political question; it is also a question of ethics. It is an ethical consideration because the current debate is not just about designing or promoting health care systems that can best address our concerns for costs, quality, and accessibility. It appears that at least some participants in the debate would not stop at arguing their beliefs as valid; they would make their beliefs law. Some urge the creation of the right to health care as a matter of law. There are significant differences between beliefs and rights, however, and they need to be considered carefully in the ongoing debate over the future of this country's health care delivery and financing system.     

Integrity—Clarifying and Upgrading an Important Concept for Business Ethics

This article discusses the concept of integrity. Often, integrity is used as a characteristic of individuals showing a high fidelity to generally praised norms. Here, a more independent meaning is suggested so that the concept implies a clear distance to integration instead of mixing up the two concepts. Integrity implies integration within the individual of beliefs, statements, and action. To what degree can society and companies accommodate a pluralism created by individuals with integrity? Here, it is argued that integrity is a useful virtue and that a more integrity‐friendly environment in companies would be beneficial by stimulating the empowered employee to make improved contributions. The concept is central for business ethics and crucial for the company's choice of such policies. A priority of integrity also affects organizational theory and the practical organizing of the company. Integrity is also vital for society at large for both citizens and companies, providing an ideological support for pluralism and a check on demands for conformism. The article also discusses how a virtue such as integrity can function as guidance for the individual operating in a complex world.     

Attitudes toward and desire for assisted suicide among persons with amyotrophic lateral sclerosis

This study aimed at investigating attitudes toward assisted suicide among individuals with amyotrophic lateral sclerosis, and the differences in health status (illness severity and functional disability) and psychosocial adjustment (depression, perceived stress, social support, and coping) between those in favor of and those against assisted suicide. This study also aimed at describing the characteristics of terminally-ill individuals who acknowledge contemplating assisted suicide. Forty-four individuals diagnosed with amyotrophic lateral sclerosis were surveyed about their attitudes and the circumstances that would make them contemplate assisted suicide and filled out standardized measures of mood, stress, social support, coping, and illness status. Seventy percent of the sample found assisted suicide morally acceptable and 60% thought it should be legalized. In addition, 60% of patients agreed they could foresee circumstances that would make them contemplate assisted suicide, but only three (7%) indicated they would have requested it already if it had been legal. Willingness to contemplate assisted suicide was associated with reports of elevated levels of depressive symptoms and reports of hopelessness. Results highlight the need to assess psychological status carefully when terminally ill individuals begin contemplating assisted suicide or voice a request for it.     

两级商业信用下存在顾客预付的易腐品库存模型

在销售单一品种的易腐品供应链中,假设销售商在获得供应链上游供应商延时还款的同时,也从（供应链）下游顾客处获得了部分预付款。分三种情况分别讨论销售商的成本构成,并由此建立数学模型以求解最优订货周期使得销售商单位时间总成本最小化。通过数学证明得到了目标函数的解析性质,结果显示每种情况下在可行域范围内至多存在一个极小值点。以此为基础给出了相应的命题以有效地确定销售商的最优决策。最后结合运作管理实践,通过数值算例说明了模型的有效性。     

Recollection Bias and Its Underpinnings: Lessons from Terrorism Risk Assessments

Recollection bias is the phenomenon whereby people who observe a highly unexpected event hold current risk beliefs about a similar event that are no higher than their recollection of their prior beliefs. This article replicates and extends the authors’ previous study of recollection bias in relation to individuals’ perceptions of the risks of terrorism attacks. Over 60% of respondents in a national U.S. sample of over 900 adults believe that the current risk of a future terrorist attack by either an airplane or in a public setting is no higher than they recall having believed, respectively, before the 9/11 attack and before the Boston Marathon bombing. By contrast, a rational Bayesian model would update to a higher currently assessed risk of these previously uncontemplated events. Recollection bias is a persistent trait: individuals who exhibited this bias for the 9/11 attack exhibited it for the Boston Marathon bombing. Only one‐fifth of respondents are free of any type of recollection bias. Recollection bias is negatively correlated with absolute levels of risk belief. Recollection bias in relation to highly unexpected terrorist events—the belief that perceived risks did not increase after the surprise occurrence—dampens support for a variety of anti‐terrorism measures, controlling for the level of risk beliefs and demographic factors. Persistent recollection bias for both 9/11 and the Boston Marathon bombing is especially influential in diminishing support for protective policy measures, such as surveillance cameras in public places. Given that public attitudes influence policy, educating the public about risk is critical.     

No‐Bubble Condition: Model‐Free Tests in Housing Markets

We test for the existence of housing bubbles associated with a failure of the transversality condition that requires the present value of payments occurring infinitely far in the future to be zero. The most prominent such bubble is the classic rational bubble. We study housing markets in the United Kingdom and Singapore, where residential property ownership takes the form of either leaseholds or freeholds. Leaseholds are finite‐maturity, pre‐paid, and tradeable ownership contracts with maturities often exceeding 700 years. Freeholds are infinite‐maturity ownership contracts. The price difference between leaseholds with extremely‐long maturities and freeholds reflects the present value of a claim to the freehold after leasehold expiry, and is thus a direct empirical measure of the transversality condition. We estimate this price difference, and find no evidence of failures of the transversality condition in housing markets in the U.K. and Singapore, even during periods when a sizable bubble was regularly thought to be present.     

Nostalgia and the Narrativization of Identity: A Turkish Case Study

This paper offers an interpretation of the collective identity‐narrative of a Turkish faculty of vocational education. Particular attention is focused on the importance of nostalgia in acts of collective self‐authorship. Nostalgia, it is argued, is key to the understanding of the dynamics of individual and organizational identity‐construction in several ways: it can be a means of maintaining a collective sense of socio‐historic continuity, a source of resistance to hegemonic influence and a defence against anxiety. The research contribution of this paper is threefold. First, it illustrates how groups assemble shared storylines that subjectively constitute their collective identity. Second, it analyses the different ways in which acts of collective nostalgia can inform the stories by which individuals and groups understand their present circumstances, preserve self‐esteem, and react to perceived threats. Third, it theorises nostalgia as giving access to a shared heritage of apparently authentic and identity‐relevant values and beliefs, as an emotional support during periods of organizational change, and as a form of uniqueness claim central to processes of individual‐organization identification.