Behaving as expected: Public information and fairness norms

What is considered to be fair depends on context‐dependent expectations. Using a modified version of the Ultimatum Game, we demonstrate that both fair behavior and perceptions of fairness depend upon beliefs about what one ought to do in a situation—that is, upon normative expectations. We manipulate such expectations by creating informational asymmetries about the offer choices available to the Proposer, and find that behavior varies accordingly. Proposers and Responders show a remarkable degree of agreement in their beliefs about which choices are considered fair. We discuss how these results fit into a theory of social norms. Copyright © 2009 John Wiley & Sons, Ltd.     

Social influence on predictions of simulated stock prices

Herding in financial markets refers to that investors are influenced by others. This study addresses the importance of consistency for herding. It is suggested that, in financial markets perceptions of consistency are based on repeated observations over time. Consistency may then be perceived as the agreement across time between investors' predictions. In addition, consistency may be related to variance over time in each investor's predictions. In an experiment using a Multiple Cue Probability Learning paradigm, 96 undergraduates made multi‐trial predictions of future stock prices given information about the current price and the predictions made by five fictitious others. Consistency was varied between the others' predictions (correlation) and within the others' predictions (variance). The results showed that the predictions were significantly influenced by the others' predictions when these were correlated. No effect of variance was observed. Hence, participants were influenced by the others when they were in agreement, regardless of whether they varied their predictions over trials or not. Copyright © 2008 John Wiley & Sons, Ltd.     

Partitioned Presentation of Multicomponent Bundle Prices: Evaluation,Choice and Underlying Processing Effects

Firms may choose to present the price of a multicomponent product bundle in partitioned (separate price for each mandatory component) or consolidated (single, equivalent price) fashion. In this article, we report on 2 experiments that examined the effects of such presentations on evaluations and choices as well as the underlying processing effects. In Experiment 1, consistent with a mental accounting analysis, a multicomponent product bundle was evaluated more favorably and chosen more often when its components were presented with partitioned (vs. consolidated) prices. The effects were, however, moderated by the component partitioned. In particular, it appeared that partitioning prices altered attention paid to the components partitioned and related product features. In Experiment 2, we found that different splits of the bundle price influenced evaluations and choices depending on how the focal product price related to that of a comparison option. These price‐split effects were also moderated by the component partitioned, suggesting attention effects similar to Experiment 1. The findings show that although the effects of price partitioning were consistent with mental accounting principles, they were moderated by information processing effects related to the partitioned component.     

Buying and Selling Prices of Investments: Configural Weight Model of Interactions Predicts Violations of Joint Independence

Judges evaluated buying and selling prices of hypothetical investments, based on the previous price of each investment and estimates of the investment's future value given by advisors of varied expertise. Effect of a source's estimate varied in proportion to the source's expertise, and it varied inversely with the number and expertise of other sources. There was also a configural effect in which the effect of a source's estimate was affected by the rank order of that source's estimate, in relation to other estimates of the same investment. These interactions were fit with a configural weight averaging model in which buyers and sellers place different weights on estimates of different ranks. This model implies that one can design a new experiment in which there will be different violations of joint independence in different viewpoints. Experiment 2 confirmed patterns of violations of joint independence predicted from the model fit in Experiment 1. Experiment 2 also showed that preference reversals between viewpoints can be predicted by the model of Experiment 1. Configural weighting provides a better account of buying and selling prices than either of two models of loss aversion or the theory of anchoring and insufficient adjustment.     

How do investors make predictions? Insights from analogical reasoning research

Previous work on investor decision making has focused almost exclusively on information specific to the company being judged. Consequently, every decision is viewed as a novel event, disconnected from the investor's existing knowledge. In this study, the analogical reasoning literature provides the theoretical support for arguing that investors frequently utilize existing knowledge as a basis for generating predictions about a company's future. The specific proposal is that investors transfer their existing knowledge via two different forms of analogical reasoning. The first, relational reasoning, is based primarily on structural correspondence between a novel company and an existing schema. The second, literal similarity reasoning, is based primarily on surface correspondence of a novel company and a previously encountered company. Our theoretical framework is tested in a study in which experienced investors predict the outcome of a novel company's strategy after reading about the experiences of other companies who implemented a similar strategy. The results are consistent with the occurrence of both relational and literal similarity reasoning, with relational reasoning emerging as the dominant approach to generating investors' predictions. Copyright © 2000 John Wiley & Sons, Ltd.     

The Relation between Selection Expectations,Perceptions and Organizational Attraction: A test of competing models

Little is known about how applicants' selection expectations and perceptions interplay in predicting applicant attraction outcomes (organizational attractiveness, job pursuit intention, and recommendation intention). In the present study, 340 entry‐level applicants for jobs in a large financial company provided information about their selection expectations before the procedure, and about their perceptions and attraction to the organization after the procedure. Regression analyses indicated that applicant perceptions, and in particular perceptions of warmth/respect, mediated the relationship between selection expectations and organizational attractiveness and job pursuit intention. No support was found for the moderating role of selection expectations in the perception–attraction relationship. Implications for practice and future research are discussed.     

Stereotype threat: the effect of expectancy on performance

The goal of this study was to investigate to role of expectancy as a potential mediator of performance deficits under stereotype threat. In Experiment 1, female students were assigned to one of three experimental conditions in which they were told that women perform worse (Negative information), equally (Control) or better (Positive information) than men in logical–mathematical tests. Later, they were given a difficult math test and asked to estimate their performance prior to taking the test. Consistent with predictions, participants who considered logical–mathematical abilities important and received negative information regarding the ingroup showed lower levels of expectations and a sharp decrease in performance compared to women in the positive and control conditions. Moreover, expectancy was found to partially mediate the effect of stereotype threat on performance. In Experiment 2, we tested the generalizability of these results to non‐stigmatized groups. A group of Black Americans living in Italy were provided with favorable or unfavorable information about either their minority (Blacks) or their majority (Americans) ingroup. Consistent with predictions, participants both in the minority and in the majority condition had lower expectations and under‐performed after negative information about the ingroup. However, the level of expectancy was found to mediate the decrease in performance for participants in the Black but not in the American condition. In the discussion of these results it is suggested that, although comparable performance deficits are found for minority and majority members, the underlying processes may be different. Copyright © 2002 John Wiley & Sons, Ltd.     

Choice‐making,Expectations, and Treatment Positivity: How and When Choosing Shapes Aversive Experiences

Every day we use products and treatments with unknown but expected effects, such as using medication to manage pain. In many cases, we have a choice over which products or treatments to use; however, in other cases, people choose for us or choices are unavailable. Does choosing (versus not choosing) have implications for how a product or treatment is experienced? The current experiments examined the role of choice‐making in facilitating so‐called expectation assimilation effects—or situations in which a person's experiences (e.g., discomfort and pain) are evaluated in a manner consistent with their expectations. In Experiment 1, participants were initially exposed to a baseline set of aversive stimuli (i.e., sounds). Next, some participants were given expectations for two “treatments” (i.e., changes in screen display) that could ostensibly reduce discomfort. Critically, participants were either given a choice or not about which of the two treatments they preferred. Participants in a control condition were not provided with treatment expectations. Results revealed that discomfort experiences assimilated to expectations only when participants were provided with choice. Experiment 2 replicated this finding and provided evidence against the idea that demand characteristics and choice‐making unrelated to the core task (i.e., choices without associated expectations) could account for the results. Further, Experiment 2 showed that choosing reduced discomfort because of increased positivity about the treatment. Results are discussed in the context of extant research on choice‐making and expectation effects. Copyright © 2013 John Wiley & Sons, Ltd.     

Three predictions of the economic concept of unit price in a choice context

Economic theory makes three predictions about consumption and response output in a choice situation: (a) When plotted on logarithmic coordinates, total consumption (i.e., summed across concurrent sources of reinforcement) should be a positively decelerating function, and total response output should be a bitonic function of unit price increases; (b) total consumption and response output should be determined by the value of the unit price ratio, independent of its cost and benefit components; and (c) when a reinforcer is available at the same unit price across all sources of reinforcement, consumption should be equal between these sources. These predictions were assessed in human cigarette smokers who earned cigarette puffs in a two-choice situation at a range of unit prices. In some sessions, smokers chose between different amounts of puffs, both available at identical unit prices. Individual subjects' data supported the first two predictions but failed to support the third. Instead, at low unit prices, the relatively larger reinforcer (and larger response requirement) was preferred, whereas at high unit prices, the smaller reinforcer (and smaller response requirement) was preferred. An expansion of unit price is proposed in which handling costs and the discounted value of reinforcers available according to ratio schedules are incorporated.     

Reviews,expectations, and the experience of stories

ABSTRACT

Theory suggests that information encountered prior to a story affects the actual experience of the story due to elicited expectations. In two experiments (N = 100; N = 167) short movies that were introduced with a positive review yielded higher transportation scores than the same movies introduced with a more negative (or neutral) review. Mediation analyses indicate that the reviews had an influence on recipients’ expectations, which in turn predicted the experience of the movie. Using the more fine-grained narrative engagement scale, we found evidence for a consistent effect on narrative presence, whereas the influence on emotional engagement, narrative understanding, and attentional focus varied between experiments. Moderation analyses (moderated mediation) showed that recipient’s opinion seeking and need for cognitive closure were unrelated to the influence of reviews on expectations and the link between expectations and narrative experience. Our findings add to the theory of story processing and they are of practical relevance for everyone who intends to influence recipients’ experience of narrative worlds.     

The role of storytelling in advertising: Consumer emotion,narrative engagement level,and word‐of‐mouth intention

This experimental study with a national online sample (n = 300) tested the effects of storytelling in radio advertisements on participants' positive emotional responses and intentions to share information about the product, depending on audiences' narrative engagement level. Treatments included a commercial for a fictitious brand of luggage using a story told by the founder of the company, another version of the same commercial manipulated so the speaker was a customer of the company, and a control stimulus consisting only of information about the product. Results showed that narrative transportation and narrative preference are positively associated with favorable responses toward ad. Stories elicited more favorable emotional responses and had some effect on participants' intention to share information about the product by word‐of‐mouth. This was especially true among participants hearing the founder's story. Results support previous assumptions about the power of storytelling in advertising, including distinctions regarding the identity of the speaker (founder vs. customer).     

Category size and judgments of variability: The effects of seeing the trees in the forest1

Abstract: Competing predictions about the effects of category size on judgments of category variability were examined in two studies involving the presentation of exemplars of two artificial social groups. In contrast to predictions of some exemplar-based models, Experiment 1 demonstrated that a numerically smaller group was perceived to be more variable than a larger group on the standard deviation measure of frequency distribution estimates. The result was interpreted to be an effect of differential information load. Experiment 2 revealed that variability judgments were influenced by prior expectations about the central tendencies as well as by practice in retrieving information about category exemplars. When frequency distribution estimates were made subsequent to abstract tasks, expectations about the numerical majority reduced perceived variability, while this influence was mitigated when memory measures preceded the frequency estimates.     

Monitoring of comprehension: The role of text difficulty in metamemory for narrative and expository text

The effect of text difficulty on metamemory for narrative and expository text was investigated. In Experiment 1, we found an interaction between type of text and type of question (thematic or detailed). For readers of narrative texts, correlations between predicted and actual performance were highest for detailed questions, but this pattern was reversed for readers of expository texts. Next, text difficulty was explored as a possible factor affecting metamemory accuracy. In Experiments 2 and 3, metamemory accuracy was a nonmonotonic function of text difficulty. Subjects made remarkably accurate predictions of future performance (meanG > .6) for both narrative and expository texts that were of intermediate difficulty (approximately a 12th-grade reading level). We propose anoptimum effort hypothesis, predicting greatest metamemory accuracy when the texts are of intermediate difficulty.     

A Model of Financial Incentive Effects in Decision Making

This paper proposes a model of the mediating processes whereby performance-contingent financial incentives influence decision quality and provides empirical evidence relevant to assessing the model. We hypothesize that performance-contingent incentives impact both cognitions and emotions, and that these cognitive and affective changes mediate the relationship between incentives and decision quality. To test these hypotheses, 84 undergraduate students were randomly assigned to conditions in which financial incentives were either performance contingent or randomly distributed. Participants used software that collected data on their information processing behavior to make choices from multiattribute choice information displays. After completing their choices, participants′ level of negative affect was assessed. Consistent with the predictions of the model, participants offered performance-contingent incentives took longer to choose, examined more information, had higher levels of negative affect, and used decision strategies that led to more accurate choices than participants offered randomly distributed incentives. Path analyses using structural equations modeling indicated that the changes in information processing behavior induced by financial incentives increased decision quality, while the increased levels of negative affect associated with incentives decreased decision quality. The paper concludes that identifying and measuring mediating variables is an important component of a research agenda designed to generate predictive theory of the relationship between financial incentives and decision quality.     

Gist-based memory for prices and “better buys” in younger and older adults

Ageing typically leads to various memory deficits which results in older adults’ tendency to remember more general information and rely on gist memory. The current study examined if younger and older adults could remember which of two comparable grocery items (e.g., two similar but different jams) was paired with a lower price (the “better buy”). Participants studied lists of grocery items and their prices, in which the two items in each category were presented consecutively (Experiment 1), or separated by intervening items (Experiment 2). At test, participants were asked to identify the “better buy” and recall the price of both items. There were negligible age-related differences for the “better buy” in Experiment 1, but age-related differences were present in Experiment 2 when there were greater memory demands involved in comparing the two items. Together, these findings suggest that when price information of two items can be evaluated and compared within a short period of time, older adults can form stable gist-based memory for prices, but that this is impaired with longer delays. We relate the findings to age-related changes in the use of gist and verbatim memory when remembering prices, as well as the associative deficit account of cognitive ageing.     

Children's “naive psychology”: The use of behavioral and situational information for the prediction of behavior

Two studies are reported that concern children's use of situational and behavioral information to predict the behavior of other persons. It was hypothesized that younger subjects would give more weight to the former and older subjects, more weight to the latter type of information. In Experiment 1, subjects were presented with vignettes relevant to assessing actors' athletic abilities and personality traits (generosity/stinginess) as well as information about related situations. Subjects then made predictions for actors' future behavior in the latter situations. Predictions made by older subjects (8–9 years old) were consistent with the previous behavioral information presented, whereas this was true to a lesser degree for predictions made by younger subjects (5–6 years old). In Experiment 2, 5- to 6-year-olds again made behavioral predictions, with the information supplied by the vignettes being either visually salient or not. The results replicated the findings of Experiment 1 and partially supported the idea that young children's tendency not to relate past to future behavior may best be characterized as a production deficiency. However, they also suggest that although young children may indeed show a tendency to see behavior as under external control, they do not automatically accord information about the situation special status when making social judgments. In addition, it seems that conflicting results in the literature may result from the sensitivity to contextual factors of younger children's predictions.     

Labor supply and consumption of food in a closed economy under a range of fixed- and random-ratio schedules: tests of unit price

The behavioral economic concept of unit price predicts that consumption and response output (labor supply) are determined by the unit price at which a good is available regardless of the value of the cost and benefit components of the unit price ratio. Experiment 1 assessed 4 pigeons' consumption and response output at a range of unit prices. In one condition, food was available according to a range of fixed-ratio schedules, whereas in the other condition, food was available according to a range of random-ratio schedules. Consistent with unit price predictions, consumption and response output were approximately equivalent across schedule types within the lower range of unit prices. However, at Unit Prices 64 (ratio value = 192) and greater, considerably more consumption and response output were observed in the random-ratio condition. Experiment 2 replicated these findings with 4 pigeons using the rapid demand curve assay procedure that is commonly used in the behavioral economics literature. Findings are integrated with two mathematical models of behavior under variable reinforcer delays.     

Older adults show a self-reference effect for narrative information

The self-reference effect (SRE), enhanced memory for information encoded through self-related processing, has been established in younger and older adults using single trait adjective words. We sought to examine the generality of this phenomenon by studying narrative information in these populations. Additionally, we investigated retrieval experience at recognition and whether valence of stimuli influences memory differently in young and older adults. Participants encoded trait adjectives and narratives in self-reference, semantic, or structural processing conditions, followed by tests of recall and recognition. Experiment 1 revealed an SRE for trait adjective recognition and narrative cued recall in both age groups, although the existence of an SRE for narrative recognition was unclear due to ceiling effects. Experiment 2 revealed an SRE on an adapted test of narrative recognition. Self-referential encoding was shown to enhance recollection for both trait adjectives and narrative material in Experiment 1, whereas similar estimates of recollection for self-reference and semantic conditions were found in Experiment 2. Valence effects were inconsistent but generally similar in young and older adults when they were found. Results demonstrate that the self-reference technique extends to narrative information in young and older adults and may provide a valuable intervention tool for those experiencing age-related memory decline.     

The Role of Brand Familiarity in Internal Reference Price Formation: An Accessibility-Diagnosticity Perspective

Very little research focused on the process by which internal reference prices are formed and used by consumers making price judgments. The accessibility-diagnosticity model is proposed as a parsimonious theoretical framework that resolves some conflicts in prior research and provides a foundation for future research on internal reference prices. This model is used to evaluate the role of brand familiarity and involvement on the formation and use of internal reference price standards. Empirical results show that (1) involvement is a better predictor of confidence in internal reference prices than brand familiarity, and (2) in forming internal reference price estimates, the offering price is discounted more for unfamiliar brands than familiar brands, but only when involvement is low. When involvement is high, the effect of brand familiarity on reference price estimates disappears. Implications for future research on internal reference price effects and for promotion practice are discussed.