Reference-dependent sympathy

Natural disasters and other traumatic events often draw a greater charitable response than do ongoing misfortunes, even those that may cause even more widespread misery, such as famine or malaria. Why is the response disproportionate to need? The notion of reference dependence critical to Prospect Theory (Kahneman & Tversky, 1979) maintains that self-utility, or benefit to self, is not absolute level of wealth but rather gain or loss relative to a reference point. Four studies show that sympathy (Study 1), dictator offers (Study 2), and judgments of deservingness (Study 3a) are reference-dependent: people respond greater to victims of loss than to victims of chronic conditions. This tendency goes away when people evaluate victims in comparison (Study 3b) and when evaluating affect-poor “statistical victims”, as compared to affect-rich “identifiable victims” (Study 4). Together, these results shed light on seemingly irrational patterns of humanitarian aid.     

The asymmetric connection between money and material vs. experiential purchases

We examined the relationship between having a monetary mindset and the pursuit of material goods over experiences and found that people tend to think of their material purchases more in monetary terms than their experiential purchases. Purchase price correlated more highly with participants’ satisfaction with their material goods than their experiences (Study 1) and participants reported that the amount spent on significant components of a purchase (Study 2) would have more impact on their satisfaction with material goods than with experiences, as would a change in purchase price (Study 3). When the same purchase (a 3D TV) was framed in material terms (vs. experiential terms), participants reported that a price change would have a greater impact on their satisfaction. These findings suggest experiences suffer less than material possessions from the extrinsic psychology that comes with thinking about purchases in monetary terms.     

经验回顾评价中峰-终定律的检验

通过两个实验对经验回顾评价的峰终定律进行检验。实验1借鉴Fredrickson和Kahneman(1993)的实验范式,选取积极和消极视频各6个,要求40名中国大学生边看边评价,看完后给出回顾评价。实验2采用现场研究的方法,要求72名大学生,在黄金周假期中每天晚上评价当天的快乐程度,并分别在假期刚结束后,结束后三周和七周三个时间水平上回顾整个黄金周的快乐程度。结论:短时间内经验回顾评价符合峰-终定律,而长时间内经验回顾评价不符合峰-终定律。     

Hierarchical Bayesian parameter estimation for cumulative prospect theory

Cumulative prospect theory (CPT Tversky & Kahneman, 1992) has provided one of the most influential accounts of how people make decisions under risk. CPT is a formal model with parameters that quantify psychological processes such as loss aversion, subjective values of gains and losses, and subjective probabilities. In practical applications of CPT, the model’s parameters are usually estimated using a single-participant maximum likelihood approach. The present study shows the advantages of an alternative, hierarchical Bayesian parameter estimation procedure. Performance of the procedure is illustrated with a parameter recovery study and application to a real data set. The work reveals that without particular constraints on the parameter space, CPT can produce loss aversion without the parameter that has traditionally been associated with loss aversion. In general, the results illustrate that inferences about people’s decision processes can crucially depend on the method used to estimate model parameters.     

When does duration matter in judgment and decision making?

Research on sequences of outcomes shows that people care about features of an experience, such as improvement or deterioration over time, and peak and end levels, which the discounted utility model (DU) assumes they do not care about. In contrast to the finding that some attributes are weighted more than DU predicts, Kahneman and coauthors have proposed that there is one feature of sequences that DU predicts people should care about but that people in fact ignore or underweight: duration. In this article, the authors extend this line of research by investigating the role of conversational norms (H. P. Grice, 1975), and scale-norming (D. Kahneman & T. D. Miller, 1986). The impact of these 2 factors are examined in 4 parallel studies that manipulate these factors orthogonally. The major finding is that response modes that reduce reliance on conversational norms or standard of comparison also increase the attention that participants pay to duration.     

Coloring Only a Single Letter Does Not Eliminate Color-Word Interference in a Vocal-Response Stroop Task: Automaticity Revealed

The presence of an interference effect in naming the print color of color words (J. R. Stroop, 1935) suggests that responses associated with the irrelevant-word dimension of the display are activated involuntarily. In the present study, the author examined the conditions under which coloring a single letter in a word reduced interference in vocal responding (D. Kahneman & A. Henik, 1981) or eliminated it in manual responding (D. Besner, J. A. Stolz, & C. Boutilier, 1997). In Experiment 1, color-word interference was significant under vocal responding for the Besner et al. displays. In Experiment 2, the author replicated the Kahneman and Henik effect with the Besner et al. stimuli. The results of Experiment 3 showed that semantic effects are not eliminated by coloring only a single letter. Coloring a single letter does not prevent the activation of the irrelevant-word dimension of the colored color word.     

Seeing is believing: Priors,trust, and base rate neglect

Kahneman and Tversky (1973) described an effect they called ‘insensitivity to prior probability of outcomes’, later dubbed base rate neglect, which describes people’s tendency to underweight prior information in favor of new data. As probability theory requires that prior probabilities be taken into account, via Bayes’ theorem, the fact that most people fail to do so has been taken as evidence of human irrationality and, by others, of a mismatch between our cognitive processes and the questions being asked (Cosmides & Tooby, 1996). In contrast to both views, we suggest that simplistic Bayesian updating using base rates is not necessarily rational. To that end, we present experiments in which base rate neglect is often the right strategy, and show that people’s base rate usage varies systematically as a function of the extent to which the data that make up a base rate are perceived as trustworthy.     

The impact of past behaviour normality on regret: replication and extension of three experiments of the exceptionality effect

Norm theory (Kahneman, D., & Miller, D. T. (1986). Norm theory: Comparing reality to its alternatives. Psychological Review, 93, 136–153) described a tendency for people to associate stronger regret with a negative outcome when it is a result of an exception (abnormal behaviour) compared to when it is a result of routine (normal behaviour). In two pre-registered studies, we conducted a replication and extension of three classic experiments on past behaviour exception/routine contrasts (N?=?684). We successfully replicated Kahneman and Miller’s (1986) experiments with the classic hitchhiker-scenario (Part 1) and car accident-scenario (Part 2). In both cases, participants examined negative outcomes and tended to indicate a protagonist who deviated from own past behaviour as more regretful than another who followed routine. Pre-registered extensions also showed effects for ratings of social norms, negative affect, and perceived luck. We did not find support for the Miller, D. T., and McFarland, C. [(1986). Counterfactual thinking and victim compensation: A test of norm theory. Personality and Social Psychology Bulletin, 12, 513–519] experiment robbery scenario (Part 3) using a compensation measure, in that compensation to a victim of a robbery was not significantly different comparing exceptional and routine circumstances. However, a pre-registered extension showed that robbery under exceptional circumstances was perceived as more regretful than robbery under routine circumstances. We discuss implications for current and future research.     

The Hindsight Bias: The Role of the Availability Heuristic and Perceived Risk

The influence of outcome knowledge (Fischhoff, 1975) and the availability heuristic (Tversky & Kahneman, 1974) on judgments of perceived risk was explored here. This study found that subjects were capable of making relatively appropriate probability estimates for disease, accident, and homicide in foresight, but they made relatively biased estimated in hindsight. The results suggest that hindsight information activates the use of the availability heuristic on peoples' probability estimates of certain misfortune.     

Are perceptuo-motor decisions really more optimal than cognitive decisions?

Human high-level cognitive decisions appear sub-optimal (Kahneman and Slovic, 1982, Kahneman and Tversky, 1979). Paradoxically, perceptuo-motor decisions appear optimal, or nearly optimal (Trommershäuser, Maloney, & Landy, 2008). Here, we highlight limitations to the comparison of performance between and within domains. These limitations are illustrated by means of two perceptuo-motor decision-making experiments. The results indicate that participants did not optimize fundamental performance-related factors (precision and time usage), even though standard analyses may have classed participants as ‘optimal’. Moreover, simulations and comparisons across our studies demonstrate that optimality depends on task difficulty. Thus, it seems that a standard model of perceptuo-motor decision-making fails to provide an absolute standard of performance. Importantly, this appears to be a limitation of optimal models of human behaviour in general. This, in conjunction with non-trivial evaluative- and methodological differences, suggests that verdicts favouring perceptuo-motor, or perceptual, systems over higher-level cognitive systems in terms of level of performance are premature.     

Public and Private Values

In this paper, we experimentally examine whether looking at other people's pricing decisions is a type of a decision rule that people over‐apply even when it is not applicable, as in the case of private‐value goods. In Study 1, we find evidence that this is indeed the case—individual valuation of a subjective experience under full information, elicited using incentive compatible mechanism, is highly influenced by values of others. In Study 2, we find that people expect to use this rule to some degree with respect to actual consumption of goods, especially goods with some public value (music), and less so for private‐value goods (noise). However, people expect to use the rule to a very large extent when they are required to express their valuation of a good using a dollar figure (Study 3). These results can shed light on price behavior as rigidities and rents. Copyright © 2015 John Wiley & Sons, Ltd.     

The effects of action,normality, and decision carefulness on anticipated regret: Evidence for a broad mediating role of decision justifiability

Two distinct theoretical views explain the effects of action/inaction and social normality on anticipated regret. Norm theory (Kahneman & Miller, 1986) emphasises the role of decision mutability, the ease with which one can imagine having made a different choice. Decision justification theory (Connolly & Zeelenberg, 2002) highlights the role of decision justifiability, the perception that the choice was made on a defensible basis, supported by convincing arguments or using a thoughtful, comprehensive decision process. The present paper tests several contrasting predictions from the two theoretical approaches in a series of four studies. Study 1 replicated earlier findings showing greater anticipated regret when the chosen option was abnormal than when it was normal, and perceived justifiability mediated the effect. Study 2 showed that anticipated regret was higher for careless than for careful decisions. Study 3 replicated this finding for a sample holding a different social norm towards the focal decision. Finally, Study 4 found that, when decision carefulness, normality and action/inaction were all specified, only the former showed a significant effect on anticipated regret, and the effect was again mediated by perceived justifiability. Decision justification theory thus appears to provide a better account of anticipated regret intensity in this context than does norm theory.     

Pain in the Past and Pleasure in the Future: The Development of Past–Future Preferences for Hedonic Goods

It seems self-evident that people prefer painful experiences to be in the past and pleasurable experiences to lie in the future. Indeed, it has been claimed that, for hedonic goods, this preference is absolute (Sullivan, 2018). Yet very little is known about the extent to which people demonstrate explicit preferences regarding the temporal location of hedonic experiences, about the developmental trajectory of such preferences, and about whether such preferences are impervious to differences in the quantity of envisaged past and future pain or pleasure. We find consistent evidence that, all else being equal, adults and children aged 7 and over prefer pleasure to lie in the future and pain in the past and believe that other people will, too. They also predict that other people will be happier when pleasure is in the future rather than the past but sadder when pain is in the future rather than the past. Younger children have the same temporal preferences as adults for their own painful experiences, but they prefer their pleasure to lie in the past and do not predict that others' levels of happiness or sadness vary dependent on whether experiences lie in the past or the future. However, from the age of 7, temporal preferences were typically abandoned at the earliest opportunity when the quantity of past pain or pleasure was greater than the quantity located in the future. Past–future preferences for hedonic goods emerge early developmentally but are surprisingly flexible.     

Context effects: the proportional difference model and the reflection of preference

The reflection effect (D. Kahneman & A. Tversky, 1979) was investigated using the stochastic model of choice developed by C. Gonzalez-Vallejo (2002). The model assumes that individuals make trade-offs among attribute values by relying on a difference variable. The model also specifies a threshold representing individual proclivities to reach to attribute differences. Two experiments demonstrated that changes in risk attitudes, from a gain to a loss situation, depended on the stimuli as well as on individuals' thresholds. Thresholds were generally lower in losses than in gains, indicating a risk-taking tendency. Thresholds were also lower when participants were endowed with greater savings. Model testing revealed better fits for the stochastic model than cumulative prospect theory (A. Tversky &. D. Kahneman, 1992).     

The effect of increasing the memorability of category instances on estimates of category size

According to Tversky and Kahneman’s (1973) availability heuristic, people sometimes make use of the ease with which instances are retrieved when they have to estimate proportions or frequencies. One implication of this availability heuristic is that any factor that affects memorability of instances from a category should also affect the estimated category size. In one of their experiments, Tversky and Kahneman found that, after being presented with a list of names, people judged the more famous names to be more frequent. Similarly, recall was found to be greater for the more famous names. Three experiments that used Tversky and Kahneman’s paradigm are reported. Repeating nonfamous names resulted in their increased recallability and a corresponding increase in estimates of their frequency (Experiments 1 and 3). Making nonfamous names more salient (Experiment 3) also had parallel effects on recallability and frequency estimates, indicating that different memory manipulations affected availability in a similar fashion. Furthermore, reliance on the heuristic was not changed as a function of prior knowledge (Experiment 2) or practice (Experiment 3)     

Reference point adaptation: Tests in the domain of security trading

According to prospect theory [Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk, Econometrica, 47, 263–292], gains and losses are measured from a reference point. We attempted to ascertain to what extent the reference point shifts following gains or losses. In questionnaire studies, we asked subjects what stock price today will generate the same utility as a previous change in a stock price. From participants’ responses, we calculated the magnitude of reference point adaptation, which was significantly greater following a gain than following a loss of equivalent size. We also found the asymmetric adaptation of gains and losses persisted when a stock was included within a portfolio rather than being considered individually. In studies using financial incentives within the BDM procedure [Becker, G. M., DeGroot, M. H., & Marschak, J. (1964). Measuring utility by a single-response sequential method. Behavioral Science, 9(3), 226–232], we again noted faster adaptation of the reference point to gains than losses. We related our findings to several aspects of asset pricing and investor behavior.     

Bad riddance or good rubbish? Ownership and not loss aversion causes the endowment effect

People typically demand more to relinquish the goods they own than they would be willing to pay to acquire those goods if they did not already own them (the endowment effect). The standard economic explanation of this phenomenon is that people expect the pain of relinquishing a good to be greater than the pleasure of acquiring it (the loss aversion account). The standard psychological explanation is that people are reluctant to relinquish the goods they own simply because they associate those goods with themselves and not because they expect relinquishing them to be especially painful (the ownership account). Because sellers are usually owners, loss aversion and ownership have been confounded in previous studies of the endowment effect. In two experiments that deconfounded them, ownership produced an endowment effect but loss aversion did not. In Experiment 1, buyers were willing to pay just as much for a coffee mug as sellers demanded if the buyers already happened to own an identical mug. In Experiment 2, buyers’ brokers and sellers’ brokers agreed on the price of a mug, but both brokers traded at higher prices when they happened to own mugs that were identical to the ones they were trading. In short, the endowment effect disappeared when buyers were owners and when sellers were not, suggesting that ownership and not loss aversion causes the endowment effect in the standard experimental paradigm.     

Power of the desired self: Influence of induced perceptions of the self on reasoning

This research shows that the motivation to posses a desired characteristic (or to avoid an undesired one) results in self-perceptions that guide people’s use of base rate in the Lawyer–Engineer problem (Kahneman & Tversky, 1973). In four studies, participants induced to believe (or recall, Exp. 2) that a rational cognitive style is success-conducive (or an intuitive cognitive style failure-conducive) subsequently viewed themselves as more rational and relied more on base rate in their probability estimates than those induced to believe that a rational cognitive style is failure-conducive (or an intuitive cognitive style success-conducive). These findings show that the desired self had an influence on reasoning in the self-unrelated lawyer–engineer task, since the use of base rates was mediated by changes in participants’ perceptions of their own rationality. These findings therefore show that the desired self, through the working self-concept that it entails, constitutes another factor influencing people’s use of distinct modes of reasoning.     

Commentary on Ted Ruffman’s “Belief or not belief: …”

I applaud Ruffman for cautioning us against interpreting early sensitivity to others’ beliefs as evidence for an innate theory of mind and for making room for learning. In turn, however, I caution against his claim that all infants need is to understand that people act depending on what they perceive. Instead, infants may keep experiential records (Perner & Roessler, 2010) for other people or records of what they have registered (Apperly & Butterfill, 2009), which makes it less obvious that all required knowledge can be acquired by statistical learning. As a general criticism I remonstrate with current theory of mind research on its lack of concern that we understand people as acting for reasons which goes beyond detecting lawful regularities in behaviour.