True Overconfidence in Interval Estimates: Evidence Based on a New Measure of Miscalibration

Overconfidence is often regarded as one of the most prevalent judgment biases. Several studies show that overconfidence can lead to suboptimal decisions of investors, managers, or politicians. Recent research, however, questions whether overconfidence should be regarded as a bias and shows that standard “overconfidence” findings can easily be explained by different degrees of knowledge of agents plus a random error in predictions. We contribute to the current literature and ongoing research by extensively analyzing interval estimates for knowledge questions, for real financial time series, and for artificially generated charts. We thereby suggest a new method to measure overconfidence in interval estimates, which is based on the implied probability mass behind a stated prediction interval. We document overconfidence patterns, which are difficult to reconcile with rationality of agents and which cannot be explained by differences in knowledge as differences in knowledge do not exist in our task. Furthermore, we show that overconfidence measures are reliable in the sense that there exist stable individual differences in the degree of overconfidence in interval estimates, thereby testing an important assumption of behavioral economics and behavioral finance models: stable individual differences in the degree of overconfidence across people. We do this in a “field experiment,” for different levels of expertise of subjects (students on the one hand and professional traders and investment bankers on the other hand), over time, by using different miscalibration metrics, and for tasks that avoid common weaknesses such as a non‐representative selection of trick questions. Copyright © 2012 John Wiley & Sons, Ltd.     

A Comparison of Modalities in Modeling

Organizational display rules (e.g., “service with a smile”) have had mixed relationships with employee emotional labor—either in the form of “bad faith” surface acting (suppressing or faking expressions) or “good faith” deep acting (modifying inner feelings). We draw on the motivational perspective of emotional labor to argue that individual differences in customer orientation will directly and indirectly relate to these acting strategies in response to display rules. With a survey of more than 500 working adults in customer contact positions, and controlling for affective disposition, we find that customer orientation directly increases “good faith” acting while it moderates the relationship of display rules with “bad faith” acting.     

Hypothesis Formulation,Model Interpretation,and Model Equivalence: Implications of a Mereological Causal Interpretation of Structural Equation Models

One can distinguish statistical models used in causal modeling from the causal interpretations that align them with substantive hypotheses. Causal modeling typically assumes an efficient causal interpretation of the statistical model. Causal modeling can also make use of mereological causal interpretations in which the state of the parts determines the state of the whole. This interpretation shares several properties with efficient causal interpretations but also differs in terms of other important properties. The availability of alternative causal interpretations of the same statistical models has implications for hypothesis specification, research design, causal inference, data analysis, and the interpretation of research results.     

Neural correlates of stimulus response and stimulus outcome shifting in healthy participants and MS patients

Introduction

Adaptation to changing situations can be mediated by two strategies: (1) Evaluation of a response and (2) Evaluation of outcome values in relation to objects. Previous studies indicate that response shifting is associated with a network comprising the left frontal cortex and parietal cortex connected by the superior longitudinal fascicle, whereas outcome evaluation is associated with a network consisting of the orbitofrontal cortex, amygdala and uncinate fascicle. However, these studies rarely compared both kinds of adaptation directly and existing fMRI studies with healthy subjects are not informative about the role of the two fiber systems.

Methods

We analyzed stimulus response shifting and stimulus outcome shifting in two studies, one fMRI-study on healthy participants and one study on patients with MS involving structural MRI (Diffusion Tensor Imaging, Voxel Based Morphometry, Ventricular volumetry). Two tasks were used, identical in presentation but different in instruction, controlling for effects of lower level processing. In the SRS task, participants had to perform a “Go” or “NoGo” response depending on a stimulus change: if the stimulus remained the same, they had to continue with the former type of response, if it changed they had to adapt their response pattern. In the SOS task they had to perform a “Go” response only if the presented stimulus corresponded to that of an internal alternating series.

Results

fMRI findings showed that SRS is related to a bilateral parietal-premotor network. In the left hemisphere the prefrontal cortex was also involved. SOS was lateralized to the right hemisphere, particularly to the anterior temporal pole and amygdala, and the inferior parietal cortex. MS patients impaired on this task suffered from lesions in the right uncinate fascicle and showed an enlarged right frontal lateral ventricle.

Conclusion

With physically identical tasks, a functional neuronal segregation can be demonstrated for stimulus response shifting (bilateral activations with a focus in the left prefrontal cortex) and stimulus outcome shifting (right anterior temporal lobe and right supramarginal gyrus).     

Does the level of physical exercise affect physiological and psychological responses to psychosocial stress in women?

ObjectivesTo test the Cross-Stressor Adaptation hypothesis for females by examining whether physically exercising young women show reduced physiological and psychological stress responses to a psychosocial stressor.DesignForty-seven healthy young women with different levels of physical exercise (17 not or rarely exercising, 15 moderately exercising, 15 vigorously exercising) underwent the Trier Social Stress Test for Groups (TSST-G); physiological and psychological stress responses during and after stress induction were compared.MethodANOVAs with repeated measures were used to compare stress reactivity and recovery between the three exercise groups. Heart rate and salivary free cortisol were used as indicators of physiological stress response, state anxiety, mood, and calmness as indicators of psychological stress response. For physiological stress reactivity, the areas under the curve with respect to the ground (AUC_G) were compared.ResultsIn all three exercise groups, experimentally induced stress led to a significant rise in heart rate, cortisol, and state anxiety; mood and calmness significantly decreased. As hypothesized, the pattern of the physiological stress response differed for the three exercise groups, with lowered reactivity in the more active groups. However, the psychological stress response partly went in the opposite direction: Exercising participants reported a higher mood decrease, suggesting a dissociation of the physiological and psychological stress responses.ConclusionsThe findings suggest that the Cross-Stressor Adaptation hypothesis is also valid for young women; however, only with regard to physiological stress response. The unexpected findings for psychological stress response need to be further explored in experimental studies.     

A Story About a Stupid Person Can Make You Act Stupid (or Smart): Behavioral Assimilation (and Contrast) as Narrative Impact

Media priming refers to the residual, often unintended consequences of media use on subsequent perceptions, judgments, and behavior. Previous research showed that the media can prime behavior that is in line with the primed traits or concepts (assimilation). However, assimilation is expected to be less likely and priming may even yield reverse effects (contrast) when recipients have a dissimilarity testing mindset. Based on previous research on narrative comprehension and experience as well as research on media priming, a short-term influence of stories on cognitive performance is predicted. In an experimental study, participants (N = 81) read a story about a stupid soccer hooligan. As expected, participants who read the story without a special processing instruction performed worse in a knowledge test than a control group who read an unrelated text. Participants with a reading goal instruction to find dissimilarities between the self and the main protagonist performed better than participants who read the story without this instruction. The effects of reported self-activation and story length were further considered. Future inquiries with narratives as primes and contrast effects in media effects research are discussed.     

Artifacts as Conventional Objects

What underlies children's understanding of artifacts? Studies suggest that beginning around age 7, people reason about artifacts in terms of the inventor's purpose—termed the design stance. Our two studies emphasize another component of artifact understanding—the cultural nature of artifacts—by demonstrating people's sensitivity to an artifact's conventional use. In past studies participants were shown a novel artifact and told that someone invented it for a certain purpose and that later another person used it for a different purpose. Here we demonstrate that if participants are told that many people, as opposed to just one person, use an artifact differently, 5-year-olds, 7-year-olds, and adults do not strictly judge the artifact in terms of its invented purpose. We conclude that people's conceptions of artifacts are more complex and dynamic than has been suggested.     

Limitations of perceptual segmentation on contextual cueing in visual search

In visual search, detection of a target in a repeated layout is faster than search within a novel arrangement, demonstrating that contextual invariances can implicitly guide attention to the target location (“contextual cueing”; Chun & Jiang, 1998). Here, we investigated how display segmentation processes influence contextual cueing. Seven experiments showed that grouping by colour and by size can considerably reduce contextual cueing. However, selectively attending to a relevant subgroup of items (that contains the target) preserved context-based learning effects. Finally, the reduction of contextual cueing by means of grouping affected both the latent learning and the recall of display layouts. In sum, all experiments show an influence of grouping on contextual cueing. This influence is larger for variations of spatial (as compared to surface) features and is consistent with the view that learning of contextual relations critically interferes with processes that segment a display into segregated groups of items.     

Eye movements across viewpoint changes in multiple object tracking

Observers can visually track multiple objects that move independently even if the scene containing the moving objects is rotated in a smooth way. Abrupt scene rotations yield tracking more difficult but not impossible. For nonrotated, stable dynamic displays, the strategy of looking at the targets' centroid has been shown to be of importance for visual tracking. But which factors determine successful visual tracking in a nonstable dynamic display? We report two eye tracking experiments that present evidence for centroid looking. Across abrupt viewpoint changes, gaze on the centroid is more stable than gaze on targets indicating a process of realigning targets as a group. Further, we show that the relative importance of centroid looking increases with object speed.