Money Imbued With Essence: How We Preserve,Invest, and Spend Inherited Money

The unique nature of inherited money is reflected in financial decisions concerning such bequests. A legacy originates in somber circumstances and bears the distinctive characteristics of the deceased. In four experiments and a survey among inheritors we found that people tended to preserve the inheritance; participants were reluctant to spend the legacy on hedonic goods or risk it by investing in the stock market. Inheritors with a close relationship with the deceased were more likely to seek uses congenial to the personality and the values of the departed. The results are discussed in terms of magical thinking and coping with bereavement.     

Reasonable reasons for waiting

Recent decision‐making research claims to establish that, in violation of Savage's normative sure‐thing principle, individuals often wait to acquire noninstrumental information and subsequently base their decisions upon this information. The current research suggests that characterizing individuals as pursuing noninstrumental or useless information may be overstated. Through a series of experiments we establish, first, that many people choose to wait, even when waiting provides no additional information at all. Second, the longer people are allowed to wait before having to decide, the more people prefer to wait rather than decide immediately. Third, those individuals who choose to wait are the ones less confident about committing themselves to a decision. For them, the benefit from waiting may be especially valuable by allowing them to come to terms with a less‐than‐ideal decision. Copyright © 2003 John Wiley & Sons, Ltd.     

The Lingering Effects of Our Past Experiences: The Sunk‐Cost Fallacy and the Inaction‐Inertia Effect

The effect of past experiences and actions in shaping current perceptions, emotions, decisions and goals is widely recognized in the psychological literature. When it comes to economic decisions, however, these influences are sometimes seen as impediments to rational decision‐making. In an attempt to explore the enduring consequences of the past, we present, compare, and discuss two familiar behavioral phenomena: The sunk‐cost effect, which refers to situations where continued actions are fueled by past investments, and the inaction‐inertia effect, in which continued inaction is triggered by the shadows of missed opportunities. Although one process elicits continued action and the other continued inaction, we show that there is a great deal of similarity in the psychological underpinnings of these effects, and argue that respecting sunk costs and avoiding actions that are associated with forgone opportunities are not necessarily unreasonable, or maladaptive behaviors.     

Insurance, risk, and magical thinking

The possession of an insurance policy may not only affect the severity of a potential loss but also its perceived probability. Intuitively, people may feel that if they are insured nothing bad is likely to happen, but if they do not have insurance they are at greater peril. In Experiment 1, respondents who were reminded of their medical insurance felt they were less likely to suffer health problems in the future compared to people who were not reminded of their medical insurance. In Experiment 2a, participants who were unable to purchase travel insurance judged the probability of travel-related calamities higher compared to those who were insured. These results were replicated in Experiment 3a in a simulation of car accident insurance. The findings are explained in terms of intuitive magical thinking, specifically, the negative affective consequences of "tempting fate" and the sense of safety afforded by the notion of "being covered."     

When bonuses backfire: an inaction inertia analysis of procrastination induced by a missed opportunity

An inaction inertia analysis of procrastination was used to generate the prediction that using bonuses to encourage early task completion will have two opposing effects, encouraging early task completion by some but also inducing procrastination for those who miss the bonus. Study 1 showed that the addition of bonuses for early completion produced both of these effects and also led to overall task completion rates that were either equal to (large bonus) or actually less than (medium and small bonuses) those obtained by simply establishing a completion deadline with no bonus. In Study 2, a lottery methodology was used to manipulate the size of a missed bonus for all participants. Even under these conditions of reduced personal responsibility the larger missed bonus led to increased procrastination as predicted by the inaction inertia analysis. Possible mediating processes based on anticipated regret and perceived fairness were discussed. Copyright © 2007 John Wiley & Sons, Ltd.     

Inaction Inertia in the Stock Market1

Based on the inaction inertia effect, it was hypothesized that investors who missed an opportunity to leave a “bear market” will be less likely to sell the stock at a later opportunity when facing a grave loss. Participants in a stock‐market computer game were given an opportunity to sell their stock for a moderate gain. Having missed this initial opportunity and now facing a grave loss, these participants were less likely to sell their stock compared to participants whose potential loss was not as grave, or compared to participants facing the same magnitude of loss who had no previous opportunity to leave the market. Analysis of the time spent by participants on reading relevant information concerning the stock market suggests that this tendency toward continued inaction was not the result of careful deliberation over market trends. The results are discussed in terms of counterfac‐tual thinking and anticipated regret.     

Embracing Chance Tactically: A Different Perspective on Risk Taking

Although they value certainty, people are willing to take risks to avoid losses. Consequently, they are risk‐seeking in the domain of losses but risk‐avoidant in the domain of gains. This behavior, frequently demonstrated in framing experiments, is traditionally explained in terms of prospect theory. We suggest a different account whereby involving chance in one's decisions may serve a strategic impression‐formation function. In the domain of losses actors may embrace chance to distance themselves from the outcomes and deflect possible blame. Given potential gains, however, actors may avoid uncertainty to enhance their association with valued outcomes. We test this idea by manipulating the level of actors' personal responsibility for the decision outcomes. The results of four studies consistently showed that when personal responsibility is high, the original framing effect is replicated (i.e., greater risk‐taking when choices are framed in terms of losses rather than gains). However, when because of assigned role or decision circumstances, actors experience low personal responsibility for the outcomes, and the classic framing effect is eliminated. Copyright © 2016 John Wiley & Sons, Ltd.     

The Lost E-Mail Technique: Use of an Implicit Measure to Assess Discriminatory Attitudes Toward Two Minority Groups in Israel

The effectiveness of the "lost e-mail technique" (LET) as an unobtrusive attitude measure was successfully demonstrated in 2 studies. In Study 1, we found that Israeli students were more likely to reply to a similar other than to a minority group member (an Israeli-Arab or an immigrant from the former Soviet Union). In Study 2, LET was administered to professors and administrators, and its effectiveness was compared to a more traditional self-report measure. Although professors showed less discrimination on the self-report measure than did administrators, they were nevertheless discriminative in their responses to lost e-mails. These results suggest that professors are not necessarily less prejudiced, but probably are better able to detect attitude probes and more motivated to appear unbiased.     

Inaction inertia

Inaction inertia occurs when bypassing an initial action opportunity has the effect of decreasing the likelihood that subsequent similar action opportunities will be taken. This overview of the inaction inertia literature demonstrates the impact of inaction inertia on decision making. Based on research on the causes of inaction inertia, we show that it is a multi-determined phenomenon, explained by both valuation and regret considerations. Moreover, we demonstrate how a sour grapes explanation of inaction inertia might integrate these two accounts. Furthermore, we explain when inaction inertia is most likely to occur and how it can be prevented. We conclude that the inaction inertia literature does not only add to our understanding of this intriguing phenomenon, but also contributes to related social psychological phenomena, such as the sunk cost effect, sequential decision making, decision avoidance (e.g., choice deferral, status quo bias, decisional conflict), and procrastination.     

Retroactive pessimism: a different kind of hindsight bias

In an attempt to regulate disappointments people may sometimes change their perceptions of the events leading to an undesirable outcome so that in retrospect this outcome seems almost inevitable. This retroactive pessimism effect was demonstrated in three studies. In the first, sports fans rated the likelihood of success for their team and its opponent before and after an important soccer match. Evidence for significant pre‐ and post‐game probability shifts was found for the fans of the defeated team but not for the supporters of the winning opponent. In the second and the third experiments participants responded to a scenario depicting a loss of stipend that was either large or small in value. Participants were expected to show more evidence of retroactive pessimism with greater disappointment. Indeed, estimates of the probability of a more favorable counterfactual outcome were sensitive to the magnitude of the loss with lower estimates of the probability that things could have turned out better in the large stipend condition. The effect was attenuated, however, when the loss was not personal but rather that of a friend (Experiment 2), or when the disappointment was mitigated (Experiment 3). Copyright © 2002 John Wiley & Sons, Ltd.