Wednesday, September 21, 2016

Sunstein (2016) on (Mild) Preferences for System 2 Nudges

Cass R. Sunstein, “People Prefer System 2 Nudges (Kind Of),” July 19, 2016. Duke Law Journal, Vol. 66, 2016. [The outline here is based on an earlier version, that of February 19, 2016.]

• In Kahneman’s terminology, System 1 is the automatic, intuitive part of our decision making, whereas System 2 represents our more considered (though not necessarily better) thoughts. 

• Some types of nudges, such as graphic labels on cigarette packages or the selection of defaults, tend to be aimed at affecting System 1 responses. Other nudges, such as the provision of better information on nutrition, engage with System 2. System 2 nudges help people “exercise their own agency [p. 5],” that is, make better considered decisions. 

• Sunstein arranges for a survey to be administered to seven groups of Americans, with more than 400 people in each group; they are paid for their participation. 

• The participants are presented with four issues -- savings, smoking, clean energy, water -- and two alternative approaches, one System 1 nudge and one System 2 nudge, for each of the issues. The majority tends to prefer System 2 nudges, but a sizeable minority feels the other way. Democrats seem slightly more likely than Republicans to support System 1 nudges. 

• If told that the System 1 nudge is significantly more effective, about 12% of folks switch to preferring the System 1 nudge; precise quantitative evidence of superior effectiveness does not seem to increase any further the attractiveness of System 1 nudges. When folks are told that System 2 nudges are more effective, that information has no effect on overall preferences between the options.

• Sunstein also explores a second set of three, more ideologically charged issues: voter registration, childhood obesity, and abortion. For voter registration and anti-obesity, a majority favor System 1 nudges. For dissuading abortions, most people prefer System 2 nudges, even when System 1 (show fetus photos) is said to be more effective. 

• Alternatively, some people like System 1 nudges, even when they are told that those nudges are less effective. It seems that when people feel strongly about an issue, they support System 1 nudges that push their side of the issue. 

• Sunstein makes a meta-observation, that perhaps our brain's System 1 likes System 2 nudges, but sometimes System 2 overrides that preference. Note that often System 1 nudges are fairly easy to implement, such as by setting a default, for instance.

Saturday, August 27, 2016

WS on Hot States and Cold States (IV)

If to do were as easy as to know what were good to do, chapels had been churches and poor men's cottages princes' palaces. It is a good divine that follows his own instructions: I can easier teach twenty what were good to be done, than be one of the twenty to follow mine own teaching. The brain may devise laws for the blood, but a hot temper leaps o'er a cold decree: such a hare is madness the youth, to skip o'er the meshes of good counsel the cripple.

(Merchant of Venice, Act 1, Scene 2, lines 206-213)

Friday, August 26, 2016

Sugden (2008) on Incoherent Preferences and Paternalism; or, Let Me See Cake

Robert Sugden, “Why Incoherent Preferences Do Not Justify Paternalism.” Constitutional Political Economy 19(3): 226–248, September 2008.

• Standard economics takes individual preferences as sacred; hence, revealed preferences are respected and interference in individual choices, absent externalities, is disparaged.

• Behavioral economics questions whether choices reflect preferences, and whether preferences are stable, context-independent, and rational; as a result, behavioral economics seems to undermine the pre-disposition against paternalistic interventions.

• From the point of view of behavioral economics, nudges are forms of paternalism that are respectful of the deeper concerns about influencing individual choices that traditional economics reflects. Behavioral researchers sometimes argue that because choices are not context-independent, influencing choice is inevitable, so we might as well be paternalistic about it.

• The incoherent preferences that behavioral economists highlight look like a sort of “corrupted data [p. 229]” from the point of view of a welfare-maximizing planner. But if we take Hayek’s approach, we can dispense with the planner, and note that incoherent preferences provide little bits of information about preferences, and that markets can still use these bits of information in socially productive ways, and perhaps help to form more regular preferences.

• Voluntary exchange and mutual advantage are hallmarks of market exchange. Further, Sugden argues, these features are not compromised by incoherent preferences: for the version of a person who makes the trade, at least, these exchanges are welfare improving. Competitive markets will still exhaust all such mutually advantageous exchanges, even with incoherent preferences.

• Can a planner do better than mutual, voluntary exchange? How can a soft paternalist know that he or she is serving the interests of the nudged individual if preferences are incoherent?

• In the “arranging food in a cafeteria” example, why not task the choice architect with the pursuit of profit maximization? Profit maximization leads to a “customer is always right” bias, which doesn’t seem bad for customers.

• The profit-maximizing cafeteria owner doesn’t care about the coherence of customer preferences, only about the willingness-to-pay of the acting version of actual customers. A person with incoherent preferences nevertheless understands his interests.

• The cafeteria example, as well as others, suffers from the initial set-up, that there is some choice architect (planner) who will give the people what they really want: control is vested in the planner from the start. This hardly captures the crux of the argument against paternalism.

• Which approach, a choice architect aiming to maximize customer well-being, or entrepreneurs wanting to maximize profits, will best serve social welfare? Shouldn’t we, like the profit-maximizing cafeteria owner, privilege the acting self, too?

• Perhaps cafeteria managers don’t so much serve preferences as create them. But how is that a problem? Do people have preferences for fashion designs before they are produced? Doesn’t profit maximization do a good job in this incoherent setting to get desirable designs produced and exchanged, even without knowledge of consumer preferences?

• “…I would rather have my willpower challenged by tempting cakes than license cafeteria managers to compromise on the attractiveness of their products so as to steer me towards the ones that they think best for me [p. 247].”

Monday, August 15, 2016

Bhattacharya, Garber, and Goldhaber-Fiebert (2015) on Exercise Nudges

Jay Bhattacharya, Alan M. Garber, and Jeremy D. Goldhaber-Fiebert, “Nudges in Exercise Commitment Contracts: A Randomized Trial.” NBER Working Paper 21406, July 2015.

• The authors implement a natural field experiment: people who browse their way to looking to sign a contract that requires them to exercise regularly are randomized into one of three conditions. 

• The three conditions differ based upon the default length of the exercise commitment contract; the default (which is easy to override) can be 8 weeks, 12 weeks, or 20 weeks. More than 8,000 people take part in the experiment (unbeknownst to them, it seems), though some of the analysis relates to approximately 3,000 subjects for whom a longer period of data is available. 

• A nudge towards longer contract durations succeeds; that is, a 20-week default setting leads to longer duration actual contracts than do the shorter default terms. More than one-in-five contractors choose to put up monetary stakes – they lose money if they fail to exercise to the terms of the contract – that average $23 per week. 

• Not only does the 20-week nudge result in longer duration contracts, it induces more weeks of exercise – though the average weeks of successful exercise are less than half of the specified durations. 

• About 6% of the sample enters into a second commitment contract after the expiration of their earlier contract. The data suggest that people would be much more likely to sign a second exercise commitment contract if they were placed into a long (more than 18 weeks) initial commitment contract, as if the longer duration helps cement an exercise habit. 

• Following the reporting of their empirical results, the authors develop a parallel theoretical model. The model offers a four-period version of a quasi-hyperbolic utility function; the four periods allow for a pre-contract period and, later, the option of signing a second contract. 

• The subjects are assumed to be present biased and sophisticated about their bias – after all, the subjects are interested in committing to exercise. Exercise in the model is a habit-forming good, but one involving current costs along with future benefits. Without commitment, present-biased people will choose to exercise too little, from the point of view of their own long-run (non-present-biased) preferences. 

• Small changes in the depreciation of exercise “capital” (which underpins the habit-forming nature of exercise) lead to large changes in optimal exercise choices. In contrast, even sizable changes in the degree of present bias have little impact on optimal exercise. 

• The authors offer a definition of a nudge that incorporates asymmetric or libertarian paternalism: a nudge in a given period t cannot decrease the person’s period t utility by very much. (But a nudge surely will decrease that utility, that is, it cannot make the period t person better off.) And though nudges must be small in this sense, they nevertheless can have a large effect on exercise choices, in particular, by helping to promote an exercise habit. A large nudge, however, can lead to so much present exercise that in future periods, exercise is eliminated, as the subject finds it optimal to rest on his or her exercise laurels. 

• Are sophisticated but present-biased people better off with a nudge? By definition, here, the person in the nudged period is not better off. Future selves can be helped or harmed, however – the overall welfare effects of nudges for a heterogeneous population are ambiguous.

Wednesday, August 3, 2016

Gilchrist, Luca, and Malhotra (2016) on Salient Workplace Gifts

Duncan S. Gilchrist, Michael Luca, Deepak Malhotra, “When 3 + 1 > 4: Gift Structure and Reciprocity in the Field.” Management Science, published online in Articles in Advance, January 19, 2016 [pdf of earlier version here]. 

• Previous experiments on whether an unexpected gift leads workers to increase their productivity – as a sort of reciprocal response to the gift – generally have not been able to distinguish between whether any productivity boost is due to the additional payment being a “gift,” and just the fact that the worker is being paid more. Perhaps the usual market price establishes a reference point, and any wage above that point is viewed as a gift, even if it is not framed as one. 

• The authors devise a natural field experiment – the subjects do not know that they are taking part in an experiment – to try to disentangle the effect of a higher wage from the effect of a gift. 

• Workers who have indicated interest are recruited for an online data entry position, one that only lasts four hours with no possibility of continued employment. They are offered randomly assigned wages of either $3 per hour, $4 per hour, or, $3 per hour followed by an unexpected bonus of an additional $1 per hour announced after the job has been accepted. Even the $3 per hour wage, incidentally, is a highly competitive wage offer for these workers; about 230 workers are hired. 

• Workers who receive the wage of $3 plus the $1 per hour gift show a 20% higher productivity compared to either the $4 per hour or $3 per hour workers; the productivity boost is maintained throughout the 4-hour length of the work. There is no statistical difference between the productivity of the $3 per hour and the $4 per hour workers. 

• The authors conclude that what matters for productivity is not just how much you pay, but how the payment is framed. Note that the $4 per hour workers and the $3 per hour plus $1 per hour bonus workers receive identical payments, but the workers who receive some of their pay as a gift are more productive.

Tuesday, July 26, 2016

Coelho do Vale, Pieters, and Zeelenberg (2016) on "The Benefits of Behaving Badly"

Rita Coelho do Vale, Rik Pieters, and Marcel Zeelenberg, “The Benefits of Behaving Badly on Occasion: Successful Regulation by Planned Hedonic Deviations.” Journal of Consumer Psychology 26(1): 17-28, January, 2016.

• Is abstinence or some other zero-tolerance regimen the best approach to avoid succumbing to temptation? The authors argue that planned deviations from the path of righteousness are helpful in reaching long-term goals. 

• Planned lapses, as it were, can bolster one’s motivation to persist in pursuing the long-term goal; improve the emotional experience of the regimen; and, help to sustain willpower. 

• In the absence of planned deviations, any lapse might be interpreted as a failure, and result in complete rejection of the goal (due to its revealed hopelessness). Planned deviations, alternatively, are seen as prizes for progress, not as markers of failure. 

• The studies reported here concern weight loss. The first study (n about 50) takes place at a computer, and involves role-playing a diet. There are two (virtual) diets, each averaging 1500 calories per day. But one diet maintains a limit of 1500 calories day after day, while the second involves 1300 calories/day until the seventh day, when 2700 calories are available. The second part of this experiment has subjects answer questions after opening a box containing snack foods. How many ways can they think of to prevent themselves from falling into temptation? Those who simulate the intermittent diet come up with more distractions; they also feel happier. 

• The second study (n=36) involves actual 14-day diets, one of the straight-striving variety and one of the intermittent type. The subjects keep diaries, and their motivation to continue the diet is tracked. Straight-strivers tend to be more demotivated by deviations from their diet than are the intermittent dieters, and other metrics seem to favor the intermittent approach, too. Nor is there any loss in efficacy of the diet from the intermittent approach. 

• The third study is a web-based survey of university-affiliated personnel (n=64) who are striving towards some long-term goal, such as weight loss. The two conditions involve imagining either a (1) straight or (2) intermittent plan to achieve their goal. Those in the intermittent condition express higher motivation to pursue their goal.

William Shakespeare, Behavioral Economist: Composite Post

I thought it might be worthwhile to provide a guide to the slew of Shakespeare posts that have found their way to Behavioral Economics Outlines in recent days... so here goes:

WS, Behavioral Economist, Introductory Post

WS on Status-Quo Bias and Loss Aversion

WS on Loss Aversion as a Goad to Action

WS on Being Risk-Loving in the Loss Domain

WS on Present Bias and Hyperbolic Discounting

WS on Hot States and Cold States (I)

WS on Hot States and Cold States (II)

WS on Hot States and Cold States (III)

WS on Hot States and Cold States (IV)

WS on Self-Control in the Face of Temptation

WS on Our Ignorance of the Mapping Between Actions and Consequences

WS on the Hedonic Treadmill

WS on Our Inability to Predict What Will Make Us Happy

WS on Happiness and the Easterlin Paradox

WS on Cue Management

WS on the Trophy Effect, or the Endowment Effect, or Hot States and Cold States

WS on Women Who Suspect that it is in their Long-Term Interest to Play Coy, But…

WS on Delaying Consumption, or Savouring

WS on the Endowment Effect

WS on Habit Formation and Addiction

WS on Visceral Factors and Their Underestimation

WS on Fighting Visceral Factors With Visceral Factors

WS on Signaling Commitment

WS on Recognizing Ego Depletion in Ourselves and Others

WS on Choosing a Reference Point

WS on Information Avoidance

I did mention that there were a slew of Shakespeare posts, no? I hope to add to the slew in the future. The Shakespeare quotes that appear in this slew o' posts generally are drawn from Open Source Shakespeare.

Monday, July 25, 2016

Shakespeare on Choosing a Reference Point

Desiring this man's art and that man's scope,
With what I most enjoy contented least;
Yet in these thoughts myself almost despising,
Haply I think on thee, and then my state,
Like to the lark at break of day arising
From sullen earth, sings hymns at heaven's gate;
    For thy sweet love remember'd such wealth brings
    That then I scorn to change my state with kings.

 (from Sonnet XXIX)

Shakespeare on Recognizing Ego Depletion in Ourselves and Others

Duke of Cornwall       Peace, sirrah!
                                    You beastly knave, know you no reverence?
Earl of Kent                Yes, sir, but anger hath a privilege.

(King Lear, Act 2, Scene 2, Lines 1135-1138)

* * * * * * * * * * * * * * * * * * * * * ** * * * * * * * * * * *

Fiery? the fiery Duke? Tell the hot Duke that-
No, but not yet! May be he is not well.
Infirmity doth still neglect all office
Whereto our health is bound. We are not ourselves
When nature, being oppress'd, commands the mind
To suffer with the body. I'll forbear;
And am fallen out with my more headier will,
To take the indispos'd and sickly fit
For the sound man.

(King Lear, Act 2, Scene 4, Lines 1381-1389)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Give me your pardon, sir. I have done you wrong;
But pardon't, as you are a gentleman.
This presence knows,
And you must needs have heard, how I am punish'd
With sore distraction. What I have done
That might your nature, honour, and exception
Roughly awake, I here proclaim was madness.
Was't Hamlet wrong'd Laertes? Never Hamlet.
If Hamlet from himself be taken away,
And when he's not himself does wrong Laertes,
Then Hamlet does it not, Hamlet denies it.
Who does it, then? His madness. If't be so,
Hamlet is of the faction that is wrong'd;
His madness is poor Hamlet's enemy.

(Hamlet, Act 5, Scene 2, Lines 3863-3876)

Shakespeare on Signaling Commitment

Tell me your counsels, I will not disclose 'em:
I have made strong proof of my constancy,
Giving myself a voluntary wound
Here, in the thigh: can I bear that with patience.
And not my husband's secrets?

(Julius Caesar, Act 2, Scene 1, Lines 926-930)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

…prove that ever I lose more blood
with love than I will get again with drinking, pick
out mine eyes with a ballad-maker's pen and hang me
up at the door of a brothel-house for the sign of
blind Cupid.

(Much Ado About Nothing, Act 1, Scene 1, Lines 224-228)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

I will not love: if 
I do, hang me; i' faith, I will not. 

(Love's Labour's Lost, Act 4, Scene 3, Lines 1326-1327)

Shakespeare on Fighting Visceral Factors With Visceral Factors

O Helicanus, strike me, honour'd sir;
Give me a gash, put me to present pain;
Lest this great sea of joys rushing upon me
O'erbear the shores of my mortality,
And drown me with their sweetness.

(Pericles, Prince of Tyre, Act 5, Scene 1, Lines 2406-2410)

Shakespeare on Visceral Factors and Their Underestimation

For every man with his affects is born,
Not by might master'd but by special grace

(Love’s Labour’s Lost, Act 1, Scene 1, lines 155-156)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

'tis all men's office to speak patience
To those that wring under the load of sorrow,
But no man's virtue nor sufficiency
To be so moral when he shall endure
The like himself.

(Much Ado About Nothing, Act 5, Scene 1, Lines 2095-2099)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

For there was never yet philosopher
That could endure the toothache patiently

(Much Ado About Nothing, Act 5, Scene 1, Lines 2103-2104)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Love is merely a madness; and, I tell you, deserves as
well a dark house and a whip as madmen do; and the reason why
they are not so punish'd and cured is that the lunacy is so
ordinary that the whippers are in love too.

(As You Like It, Act 3, Scene 2, Lines 1476-1479)

Shakespeare on Habit Formation and Addiction

How use doth breed a habit in a man!

(Two Gentlemen of Verona, Act 5, Scene 4, Line 2149; a variation of this quotation introduces  “A Theory of Rational Addiction,” by Gary S. Becker and Kevin M. Murphy, Journal of Political Economy Vol. 96, No. 4 (Aug., 1988), pp. 675-700).

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Good night- but go not to my uncle's bed.
Assume a virtue, if you have it not.
That monster, custom, who all sense doth eat
Of habits evil, is angel yet in this,
That to the use of actions fair and good
He likewise gives a frock or livery,
That aptly is put on. Refrain to-night,
And that shall lend a kind of easiness
To the next abstinence; the next more easy;
For use almost can change the stamp of nature…

(Hamlet, Act 3, Scene 4, Lines 2562-2571) 

Shakespeare on the Endowment Effect

My lord, 'tis rated
As those which sell would give: but you well know,
Things of like value differing in the owners
Are prized by their masters: believe't, dear lord,
You mend the jewel by the wearing it.

(Timon of Athens, Act 1, Scene 1, Lines 209-213)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Let Helen go:
Since the first sword was drawn about this question,
Every tithe soul, 'mongst many thousand dismes,
Hath been as dear as Helen; I mean, of ours:
If we have lost so many tenths of ours,
To guard a thing not ours nor worth to us,
Had it our name, the value of one ten,
What merit's in that reason which denies
The yielding of her up?

(Troilus and Cressida, Act 2, Scene 2, Lines 1006-1014)

Shakespeare on Delaying Consumption, or Savouring

Whom best I love I cross; to make my gift,
The more delay'd, delighted.

(Cymbeline, Act 5, Scene 4, Lines 3251-3252)

Shakespeare on Women Who Suspect that it is in their Long-Term Interest to Play Coy, But…

Thou know'st the mask of night is on my face,
Else would a maiden blush bepaint my cheek
For that which thou hast heard me speak to-night
Fain would I dwell on form, fain, fain deny
What I have spoke: but farewell compliment!

(Romeo and Juliet, Act 2, Scene 2, Lines 934-938)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

At mine unworthiness that dare not offer
What I desire to give, and much less take
What I shall die to want. But this is trifling;
And all the more it seeks to hide itself,
The bigger bulk it shows. Hence, bashful cunning!
And prompt me, plain and holy innocence!
I am your wife, if you will marry me;

(The Tempest, Act 3, Scene 1, Lines 1370-1376)

Shakespeare on the Trophy Effect, or the Endowment Effect, or Hot States and Cold States

They are both in either's powers; but this swift business
I must uneasy make, lest too light winning
Make the prize light.

(The Tempest, Act 1, Scene 2, Lines 628-630)

* * * * * * * * * * * * * * * * * * * ** * * * * * * * * * *

Yet hold I off. Women are angels, wooing:
Things won are done; joy's soul lies in the doing.
That she beloved knows nought that knows not this:
Men prize the thing ungain'd more than it is:
That she was never yet that ever knew
Love got so sweet as when desire did sue.
Therefore this maxim out of love I teach:
Achievement is command; ungain'd, beseech:
Then though my heart's content firm love doth bear,
Nothing of that shall from mine eyes appear.

(Troilous and Cressida, Act 1, Scene 2, Lines 438-447)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

…but go with speed
To some forlorn and naked hermitage,
Remote from all the pleasures of the world;
There stay until the twelve celestial signs
Have brought about the annual reckoning.
If this austere insociable life
Change not your offer made in heat of blood;
If frosts and fasts, hard lodging and thin weeds
Nip not the gaudy blossoms of your love,
But that it bear this trial and last love;
Then, at the expiration of the year,
Come challenge me, challenge me by these deserts,
And, by this virgin palm now kissing thine
I will be thine…

(Love’s Labour’s Lost, Act 5, Scene 2, Lines 2736-2749)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Since you are dear bought, I will love you dear.

(Merchant of Venice, Act 3, Scene 2, Line 1691)

Shakespeare on Cue Management

I am fain to dine and sup with water and bran; I dare not for
my head fill my belly; one fruitful meal would set me to 't.

(Fornication is a capital crime. The speaker is saying that he must avoid eating a good meal, as that might put him in a hot state, where he will become lustful, leading, perhaps, to his execution; Measure For Measure, Act 4, Scene 3, Lines 2281-2284)

Shakespeare on Happiness and the Easterlin Paradox

And happy always was it for that son
Whose father for his hoarding went to hell?
I'll leave my son my virtuous deeds behind;
And would my father had left me no more!
For all the rest is held at such a rate
As brings a thousand-fold more care to keep
Than in possession any jot of pleasure. 
(Henry VI, Part III, Act 2, Scene 2, lines 889-895)

* * ** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Who would not wish to be from wealth exempt,
Since riches point to misery and contempt?...
My dearest lord, bless'd, to be most accursed,
Rich, only to be wretched, thy great fortunes
Are made thy chief afflictions.

(Timon of Athens, Act 4, Scene 2Lines 1641-1642 and 1652-1654)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 

Lord, who would live turmoiled in the court,
And may enjoy such quiet walks as these?
This small inheritance my father left me
Contenteth me, and worth a monarchy.
I seek not to wax great by others' waning,
Or gather wealth, I care not, with what envy:
Sufficeth that I have maintains my state
And sends the poor well pleased from my gate.

(Henry VI, Part II, Act 4, Scene 10, Lines 2904-2911)

Shakespeare on Our Inability to Predict What Will Make Us Happy

All things that are,
Are with more spirit chased than enjoy'd.

(Merchant of Venice, Act 2, Scene 6, Lines 921-922)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Oh cousin!
That we should things desire, which do cost us
The loss of our desire! That nought could buy
Dear love, but loss of dear love!

(The Two Noble Kinsmen, Act 5, Scene 4, Lines 109-112, by John Fletcher and William Shakespeare, The Arden Shakespeare, third edition, Lois Potter, editor, Thomas Nelson and  Sons Ltd., 1997.)

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Past reason hunted, and no sooner had
Past reason hated, as a swallow'd bait
On purpose laid to make the taker mad;
Mad in pursuit and in possession so;
Had, having, and in quest to have, extreme;
A bliss in proof, and proved, a very woe;
Before, a joy proposed; behind, a dream.

(Sonnet CXXIX, Lines 6-12)

Shakespeare on the Hedonic Treadmill

And sweets grown common lose their dear delight.

(Sonnet CII, line 12) 


If all the year were playing holidays,
To sport would be as tedious as to work;
But when they seldom come, they wish'd for come, 
And nothing pleaseth but rare accidents. 

(Henry IV, Part I, Act 1, Scene 2, Lines 307-310)  

Shakespeare on Our Ignorance of the Mapping Between Actions and Consequences

Our wills and fates do so contrary run
That our devices still are overthrown;
Our thoughts are ours, their ends none of our own.

(Hamlet, Act 3, Scene 2, Lines 2103-2105)

Sunday, July 24, 2016

Shakespeare on Self-Control in the Face of Temptation

They that have power to hurt and will do none,
That do not do the thing they most do show,
Who, moving others, are themselves as stone,
Unmoved, cold, and to temptation slow:
They rightly do inherit heaven’s graces
And husband nature’s riches from expense;
They are the lords and owners of their faces,
Others but stewards of their excellence.

Shakespeare on Hot States and Cold States (III)

In Henry V, Henry explains to the leaders of the besieged French town of Harfleur that they must surrender immediately, while the English soldiers are in a cold state, because once further fighting brings on the hot state, the soldiers will be uncontrolled and cruel beyond measure:

Therefore to our best mercy give yourselves;
Or like to men proud of destruction
Defy us to our worst: for, as I am a soldier,
A name that in my thoughts becomes me best,
If I begin the battery once again,
I will not leave the half-achieved Harfleur
Till in her ashes she lie buried.
The gates of mercy shall be all shut up,
And the flesh'd soldier, rough and hard of heart,
In liberty of bloody hand shall range
With conscience wide as hell, mowing like grass
Your fresh-fair virgins and your flowering infants.
What is it then to me, if impious war,
Array'd in flames like to the prince of fiends,
Do, with his smirch'd complexion, all fell feats
Enlink'd to waste and desolation?
What is't to me, when you yourselves are cause,
If your pure maidens fall into the hand
Of hot and forcing violation?
What rein can hold licentious wickedness
When down the hill he holds his fierce career?
We may as bootless spend our vain command
Upon the enraged soldiers in their spoil
As send precepts to the leviathan
To come ashore. Therefore, you men of Harfleur,
Take pity of your town and of your people,
Whiles yet my soldiers are in my command;
Whiles yet the cool and temperate wind of grace
O'erblows the filthy and contagious clouds
Of heady murder, spoil and villany.
If not, why, in a moment look to see
The blind and bloody soldier with foul hand
Defile the locks of your shrill-shrieking daughters;
Your fathers taken by the silver beards,
And their most reverend heads dash'd to the walls,
Your naked infants spitted upon pikes,
Whiles the mad mothers with their howls confused
Do break the clouds, as did the wives of Jewry
At Herod's bloody-hunting slaughtermen.
What say you? will you yield, and this avoid,
Or, guilty in defence, be thus destroy'd?

(Henry V, Act 3, Scene 3, lines 1275-1315)

Shakespeare on Hot States and Cold States (II)

In Timon of Athens (Act 3, Scene 6), Timon assembles his non-reciprocal friends (they did not return his (excessive) generosity with the like) ostensibly for a feast. Presumably the guests arrive hungry, and pre-feast talk of meat further whets their appetites. When the dishes are uncovered, they reveal no meat, only warm water. Oh, Timon has foreseen that this is better revenge than he could muster from simply informing his non-hungry (cold state) former friends that they are no longer welcome to table!

Shakespeare on Hot States and Cold States (I)

I do believe you think what now you speak;
But what we do determine oft we break.
Purpose is but the slave to memory,
Of violent birth, but poor validity;
Which now, like fruit unripe, sticks on the tree,
But fall unshaken when they mellow be.
Most necessary 'tis that we forget
To pay ourselves what to ourselves is debt.
What to ourselves in passion we propose,
The passion ending, doth the purpose lose.
The violence of either grief or joy
Their own enactures with themselves destroy.
Where joy most revels, grief doth most lament;
Grief joys, joy grieves, on slender accident.

(Hamlet, Act 3, Scene 2, Lines 2078-2091)

Shakespeare on Present Bias and Hyperbolic Discounting

What is love? 'tis not hereafter;
Present mirth hath present laughter;
What's to come is still unsure:
In delay there lies no plenty;
Then come kiss me, sweet and twenty,
Youth's a stuff will not endure.

(Twelfth Night, Act 2, Scene 3, Lines 748-753)

Shakespeare on Being Risk-Loving in the Loss Domain

In my school-days, when I had lost one shaft, 
I shot his fellow of the self-same flight 
The self-same way with more advised watch, 
To find the other forth, and by adventuring both 
I oft found both: I urge this childhood proof, 
Because what follows is pure innocence. 
I owe you much, and, like a wilful youth, 
That which I owe is lost; but if you please 
To shoot another arrow that self way 
Which you did shoot the first, I do not doubt, 
As I will watch the aim, or to find both 
Or bring your latter hazard back again 
And thankfully rest debtor for the first.

(The Merchant of Venice, Act 1, Scene 1, Lines 147-159)

Shakespeare on Loss Aversion as a Goad to Action

Were't not a shame, that whilst you live at jar,
The fearful French, whom you late vanquished, 
Should make a start o'er seas and vanquish you?
Methinks already in this civil broil
I see them lording it in London streets,
Crying 'Villiago!' unto all they meet.
Better ten thousand base-born Cades miscarry
Than you should stoop unto a Frenchman's mercy.
To France, to France, and get what you have lost;
Spare England, for it is your native coast;
Henry hath money, you are strong and manly;
God on our side, doubt not of victory.

(History of Henry VI, Part II, Act 4, Scene 8, Lines 2799-2810)

Shakespeare on Status-Quo Bias and Loss Aversion

Who would these fardels bear,
To grunt and sweat under a weary life,
But that the dread of something after death-
The undiscover'd country, from whose bourn
No traveller returns- puzzles the will,
And makes us rather bear those ills we have
Than fly to others that we know not of? 

(Hamlet, Act 3, Scene 1, Lines 1769-1775)


Those that much covet are with gain so fond,
For what they have not, that which they possess
They scatter and unloose it from their bond,
And so, by hoping more, they have but less;
Or, gaining more, the profit of excess
Is but to surfeit, and such griefs sustain,
That they prove bankrupt in this poor-rich gain.

The aim of all is but to nurse the life
With honour, wealth, and ease, in waning age;
And in this aim there is such thwarting strife,
That one for all, or all for one we gage;
As life for honour in fell battle's rage;
Honour for wealth; and oft that wealth doth cost
The death of all, and all together lost.

So that in venturing ill we leave to be
The things we are for that which we expect;
And this ambitious foul infirmity,
In having much, torments us with defect
Of that we have: so then we do neglect
The thing we have; and, all for want of wit,
Make something nothing by augmenting it.

(The Rape of Lucrece, Lines 185-205)

William Shakespeare, Behavioral Economist

Every year when I teach Behavioral Economics & Policy, around the time of Shakespeare's birthday (April 23 is the conventional date) I provide a handout entitled, yes, William Shakespeare, Behavioral Economist. The current version is some 11 pages long, and I thought that I would reproduce that handout (and augment it) in a series of posts here on Behavioral Economics Outlines. These posts will not consist of outlines, alas; rather, they will be Shakespeare quotes, generally taken from Open Source Shakespeare. The title William Shakespeare, Behavioral Economist, pays homage to Nava Ashraf, Colin F. Camerer, and George Loewenstein, “Adam Smith, Behavioral Economist,” Journal of Economic Perspectives 19(3): 131–145, 2005.