Banker et al. (2017) on Sticky Anchors

Sachin Banker, Sarah E. Ainsworth, Roy F. Baumeister, Dan Ariely, and Kathleen D. Voh, “The Sticky Anchor Hypothesis: Ego Depletion Increases Susceptibility to Situational Cues.” Journal of Behavioral Decision Making 30(5): 1027-1040, December 2017 [pdf here].

• “Ego Depletion”: Exerting self-control undermines self-control in slightly later situations. 

• Is ego depletion a thing? Maybe, maybe not (pdf here); like many behavioral concepts (for example, grit [pdf here]), ego depletion has its detractors. 

• In a dictator game-type setting, does less altruistic behavior (from ego depletion) come about because self-controls over selfishness are undermined, or because people are more inclined to follow salient situational cues? This latter possibility is the sticky anchor hypothesis: depleted people are more suggestible or manipulable. 

• Some dictator game experiments show that depleted people do indeed keep more of the monetary stake for themselves. 

• Are the dictator game findings due to unleashed selfishness or to sticking with the default? To test between the two mechanisms, the authors switch the default: they conduct reverse dictator games. The other (anonymous) party is endowed with the full stake, but you, as the dictator, can choose to take some or all of it. The default, now, is the unselfish setting, so if depleted people have a hard time overcoming defaults, they will leave more of the cash with the other player (relative to the amount left by undepleted folks). Alternatively, if depletion makes you selfish, depleted folks will take more of the endowment from the other player. 

• The depletion manipulation (in Experiment 1, with overall N=54) involves writing some text without using the letters A or N. (Those in the “undepleted” camp write without using the letters X and Z. Incidentally, this reminds me of the singular novel Ella Minnow Pea.) That is, it is attention control that is the source of ego depletion within this experiment.

• On average, those in the depleted condition take less money for themselves ($2.62) than do those in the undepleted condition ($3.69). So, ego depletion does not seem to increase selfishness; rather, it makes it harder to overcome the influence of environmental cues: defaults become more sticky. Notice that neither group is particularly generous. 

• But maybe the attention control manipulation means that the depleted also feel like failures, because they perform poorly at writing without A’s or N’s: they don’t deserve the money in the reverse dictator game. Vicarious depletion [pdf here] to the rescue! A waiter is really hungry…(alternatively, not so hungry…) 

• Once again, the depleted folks (that is, the now vicariously depleted folks, who feel no shame) stick more closely to the anchor: it doesn’t seem to be a lack of desert that causes them to take less money (or fewer lottery tickets) for themselves. 

• But maybe it isn’t general environmental cues at work, maybe it is just our old friend, the status quo effect. So now (Experiment 3) the authors offer either a high or a low anchor before subjects decide how much money to take. Note that the default (the anonymous other gets all the cash) is unchanged, but there is a new situational cue, the anchor. (Subjects are first asked whether they want to take more or less than the anchor; only then are they asked for the precise amount they want to take.) Will depleted people respond to the anchor (more than non-depleted people do), or just to the default? 

• Both depleted and non-depleted subjects respond to the anchor. But the depleted respond more, particularly in the low-anchor treatment. The influence of environmental cues, and not the status quo per se, is what leads to different behavior by depleted folk relative to the undepleted.

Shrader, Wooten, White, et al. (2017) on Using Loss Aversion to Motivate Students

Rebekah Shrader, Jadrian James Wooten, Dustin R. White, et al., “Improving Student Performance through Loss Aversion.” December 12, 2017; updated version available here.

• Pairs of nearly identical courses are offered, where one element of each pair calculates student points as losses from a perfect base: a score of 50 means the student has lost 50 points, as opposed to the usual (control) case where points accumulate with correct assignments. 

• The idea is to see if the “loss framing” triggers greater student effort in a bid to avoid or minimize losses (as opposed to hoping to acquire gains); that is, the authors are testing to see if enlisting aversion towards losses via the grading framework leads to better student performance. 

• Students were not informed when they signed up for their classes that they were part of a field experiment. 

• The loss framing (“counting down”) was associated with higher grades – some 2.6 to 4.2 percentage points higher. 

• Did students perform better in the loss framework simply because it was unusual? 

• A couple of related papers. not (yet?) covered by Behavioral Economics Outlines, are Roland G. Fryer, Jr, Steven D. Levitt, John List, and Sally Sadoff, “Enhancing the Efficacy of Teacher Incentives Through Framing: A Field Experiment," April 2018, pdf here) and Steven D. Levitt, John A. List, Susanne Neckermann, and Sally Sadoff, “The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance,” American Economic Journal: Economic Policy 8(4): 183-219, November 2016. 

Clark and Lisowski (2017) on Prospect Theory and Moving

William A. V. Clark and William Lisowski, “Prospect Theory and the Decision to Move or Stay.” Proceedings of the National Academy of Sciences of the United States of America 114(36): E7432–E7440, September 5, 2017.

• Clark and Lisowski examine residential moves (of 70 kilometers or more) in Australia between 2010 and 2014. 

• The analysis assumes that the status quo residence represents the reference point. 

• The authors argue that the endowment effect in housing occurs because residents learn more about advantages and disadvantages of their housing, and that this raises “use values” relative to “exchange values.” 

• Previous empirical evidence indicates that the probability of moving decreases with the duration of living in the current residence; the authors, therefore, include a duration variable, as well as an indicator for owning versus renting, among their independent variables. 

• Clark and Lisowski also possess a variable that captures the extent of self-reported risk aversion on the part of the surveyed individual. It turns out that people who don’t move are quite likely to be in the top half of the population in terms of this measure of risk aversion. 

• Movers tend to be younger, and they tend to be renters in their initial residence. Couples with kids are less likely to move.  

• Both duration and home ownership are associated with decreased re-location, which the authors interpret as an endowment effect -- but are these endowment effects?

Chen and Schonger (2016) on Ambiguity Aversion

Daniel L. Chen and Martin Schonger, “Is Ambiguity Aversion a Preference?” TSE Working Paper No. 16-703, December 2016.

• Ambiguity aversion has been implicated in many real world phenomena, including the equity premium puzzle: the stock market operates under Knightian uncertainty (ambiguity), not risk, and so ambiguity-averse investors need compensation to buy stocks. Overly punitive plea bargains are acceptable to ambiguity-averse defendants…

• But perhaps the sort of behavior exhibited by the Ellsberg paradox is not really indicative of underlying preferences – perhaps it is mistake, the use of a decision heuristic in inappropriate circumstances. Perhaps people are not actually ambiguity averse.

• Maybe people (rightly) shy away from unfamiliar offers, especially when the person making the offer possesses superior information – and this is the situation when experimental participants are presented with the Ellsberg game. Subjects suspect that the experimenter actually knows how many red and blue balls are in the urn.

• Chen and Schonger set up an Ellsberg experiment where the experimenter is not the party responsible for the contents of the ambiguous urn; rather, the choices of other subjects determine the contents. 

• Every subject decides which of two symbols to send to the others. In experiment 1, the symbol that gets the most “votes” is the symbol that will appear in the “ambiguous” urn for other participants (which need not be the same for all participants, incidentally). 

• All experiments involve a toss of a fair coin, where the subjects can choose to bet on either heads or tails, along with the two ambiguous options. A correct outcome yields 4€. The choice of the bet is determined by taking the maximum of the valuations provided by each participant for each of the four bets. 

• People turn out to prefer the ambiguous bets! “For each of the 16 sessions, individuals were more likely to bet on a symbol with subjective uncertainty, and in all but 2 of the 16 sessions, both bets with subjective uncertainty were more popular than the bets with objective uncertainty [p. 15].” This remains true in design 2, where there is a full-on urn and not just a specific symbol chosen by others.