Thinking about it
"I was going to offer $10,000 but.": The effects of phantom anchors in negotiation
Nazlı Bhatia & Brian Gunia
Organizational Behavior and Human Decision Processes, September 2018, Pages 70-86
Abstract:
Negotiators commonly attach phantom anchors - retracted and aggressive figures - to their actual and less aggressive offers. For example, a seller might say, "I was going to ask for $10,000, but I can offer $8000." Drawing from research on anchoring, we predict that offer-makers will economically benefit from offers with phantom anchors. Drawing from research on interpersonal perceptions, we test competing hypotheses indicating that phantom anchors might elicit perceptions of manipulativeness or benevolence, with economic implications. Finally, we explore situational conditions that could moderate these perceptions. Five studies show that negotiators using offers with (versus without) phantom anchors receive less aggressive counteroffers and more beneficial agreements in both distributive and integrative negotiations, but also seem more manipulative. Situations portraying the phantom anchor-actual offer combination as a true concession, however, dampen manipulativeness perceptions. Overall, the results suggest that phantom anchors represent a powerful yet risky and understudied value-claiming strategy in negotiations.
"1-in-X" bias: "1-in-X" format causes overestimation of health-related risks
Miroslav Sirota, Marie Juanchich & Jean-Francois Bonnefon
Journal of Experimental Psychology: Applied, forthcoming
Abstract:
According to the "1-in-X" effect, "1-in-X" ratios (e.g., 1 in 12) trigger a higher subjective probability than do numerically equivalent "N-in-X*N" ratios (e.g., 3 in 36). Here we tested the following: (a) the effect on objective measures, (b) its consequences for decision-making, (c) whether this effect is a form of bias by measuring probability accuracy, and (d) its amplification in people with lower health literacy and numeracy. In parallel-designed experiments, 975 participants from the general adult population participated in 1 of 5 experiments following a 2(format: "1-in-X" or "N-in-X*N") × 4(scenarios) mixed design. Participants assessed the risk of contracting a disease on either a verbal probability scale (Experiment 1) or a numerical probability/frequency scale with immediate (Experiments 2-3) or delayed presentation (Experiments 4-5). Participants also made a health-related decision and completed a health literacy and numeracy scale. The "1-in-X" ratios yielded higher probability perceptions than did the "N-in-X*N" ratios and affected relevant decisions. Critically, the "1-in-X" ratios led to a larger objective overestimation of numerical probabilities than did the "N-in-X*N" ratios. People with lower levels of health literacy and numeracy were not more sensitive to the bias. Health professionals should use "1-in-X" ratios with great caution when communicating to patients, because they overestimate health risks.
The Binary Bias: A Systematic Distortion in the Integration of Information
Matthew Fisher & Frank Keil
Psychological Science, forthcoming
Abstract:
One of the mind's most fundamental tasks is interpreting incoming data and weighing the value of new evidence. Across a wide variety of contexts, we show that when summarizing evidence, people exhibit a binary bias: a tendency to impose categorical distinctions on continuous data. Evidence is compressed into discrete bins, and the difference between categories forms the summary judgment. The binary bias distorts belief formation - such that when people aggregate conflicting scientific reports, they attend to valence and inaccurately weight the extremity of the evidence. The same effect occurs when people interpret popular forms of data visualization, and it cannot be explained by other statistical features of the stimuli. This effect is not confined to explicit statistical estimates; it also influences how people use data to make health, financial, and public-policy decisions. These studies (N = 1,851) support a new framework for understanding information integration across a wide variety of contexts.
Is overconfidence a social liability? The effect of verbal versus nonverbal expressions of confidence
Elizabeth Tenney et al.
Journal of Personality and Social Psychology, forthcoming
Abstract:
What are the reputational consequences of being overconfident? We propose that the channel of confidence expression is one key moderator - that is, whether confidence is expressed verbally or nonverbally. In a series of experiments, participants assessed target individuals (potential collaborators or advisors) who were either overconfident or cautious. Targets expressed confidence, or a lack thereof, verbally or nonverbally. Participants then learned targets' actual performance. Across studies, overconfidence was advantageous initially - regardless of whether targets expressed confidence verbally or nonverbally. After performance was revealed, overconfident targets who had expressed confidence verbally were viewed more negatively than cautious targets; however, overconfident targets who had expressed confidence nonverbally were still viewed more positively than cautious ones. The one condition wherein nonverbal overconfidence was detrimental was when confidence was clearly tied to a falsifiable claim. Results suggest that, compared with verbal statements, nonverbal overconfidence reaps reputational benefits because of its plausible deniability.
The adding-and-averaging effect in bundles of information: Preference reversals across joint and separate evaluation
Kimberlee Weaver & Stephen Garcia
Journal of Experimental Psychology: Applied, September 2018, Pages 296-305
Abstract:
When does adding mildly favorable information (e.g., job experience at the Railway Credit Union) alongside highly favorable (e.g., job experience at Goldman Sachs) increase versus decrease evaluations of a bundle of information like a resume or product bundle? We posit that whether that package of information is evaluated by itself - in separate evaluation (SE) - or side by side with another package - in joint evaluation (JE) - matters. Across a variety of contexts, four studies show that people "average" in SE and "add" in JE. Consequently, mildly favorable information hurts evaluations in SE but helps in JE. Study 1 demonstrated this "adding-and-averaging effect" among persons with expertise: law professors judging law faculty candidates. Adding middle tier academic publications to a higher tier publication on a CV decreased evaluations of a candidate judged in SE but increased evaluations of the same candidate in JE. Study 3 examined a linear pattern prediction, showing that each piece of mildly favorable information linearly added to the overall impression of a package of information in JE but linearly detracted from evaluations of the identical target in SE. Finally, Study 4 traced these differences in evaluative judgments to a shift in reference points brought about by evaluation mode. Implications for the organization specifically and our understanding of judgment and decision making processes more generally are considered.
Sniff Tests in Economics: Aggregate Distribution of Their Probability Values and Implications for Publication Bias
Christopher Snyder & Ran Zhuo
NBER Working Paper, September 2018
Abstract:
The increasing demand for rigor in empirical economics has led to the growing use of auxiliary tests (balance, specification, over-identification, placebo, etc.) supporting the credibility of a paper's main results. We dub these "sniff tests" because standards for passing are subjective and rejection is bad news for the author. Sniff tests offer a new window into publication bias since authors prefer them to be insignificant, the reverse of standard statistical tests. Collecting a sample of nearly 30,000 sniff tests across 60 economics journals, we provide the first estimate of their aggregate probability-value (p-value) distribution. For the subsample of balance tests in randomized controlled trials (for which the distribution of p-values is known to be uniform absent publication bias, allowing reduced-form methods to be employed) estimates suggest that 45% of failed tests remain in the "file drawer" rather than being published. For the remaining sample with an unknown distribution of p-values, structural estimates suggest an even larger file-drawer problem, as high as 91%. Fewer significant sniff tests show up in top-tier journals, smaller tables, and more recent articles. We find no evidence of author manipulation other than a tendency to overly attribute significant sniff tests to bad luck.
Feeling certain: Gut choice, the true self, and attitude certainty
Sam Maglio & Taly Reich
Emotion, forthcoming
Abstract:
Decisions need not always be deliberative. Instead, people confronting choices can recruit their gut feelings, processing information about choice options in accordance with how they feel about options rather than what they think about them. Reliance on feelings can change what people choose, but might this decision strategy also impact how people evaluate their chosen options? The present investigation tackles this question by integrating insights from the separate literatures on the true self and attitude certainty. Four studies support a process model by which focusing on feelings (vs. deliberation) in choice causes people to see their true selves reflected in those choices (Studies 1 and 2), leading to enhanced attitude certainty (Study 3) and advocacy on behalf of that attitude (Study 4) while offering robustness checks and accounting for alternative explanations throughout. Discussion of these findings highlights the opportunity for new insights at the intersection of feeling-focused decision making, attitudes, and the true self.
The impact of a limited time perspective on information distortion
Anne-Sophie Chaxel, Catherine Wiggins & Jieru Xie
Organizational Behavior and Human Decision Processes, November 2018, Pages 35-46
Abstract:
The present research examines how a limited time perspective influences the processing of new information during choice making. Specifically, we examine how perceptions of a limited future promote the distortion of new information in favor of one's prior beliefs. Across five studies, we provide evidence of a link between more-limited time perspectives and higher information distortion, and we illuminate the proposed process: the adoption of a cognitive consistency goal when the time perspective is limited. Overall, the current work identifies a new driver of distortion - the amount of time individuals believe remains in the future. Furthermore, it contributes a novel source of biased information processing that is motivational in nature rather than the result of a lack of cognitive resources: the mere belief regarding how much time remains in the future influences information processing goals and, subsequently, how decision-makers process new information.
Mnemonic accessibility affects statement believability: The effect of listening to others selectively practicing beliefs
Madalina Vlasceanu & Alin Coman
Cognition, November 2018, Pages 238-245
Abstract:
Belief endorsement is rarely a fully deliberative process. Oftentimes, one's beliefs are influenced by superficial characteristics of the belief evaluation experience. Here, we show that by manipulating the mnemonic accessibility of particular beliefs we can alter their believability. We use a well-established socio-cognitive paradigm (i.e., the social version of the selective practice paradigm) to increase the mnemonic accessibility of some beliefs and induce forgetting in others. We find that listening to a speaker selectively practicing beliefs results in changes in believability. Beliefs that are mentioned become mnemonically accessible and exhibit an increase in believability, while beliefs that are related to those mentioned experience mnemonic suppression, which results in decreased believability. Importantly, the latter effect occurs regardless of whether the belief is scientifically accurate or inaccurate. Furthermore, beliefs that are endorsed with moderate-strength are particularly susceptible to mnemonically-induced believability changes. These findings, we argue, have the potential to guide interventions aimed at correcting misinformation in vulnerable communities.
The limits of learning: Exploration, generalization, and the development of learning traps
Alexander Rich & Todd Gureckis
Journal of Experimental Psychology: General, forthcoming
Abstract:
Learning usually improves the accuracy of beliefs through the accumulation of experience. But are there limits to learning that prevent us from accurately understanding our world? In this article we investigate the concept of a "learning trap" - the formation of a stable false belief even with extensive experience. Our review highlights how these traps develop through the interaction of learning and decision making in unknown environments. We further document a particularly pernicious learning trap driven by selective attention, a mechanism often assumed to facilitate learning in complex environments. Using computer simulation, we demonstrate the key attributes of the agent and environment that lead to this new type of learning trap. Then, in a series of experiments we present evidence that people robustly fall into this trap, even in the presence of various interventions predicted to meliorate it. These results highlight a fundamental limit to learning and adaptive behavior that impacts individuals, organizations, animals, and machines.
Exponential growth bias matters: Evidence and implications for financial decision making of college students in the U.S.A.
Bryan Foltice & Thomas Langer
Journal of Behavioral and Experimental Finance, September 2018, Pages 56-63
Abstract:
This paper tests the exponential growth bias of undergraduate students at a top-level university in the United States and explores the potential drivers that influence the size of this bias. Here, we find that bias matters, even for college students, in making savings and debt decisions. We observe that the individuals who have already taken on debt are more biased in their compound savings estimates, while those who have experience with savings products are less biased. Interestingly, we detect no significant differences in the results between freshmen and upperclassmen, despite the findings that significantly more upperclassmen claim to have previously learned about compounding interest and are more aware of compound growth. We believe that these findings entail some strong policy implications and we urge policy makers in the U.S. to consider both a more extensive compound savings formula training curriculum and a focus on bias "awareness".
Randomization and serial dependence in professional tennis matches: Do strategic considerations, player rankings and match characteristics matter?
Leonidas Spiliopoulos
Judgment and Decision Making, September 2018, Pages 413-427
Abstract:
In many sports contests, the equilibrium requires players to randomize across repeated rounds, i.e., exhibit no temporal predictability. Such sports data present a window into the (in)efficiency of random sequence generation in a natural competitive environment, where the decision makers (tennis players) are both highly experienced and incentivized compared to laboratory studies. I resolve a long-standing debate about whether professional players' tennis serve directions are serially independent (Hsu, Huang & Tang, 2007) or not (Walker & Wooders, 2001) using a new dataset that is two orders of magnitude larger than those studies. I examine both between- and within-player determinants of the degree of serial (in)dependence. Evidence of the existence of significant serial dependence across serves is presented, even among players ranked Number 1 in the world. Furthermore, significant heterogeneity was found with respect to the strength of serial dependence and also its sign. A novel finding is that Number 1 and Number 2 ranked players tend to under-alternate on average, whereas in line with previous findings, the lower-ranked the players, the greater their tendency to over-alternate. Within-player analyses show that high-ranked players do not condition their randomization behavior on their opponent's ranking. However, the under-alternation of top players would be consistent with a best-response to beliefs that the population of opponents over-alternates on average. Finally, the degree of observed serial dependence is not systematically related to other match variables proxying for match difficulty, fatigue, and psychological pressure.
Confirmation Bias through Selective Overweighting of Choice-Consistent Evidence
Bharath Chandra Talluri et al.
Current Biology, 8 October 2018, Pages 3128-3135
Abstract:
People's assessments of the state of the world often deviate systematically from the information available to them. Such biases can originate from people's own decisions: committing to a categorical proposition, or a course of action, biases subsequent judgment and decision-making. This phenomenon, called confirmation bias, has been explained as suppression of post-decisional dissonance. Here, we provide insights into the underlying mechanism. It is commonly held that decisions result from the accumulation of samples of evidence informing about the state of the world. We hypothesized that choices bias the accumulation process by selectively altering the weighting (gain) of subsequent evidence, akin to selective attention. We developed a novel psychophysical task to test this idea. Participants viewed two successive random dot motion stimuli and made two motion-direction judgments: a categorical discrimination after the first stimulus and a continuous estimation of the overall direction across both stimuli after the second stimulus. Participants' sensitivity for the second stimulus was selectively enhanced when that stimulus was consistent with the initial choice (compared to both, first stimuli and choice-inconsistent second stimuli). A model entailing choice-dependent selective gain modulation explained this effect better than several alternative mechanisms. Choice-dependent gain modulation was also established in another task entailing averaging of numerical values instead of motion directions. We conclude that intermittent choices direct selective attention during the evaluation of subsequent evidence, possibly due to decision-related feedback in the brain. Our results point to a recurrent interplay between decision-making and selective attention.