Pavlovian Processes in Consumer Choice: The Physical Presence of a Good Increases Willingness-to-Pay

This paper describes a series of laboratory experiments studying whether the form in which items are displayed at the time of decision affects the dollar value that subjects place on them. Using a Becker-DeGroot auction under three different conditions — (i) text displays, (ii) image displays, and (iii) displays of the actual items — we find that subjects' willingness-to-pay is 40-61 percent larger in the real than in the image and text displays. Furthermore, follow-up experiments suggest the presence of the real item triggers preprogrammed consummatory Pavlovian processes that promote behaviors that lead to contact with appetitive items whenever they are available

Aging and decision making: a comparison between neurologically healthy elderly and young individuals

We report the results of experiments on economic decisions with two populations, one of healthy elderly individuals (average age 82) and one of younger students (average age 20). We examine confidence, decisions under uncertainty, differences between willingness to pay and willingness to accept and the theory of mind (strategic thinking). Our findings indicate that the older adults’ decision behavior is similar to that of young adults, contrary to the notion that economic decision making is impaired with age. Moreover, some of the demonstrated decision behaviors suggest that the elderly individuals are less biased than the younger individuals

Neural signatures of strategic types in a two-person bargaining game

The management and manipulation of our own social image in the minds of others requires difficult and poorly understood computations. One computation useful in social image management is strategic deception: our ability and willingness to manipulate other people's beliefs about ourselves for gain. We used an interpersonal bargaining game to probe the capacity of players to manage their partner's beliefs about them. This probe parsed the group of subjects into three behavioral types according to their revealed level of strategic deception; these types were also distinguished by neural data measured during the game. The most deceptive subjects emitted behavioral signals that mimicked a more benign behavioral type, and their brains showed differential activation in right dorsolateral prefrontal cortex and left Brodmann area 10 at the time of this deception. In addition, strategic types showed a significant correlation between activation in the right temporoparietal junction and expected payoff that was absent in the other groups. The neurobehavioral types identified by the game raise the possibility of identifying quantitative biomarkers for the capacity to manipulate and maintain a social image in another person's mind

Meta-Analysis of Empirical Estimates of Loss-Aversion

Loss aversion is one of the most widely used concepts in behavioral economics. We conduct a large-scale, interdisciplinary meta-analysis, to systematically accumulate knowledge from numerous empirical estimates of the loss aversion coefficient reported from 1992 to 2017. We examine 607 empirical estimates of loss aversion from 150 articles in economics, psychology, neuroscience, and several other disciplines. Our analysis indicates that the mean loss aversion coefficient is 1.955 with a 95% probability that the true value falls in the interval [1.820, 2.105]. We record several observable characteristics of the study designs. Few characteristics are substantially correlated with differences in the mean estimates

Aging and decision making: A comparison between neurologically healthy elderly and young individuals

We report the results of experiments on economic decisions with two populations, one of healthy elderly individuals (average age 82) and one of younger students (average age 20). We examine confidence, decisions under uncertainty, differences between willingness to pay and willingness to accept and the theory of mind (strategic thinking). Our findings indicate that the older adults’ decision behavior is similar to that of young adults, contrary to the notion that economic decision making is impaired with age. Choices over lotteries do not reflect the age differences previously reported in the psychology and biology literature. Moreover, some of the demonstrated decision behaviors suggest that the elderly individuals are less biased than the younger individuals.(1)There is a greater prevalence of overconfident behavior in the younger population. (2) Our results show no significant support for a theory of an endowment effect in either population. (3) Both populations perform similarly on the beauty contest task, although there is a modest indication of a higher incidence of confused behavior by the older

Physiological responses to a haunted house threat experience: Distinct tonic and phasic effects

Threats elicit physiological responses, the frequency and intensity of which have implications for survival. Ethical and practical limitations on human laboratory manipulations present barriers to studying immersive threat. Furthermore, few investigations examine group effects and concordance with subjective emotional experiences to threat. The current preregistered study measured electrodermal activity in 156 humans while they participated in small groups in a 30 minute haunted house experience involving various threats. Results revealed positive associations between (i) friends and tonic arousal, (ii) unexpected attacks and phasic activity (frequency and amplitude), (iii) subjective fear and phasic frequency, and (iv) dissociable sensitization effects linked to orienting response. Findings demonstrate relevance of social dynamics (friends versus strangers) for tonic arousal, and subjective fear and threat predictability for phasic arousal

Contextual and endogenous effects on physiology during a haunted house fear induction

Threat exposure elicits physiological and psychological responses, the frequency and intensity of which, and concordance between, has implications for survival. Ethical and practical limitations on human laboratory fear inductions make it essentially impossible to measure response to extreme threat. Furthermore, ecologically valid investigations of group effects on fear are lacking in humans. The current preregistered study measured tonic and phasic electrodermal activity in 156 human participants while they participated in small groups in a 30 minute sequence of threats of varying intensity (a haunted house). Results revealed that (i) friends increased overall arousal, (ii) unexpected attacks elicited greater phasic responses than expected attacks, (iii) subjective fear increased frequency of phasic spikes, and (iv) startle had dissociable effects on frequency and amplitude of phasic reactivity. Findings show that etiology of emotional contagion varies depending on relationship type (increased among friends) and subjective fear is associated with temporal aspects of physiological arousal

Criticality and finite size effects in a simple realistic model of stock market

We discuss a simple model based on the Minority Game which reproduces the main stylized facts of anomalous fluctuations in finance. We present the analytic solution of the model in the thermodynamic limit and show that stylized facts arise only close to a line of critical points with non-trivial properties. By a simple argument, we show that, in Minority Games, the emergence of critical fluctuations close to the phase transition is governed by the interplay between the signal to noise ratio and the system size. These results provide a clear and consistent picture of financial markets as critical systems.Comment: 4 pages, 4 figure

The Mythology of Game Theory

Non-cooperative game theory is at its heart a theory of cognition, specifically a theory of how decisions are made. Game theory\u27s leverage is that we can design different payoffs, settings, player arrays, action possibilities, and information structures, and that these differences lead to different strategies, outcomes, and equilibria. It is well-known that, in experimental settings, people do not adopt the predicted strategies, outcomes, and equilibria. The standard response to this mismatch of prediction and observation is to add various psychological axioms to the game-theoretic framework. Regardless of the differing specific proposals and results, game theory uniformly makes certain cognitive assumptions that seem rarely to be acknowledged, much less interrogated. Indeed, it is not widely understood that game theory is essentially a cognitive theory. Here, we interrogate those cognitive assumptions. We do more than reject specific predictions from specific games. More broadly, we reject the underlying cognitive model implicitly assumed by game theory

Game theory of mind

This paper introduces a model of ‘theory of mind’, namely, how we represent the intentions and goals of others to optimise our mutual interactions. We draw on ideas from optimum control and game theory to provide a ‘game theory of mind’. First, we consider the representations of goals in terms of value functions that are prescribed by utility or rewards. Critically, the joint value functions and ensuing behaviour are optimised recursively, under the assumption that I represent your value function, your representation of mine, your representation of my representation of yours, and so on ad infinitum. However, if we assume that the degree of recursion is bounded, then players need to estimate the opponent's degree of recursion (i.e., sophistication) to respond optimally. This induces a problem of inferring the opponent's sophistication, given behavioural exchanges. We show it is possible to deduce whether players make inferences about each other and quantify their sophistication on the basis of choices in sequential games. This rests on comparing generative models of choices with, and without, inference. Model comparison is demonstrated using simulated and real data from a ‘stag-hunt’. Finally, we note that exactly the same sophisticated behaviour can be achieved by optimising the utility function itself (through prosocial utility), producing unsophisticated but apparently altruistic agents. This may be relevant ethologically in hierarchal game theory and coevolution