Male and overconfident groups overinvest due to inflated perceived ability to beat the odds

Organizational decisions are often made by groups rather than individuals. Depending on the group composition, each member's characteristics—like gender and motivated beliefs-can influence the final group investment decision. To capture this, we design two types of investment situations in a randomized controlled laboratory experiment-one with fixed chances of success and one with performance-dependent chances of success. This novel design entails the perceived ability to “beat the odds” of the investment and thus models real-life investment situations more accurately than standard lottery choice. Our results demonstrate the benefits of mixed group composition in terms of both gender and overconfidence: Groups with all men and/or all overconfident group members consistently overinvest when a possibility to “beat the odds” is present, but not in standard situations. We explore several channels for our results and find that (i) individual probability perception, (ii) leader responsibility allocation and (iii) spillover effects from priming show significant effects

Strategic incentives undermine gaze as a signal of prosocial motives

People often have to judge the social motives of others, for example, to distinguish truly prosocial people from those merely trying to appear prosocial. Gaze can reveal the motives underlying social decisions, as decision-makers dedicate more attention to motive-relevant information. We extend the use of eye-tracking and apply it as a communication device by providing (real-time) eye-tracking information of one participant to another. We find that untrained observers can judge the prosociality of decision-makers from their eye-tracked gaze alone, but only if there are no strategic incentives to be chosen for a future interaction. When there are such strategic incentives, the cues of prosociality are invalidated, as both individualistic and prosocial decision-makers put effort into appearing more prosocial. Overall, we find that gaze carries information about a person's prosociality, but also that gaze is malleable and affected by strategic considerations

Who initiates punishment, who joins punishment? Disentangling types of third-party punishers by neural traits

The act of punishing unfair behavior by unaffected observers (i.e., third-party punishment) is a crucial factor in the functioning of human societies. In everyday life, we see different types of individuals who punish. While some individuals initiate costly punishment against an unfair person independently of what other observers do (independent punishers), others condition their punishment engagement on the presence of another person who punishes (conditional punishers). Still others do not want to partake in any sort of punishment (non-punishers). Although these distinct behavioral types have a divergent impact on human society, the sources of heterogeneity are poorly understood. We present novel laboratory evidence on the existence of these three types. We use anatomical brain characteristics in combination with stated motives to characterize these types. Findings revealed that independent punishers have larger gray matter volume in the right temporo-parietal junction compared to conditional punishers and non-punishers, an area involved in social cognition. Conditional punishers are characterized by larger gray matter volume in the right dorsolateral prefrontal cortex, a brain area known to be involved in behavioral control and strategic reasoning, compared to independent punishers and non-punishers. Finally, both independent punishers and non-punishers are characterized by larger gray matter volume in an area involved in the processing of social and monetary rewards, i.e., the bilateral caudate. By using a neural trait approach, we were able to differentiate these three types clearly based on their neural signatures, allowing us to shed light on the underlying psychological mechanisms

Local slow wave activity in regular sleep reveals individual risk preferences

In many everyday life situations, we have to make decisions under varying degrees of risk. Even though previous research has shown that the manipulation of sleep affects risky decision-making, it yet remains to be understood how regular, healthy sleep relates to risk preferences. Therefore, we investigated the relationship between individual, temporally stable neural sleep characteristics and individual differences in risk preferences in healthy adults. Sleep data were collected using a portable high-density EEG system at participants’ home. Results revealed a significant negative correlation between local sleep depth, as reflected in slow-wave activity (SWA) in a cluster of 5 electrodes located over the right prefrontal cortex and risk-taking behavior. This finding remained significant when controlling for total sleep time. Moreover, the association between SWA over the right prefrontal cortex and risk preferences was very similar in all sleep cycles. Our findings suggest that sleep depth in the right prefrontal cortex, an area involved in self-regulation, might serve as a dispositional indicator of lower self-regulatory abilities, which is expressed in greater risk-taking behavior

Local slow-wave activity over the right prefrontal cortex reveals individual risk preferences.

In everyday life, we have to make decisions under varying degrees of risk. Even though previous research has shown that the manipulation of sleep affects risky decision-making, it remains unknown whether individual, temporally stable neural sleep characteristics relate to individual differences in risk preferences. Here, we collected sleep data under normal conditions in fifty-four healthy adults using a portable high-density EEG at participants' home. Whole-brain corrected for multiple testing, we found that lower slow-wave activity (SWA, an indicator of sleep depth) in a cluster of electrodes over the right prefrontal cortex is associated with higher individual risk propensity. Importantly, the association between local sleep depth and risk preferences remained significant when controlling for total sleep time and for time spent in deep sleep, i.e., sleep stages N2 and N3. Moreover, the association between risk preferences and SWA over the right prefrontal cortex was very similar in all sleep cycles. Because the right prefrontal cortex plays a central role in cognitive control functions, we speculate that local sleep depth in this area, as reflected by SWA, might serve as a dispositional indicator of self-regulatory ability, which in turn reflects risk preferences

How Pressure Affects Decision Making

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Risky Decisions and the Opportunity Cost of Time

We investigate the trade-off between the opportunity costs of decisions and their quality in a simple model. In a lab experiment, we introduce exogenous variation in the opportunity costs of time. Contrary to claims in the previous literature, we show that using more time when making small-stake decisions does not indicate irrational behavior, and neither does a positive correlation between decision time and the probability of making mistakes. Such behavior is compatible with rational decisionmaking and our causal experimental evidence and, hence, does not imply that people behave fundamentally irrational when making observable decision errors under risk

Tracing risky decisions for oneself and others: The role of intuition and deliberation

This study contributes to the understanding of how individuals make choices for themselves and on behalf of others in a risky environment. In a laboratory eye-tracking experiment, we investigate whether risk preferences, decision error, and information processing differ between decisions made for oneself and on behalf of others. While we find no differences in risk preferences when deciding for oneself or for someone else, individuals have a greater decision error when deciding for others. Process data partly explains these differences. Individuals spend less time, have less fixations, and inspect less information when deciding for others. We detect similar processing patterns when comparing intuitive and deliberative decision making. We argue that the processing of decisions for oneself is more effortful and involves more extensive deliberation which, in turn, is related to less decision errors

Eyes on the Prize: An (Interactive) Eye-Tracking Study of Motives in Economic Interactions

We investigate how untrained observers use decision makers’ gaze patterns to uncover motives behind their decisions. Gaze patterns can reveal motives, as decision makers dedicate more attention to items particularly relevant for these motives. We display either non-strategic or strategic gaze patterns of decision makers to observers and let the latter infer the former’s motives and actions. While the non-strategic gaze patterns provide strategically undisturbed information, the strategic gaze patterns require taking the future consequences of the interaction into account. When the gaze is non-strategic, observers can recognize the more prosocial and generous decision makers. In contrast, when the gaze is strategic, the eye-tracked decision makers successfully alter their gaze to appear more prosocial. Consequently, less prosocial decision makers are chosen for future interaction more often, leading to increased payoffs for them and decreased payoffs for the observers

The value of decision-making power in social decisions

People differ in whether they like to be in control of a decision or whether they would happily delegate a decision. We explore the heterogeneity and the underlying factors of the participants’ values of decision-making power in an allocation choice between a fair and an unfair option. This allocation decision affects the outcomes of the deciding person and three other people in different ways. We find that people differ in their preference for keeping this social decision, and more than 85% never pay for delegating the choice. The value for keeping the decision-making power is affected by the strength, but not the direction of social preferences, and relates to the preference for keeping a useless decision, i.e. selecting the winning number of a lottery. The value of decision-making power is reflected in response times and both eye- and mouse-tracking