Asymmetric preference formation in willingness to pay estimates in discrete choice models

Individuals when faced with choices amongst a number of alternatives often adopt a variety of processing rules, ranging from simple linear to complex non-linear treatment of each attribute defining the offer of each alternative. In this paper we investigate the presence of asymmetry in preferences to test for reference effects and differential willingness to pay according to whether we are valuing gains or losses. The findings offer clear evidence of an asymmetrical response to increases and decreases in attributes when compared to the corresponding values for a reference alternative, where the degree of asymmetry varies across attributes and population segments

Distinguished Lecture on Economics in Government: The Private Uses of Public Interests: Incentives and Institutions

As a long-time student of the public sector, I welcomed the opportunity to come to Washington as a member of the Council of Economic Advisers and later to become the Chairman of the Council, partly because it gave me an opportunity to study at first hand this immensely important part of our economy and society and to test my ideas against the reality of government in action

Cognitive heuristics in borderline personality disorder across treatment: A longitudinal non-parametric analysis.

The development of a constructive therapeutic alliance may represent an important feature of interpersonal adaptation in clients with Borderline Personality Disorder (BPD). The present study explores cognitive heuristics as dynamic features of change in relationship with the therapeutic alliance in the treatment of BPD. In total, N = 60 clients with BPD, are included in the present study. In the context of brief therapy, the therapeutic alliance (WAI) is assessed from the client and the therapist perspectives after each therapy session; cognitive heuristics are assessed three times (CERS). The data analyses are on the basis of non-parametric clusters (kml3d) linked with the therapeutic alliance. The results showed that clusters of cognitive heuristics trajectories are linked with the client's therapeutic alliance (t(55) = 2.30, p = .03), but they remained unrelated with the evolution of the therapist's alliance. These results are discussed with regard to the interpersonal adaptiveness of cognitive heuristics in the context of BPD undergoing treatment

Evidence for surprise minimization over value maximization in choice behavior

Classical economic models are predicated on the idea that the ultimate aim of choice is to maximize utility or reward. In contrast, an alternative perspective highlights the fact that adaptive behavior requires agents' to model their environment and minimize surprise about the states they frequent. We propose that choice behavior can be more accurately accounted for by surprise minimization compared to reward or utility maximization alone. Minimizing surprise makes a prediction at variance with expected utility models; namely, that in addition to attaining valuable states, agents attempt to maximize the entropy over outcomes and thus 'keep their options open'. We tested this prediction using a simple binary choice paradigm and show that human decision-making is better explained by surprise minimization compared to utility maximization. Furthermore, we replicated this entropy-seeking behavior in a control task with no explicit utilities. These findings highlight a limitation of purely economic motivations in explaining choice behavior and instead emphasize the importance of belief-based motivations

An IRT Analysis of Motive Questionnaires: The Unified Motive Scales

Multiple inventories claiming to assess the same explicit motive (achievement, power, or affiliation) show only mediocre convergent validity. In three studies (N = 1685) the structure, nomological net, and content coverage of multiple existing motive scales was investigated with exploratory factor analyses. The analyses revealed four approach factors (achievement, power, affiliation, and intimacy) and a general avoidance factor with a facet structure. New scales (the Unified Motive Scales; UMS) were developed using IRT, reflecting these underlying dimensions. In comparison to existing questionnaires, the UMS have the highest measurement precision and provide short (6-item) and ultra-short (3-item) scales. In a fourth study (N = 96), the UMS demonstrated incremental validity over existing motive scales with respect to several outcome criteria

Reducing energy demand: a review of issues, challenges and approaches

Most commentators expect improved energy efficiency and reduced energy demand to provide the dominant contribution to tackling global climate change. But at the global level, the correlation between increased wealth and increased energy consumption is very strong and the impact of policies to reduce energy demand is both limited and contested. Different academic disciplines approach energy demand reduction in different ways: emphasising some mechanisms and neglecting others, being more or less optimistic about the potential for reducing energy demand and providing insights that are more or less useful for policymakers. This article provides an overview of the main issues and challenges associated with energy demand reduction, summarises how this challenge is ‘framed’ by key academic disciplines, indicates how these can provide complementary insights for policymakers and argues that a ‘sociotechnical’ perspective can provide a deeper understanding of the nature of this challenge and the processes through which it can be achieved. The article integrates ideas from the natural sciences, economics, psychology, innovation studies and sociology but does not give equal weight to each. It argues that reducing energy demand will prove more difficult than is commonly assumed and current approaches will be insufficient to deliver the transformation required

Optimal inference with suboptimal models:Addiction and active Bayesian inference

When casting behaviour as active (Bayesian) inference, optimal inference is defined with respect to an agent's beliefs - based on its generative model of the world. This contrasts with normative accounts of choice behaviour, in which optimal actions are considered in relation to the true structure of the environment - as opposed to the agent's beliefs about worldly states (or the task). This distinction shifts an understanding of suboptimal or pathological behaviour away from aberrant inference as such, to understanding the prior beliefs of a subject that cause them to behave less 'optimally' than our prior beliefs suggest they should behave. Put simply, suboptimal or pathological behaviour does not speak against understanding behaviour in terms of (Bayes optimal) inference, but rather calls for a more refined understanding of the subject's generative model upon which their (optimal) Bayesian inference is based. Here, we discuss this fundamental distinction and its implications for understanding optimality, bounded rationality and pathological (choice) behaviour. We illustrate our argument using addictive choice behaviour in a recently described 'limited offer' task. Our simulations of pathological choices and addictive behaviour also generate some clear hypotheses, which we hope to pursue in ongoing empirical work

Static and dynamic views of European integration

There is a theoretical and empirical need to distinguish between static support for the EU as it now is and dynamic support for further integration. Although most Europeans endorse the EU as a good thing today, the European Election Study finds no popular majority for an ever closer union, the commitment of EU institutions. Less than one-third endorses further integration and less than one-third thinks integration has gone too far. The largest group favours keeping the EU as it is. Their outlook reflects ambivalence; they see the EU as having both strengths and weaknesses. It does not reflect lack of EU knowledge or of socio-economic resources, as is the case with ‘don't knows’. While eurozone institutions are committed to further integration, most EU citizens are not. Likewise, there is no majority supporting eurosceptic demands for returning powers to national governments