Overconfidence and Loss Aversion in Economic Decision Making

In chapter one, we ask if reports of private information about skills, abilities or achievements are affected by image concerns. We develop a simple model that illustrates how image utility can lead to misreporting of private information in contexts where truthful reports maximize monetary outcomes. In addition, we test the model's predictions in a controlled lab experiment. In the experiment, all subjects go through a series of quiz questions and subsequently report a performance measure. We vary if reports are made to an audience or not and find evidence for image effects. In the audience treatment, stated reports are significantly higher than in the private treatment. This suggests that overconfident appearance might be a consequence of social approval seeking. We also find that men state higher self-assessments than women. This gender difference seems to be driven by men responding more strongly to the presence of an audience. Chapter two studies the influence of information on entry choices in a competition with a controlled laboratory experiment. We investigate whether information provision attracts mainly high productivity individuals and reduces competition failure, where competition failure occurs when an individual loses the competition because the opponent holds a higher productivity. In the experiment, subjects face the choice between a competition game and a safe outside option. We analyze subjects’ entry behavior with a benchmark treatment without information and three treatments, where we exogenously manipulate the information on the opponents. Information on the opponent is a promising nudge to raise individuals’ awareness towards the complexity of the decision problem and to update beliefs about success. Our results are, (1) information on the productivity distribution of all potential opponents reduces competition failures by more than 50%, (2) information on the distribution is sufficient, i.e. precise information on the matched opponent’s type does not further diminish failure rates. In chapter three, we theoretically and experimentally study independent private value auctions in the presence of bidders who are loss averse in the sense of Köszegi and Rabin (2007). In one specification, we consider gains and losses in two dimensions separately, about whether they receive the object or not, and how much they pay (narrow bracketing of gains and losses); in the other specification, we consider gains and losses over the entire risk neutral pay off, i.e. the valuation less the bid (wide bracketing of gains and losses). With wide bracketing, we show that the expected revenue for the auctioneer is higher in the first price auction than in the all pay auction, and with narrow bracketing, we show that the opposite is true for the revenue ranking between the first price auction and the all pay auction. In order to test the theoretical predictions, we conduct laboratory experiments, in which money and a real object is auctioned in both a first price auction and an all pay auction. In both settings, the average revenue is significantly higher in the first price auction, suggesting that bidders may behave according to the one dimensional model, although a real object is auctioned. Whereas our findings are inconsistent with narrow bracketing of gains and losses, they are consistent with wide bracketing of gains and losses

Secondary prevention of Alzheimer's dementia: neuroimaging contributions

BACKGROUND: In Alzheimer's disease (AD), pathological changes may arise up to 20 years before the onset of dementia. This pre-dementia window provides a unique opportunity for secondary prevention. However, exposing non-demented subjects to putative therapies requires reliable biomarkers for subject selection, stratification, and monitoring of treatment. Neuroimaging allows the detection of early pathological changes, and longitudinal imaging can assess the effect of interventions on markers of molecular pathology and rates of neurodegeneration. This is of particular importance in pre-dementia AD trials, where clinical outcomes have a limited ability to detect treatment effects within the typical time frame of a clinical trial. We review available evidence for the use of neuroimaging in clinical trials in pre-dementia AD. We appraise currently available imaging markers for subject selection, stratification, outcome measures, and safety in the context of such populations. MAIN BODY: Amyloid positron emission tomography (PET) is a validated in-vivo marker of fibrillar amyloid plaques. It is appropriate for inclusion in trials targeting the amyloid pathway, as well as to monitor treatment target engagement. Amyloid PET, however, has limited ability to stage the disease and does not perform well as a prognostic marker within the time frame of a pre-dementia AD trial. Structural magnetic resonance imaging (MRI), providing markers of neurodegeneration, can improve the identification of subjects at risk of imminent decline and hence play a role in subject inclusion. Atrophy rates (either hippocampal or whole brain), which can be reliably derived from structural MRI, are useful in tracking disease progression and have the potential to serve as outcome measures. MRI can also be used to assess comorbid vascular pathology and define homogeneous groups for inclusion or for subject stratification. Finally, MRI also plays an important role in trial safety monitoring, particularly the identification of amyloid-related imaging abnormalities (ARIA). Tau PET to measure neurofibrillary tangle burden is currently under development. Evidence to support the use of advanced MRI markers such as resting-state functional MRI, arterial spin labelling, and diffusion tensor imaging in pre-dementia AD is preliminary and requires further validation. CONCLUSION: We propose a strategy for longitudinal imaging to track early signs of AD including quantitative amyloid PET and yearly multiparametric MRI

Deception and Self-Deception

Why are people so often overconfident? We conduct an experiment to test the hypothesis that people become overconfident to more effectively persuade or deceive others. After performing a cognitively challenging task, half of our subjects are informed that they can earn money by convincing others of their superior performance. The privately elicited beliefs of informed subjects are significantly more confident than the beliefs of subjects in the control condition. By generating exogenous variation in confidence with a noisy performance signal, we are also able to show that higher confidence indeed makes subjects more persuasive in the subsequent face-to-face interactions

Auctions with Loss Averse Bidders

We theoretically and experimentally study independent private value auctions in the presence of bidders who are loss averse in the sense of Köszegi and Rabin (2007). In one specification, we consider gains and losses in two dimensions separately, about whether they receive the object or not, and how much they pay (narrow bracketing of gains and losses); in the other specification, we consider gains and losses over the entire risk neutral pay off, i.e. the valuation less the bid (wide bracketing of gains and losses). With wide bracketing, we show that the expected revenue for the auctioneer is higher in the first price auction than in the all pay auction, and with narrow bracketing, we show that the opposite is true for the revenue ranking between the first price auction and the all pay auction. In order to test the theoretical predictions, we conduct laboratory experiments, in which money and a real object is auctioned in both a first price auction and an all pay auction. In both settings, the average revenue is significantly higher in the first price auction, suggesting that bidders may behave according to the one dimensional model, although a real object is auctioned. Whereas our findings are inconsistent with narrow bracketing of gains and losses, they are consistent with wide bracketing of gains and losses

Auctions with Loss Averse Bidders

We theoretically and experimentally study independent private value auctions in the presence of bidders who are loss averse in the sense of Köszegi and Rabin (2007). In one specification, we consider gains and losses in two dimensions separately, about whether they receive the object or not, and how much they pay (narrow bracketing of gains and losses); in the other specification, we consider gains and losses over the entire risk neutral pay off, i.e. the valuation less the bid (wide bracketing of gains and losses). With wide bracketing, we show that the expected revenue for the auctioneer is higher in the first price auction than in the all pay auction, and with narrow bracketing, we show that the opposite is true for the revenue ranking between the first price auction and the all pay auction. In order to test the theoretical predictions, we conduct laboratory experiments, in which money and a real object is auctioned in both a first price auction and an all pay auction. In both settings, the average revenue is significantly higher in the first price auction, suggesting that bidders may behave according to the one dimensional model, although a real object is auctioned. Whereas our findings are inconsistent with narrow bracketing of gains and losses, they are consistent with wide bracketing of gains and losses

Risk of COVID-19 after natural infection or vaccinationResearch in context

Background: While vaccines have established utility against COVID-19, phase 3 efficacy studies have generally not comprehensively evaluated protection provided by previous infection or hybrid immunity (previous infection plus vaccination). Individual patient data from US government-supported harmonized vaccine trials provide an unprecedented sample population to address this issue. We characterized the protective efficacy of previous SARS-CoV-2 infection and hybrid immunity against COVID-19 early in the pandemic over three-to six-month follow-up and compared with vaccine-associated protection. Methods: In this post-hoc cross-protocol analysis of the Moderna, AstraZeneca, Janssen, and Novavax COVID-19 vaccine clinical trials, we allocated participants into four groups based on previous-infection status at enrolment and treatment: no previous infection/placebo; previous infection/placebo; no previous infection/vaccine; and previous infection/vaccine. The main outcome was RT-PCR-confirmed COVID-19 >7–15 days (per original protocols) after final study injection. We calculated crude and adjusted efficacy measures. Findings: Previous infection/placebo participants had a 92% decreased risk of future COVID-19 compared to no previous infection/placebo participants (overall hazard ratio [HR] ratio: 0.08; 95% CI: 0.05–0.13). Among single-dose Janssen participants, hybrid immunity conferred greater protection than vaccine alone (HR: 0.03; 95% CI: 0.01–0.10). Too few infections were observed to draw statistical inferences comparing hybrid immunity to vaccine alone for other trials. Vaccination, previous infection, and hybrid immunity all provided near-complete protection against severe disease. Interpretation: Previous infection, any hybrid immunity, and two-dose vaccination all provided substantial protection against symptomatic and severe COVID-19 through the early Delta period. Thus, as a surrogate for natural infection, vaccination remains the safest approach to protection. Funding: National Institutes of Health

Risk of COVID-19 after natural infection or vaccinationResearch in context

Summary: Background: While vaccines have established utility against COVID-19, phase 3 efficacy studies have generally not comprehensively evaluated protection provided by previous infection or hybrid immunity (previous infection plus vaccination). Individual patient data from US government-supported harmonized vaccine trials provide an unprecedented sample population to address this issue. We characterized the protective efficacy of previous SARS-CoV-2 infection and hybrid immunity against COVID-19 early in the pandemic over three-to six-month follow-up and compared with vaccine-associated protection. Methods: In this post-hoc cross-protocol analysis of the Moderna, AstraZeneca, Janssen, and Novavax COVID-19 vaccine clinical trials, we allocated participants into four groups based on previous-infection status at enrolment and treatment: no previous infection/placebo; previous infection/placebo; no previous infection/vaccine; and previous infection/vaccine. The main outcome was RT-PCR-confirmed COVID-19 >7–15 days (per original protocols) after final study injection. We calculated crude and adjusted efficacy measures. Findings: Previous infection/placebo participants had a 92% decreased risk of future COVID-19 compared to no previous infection/placebo participants (overall hazard ratio [HR] ratio: 0.08; 95% CI: 0.05–0.13). Among single-dose Janssen participants, hybrid immunity conferred greater protection than vaccine alone (HR: 0.03; 95% CI: 0.01–0.10). Too few infections were observed to draw statistical inferences comparing hybrid immunity to vaccine alone for other trials. Vaccination, previous infection, and hybrid immunity all provided near-complete protection against severe disease. Interpretation: Previous infection, any hybrid immunity, and two-dose vaccination all provided substantial protection against symptomatic and severe COVID-19 through the early Delta period. Thus, as a surrogate for natural infection, vaccination remains the safest approach to protection. Funding: National Institutes of Health