Losses, gains, and brains: Neuroeconomics can help to answer open questions about loss aversion

Much is understood about loss aversion (the tendency for losses to have greater hedonic impact than comparable gains), but open questions remain. First, there is debate about whether loss aversion is best understood as the byproduct of a single system within the brain that treats losses and gains asymmetrically or the interaction of separate deliberative and emotional systems. Second, some have questioned whether loss aversion alone is the best account for the endowment effect. Alternative accounts, based on the differential focus induced by buying versus selling, the order in which buyers and sellers consider positive and negative aspects of the good, the extent to which ownership induces liking, and the desire to avoid making a bad deal, have been proposed. Third, it is unclear whether losses are actually experienced more intensely than comparable gains, or whether people simply behave as if they were. Some have argued that loss aversion is nothing more than an affective forecasting error, while others have argued that there are many situations in which losses are actually more impactful than comparable gains. This review synthesizes the insights that behavioral researchers and neuroeconomists have contributed to each debate, and highlights potential avenues for future research.Peer Reviewedhttps://deepblue.lib.umich.edu/bitstream/2027.42/141938/1/jcpy453.pd

The Role of Tacit Routines in Coordinating Activity

We explore the influence of tacit routines in obtaining coordination. Our experiment uses simple laboratory "firms," in which we interfere with one kind of firm's ability to develop tacit routines. Thus, our firms vary in the degree to which they rely on this kind of knowledge – instead of other, explicit, mechanisms – for obtaining coordination. We find that interfering with the development of tacit routines harms firms’ ability to coordinate. We then explore the extent to which firms are able to transfer their ability to coordinate activity, either to a new domain or to new members. Our results indicate that tacit routines transfer more easily than other mechanisms to a new, but closely related, domain. However, routine-based firms perform slightly worse in their ability to incorporate new members

Productivity and the structure of employment

The paper examines the structure of employment defined by industry, skill, age, part-time and casual employment status and the distribution of earnings. Employment patterns, and changes in employment profiles, are examined for differences between high productivity growth industry sectors and low productivity growth industry sectors.productivity - employment - labour - workforce - education - occupation - unemployment - skills

Large Steps toward Small Donations: Reputational Benefits of Nominal Corporate Generosity

Cause marketing campaigns often highlight two attributes: the percent-of-proceeds from each purchase to be donated, and the maximum amount the company will donate. For example, a recent campaign by Chipotle pledged to donate 50% of its proceeds, up to $35,000, to a zoo. How do consumers process this information when forming perceptions of the brand’s generosity? We find that the percent-of-proceeds attribute is more influential because it is easier to evaluate. As a result, brands can appear highly generous without actually being highly generous (by pledging a high percent-of-proceeds and a low maximum donation). The perceived generosity induced by cause marketing campaigns that donate a high percent-of-proceeds can lead to greater desire for the brand’s products. Comparative context (provided by exposing people to multiple cause marketing campaigns) helps people evaluate the maximum donation attribute and reduces the undue influence of the percent-of-proceeds attribute.https://deepblue.lib.umich.edu/bitstream/2027.42/136602/1/1365_Rick.pd

Income Tax and the Motivation to Work

How does income tax influence the motivation to work? We propose that the degree of effort exertion in the presence of income tax depends on people’s attitudes toward two key components of taxation: redistribution and government intervention. For people favorable toward both, working while taxed is aligned with personal identity and may actually enhance motivation. All others, however, may find taxes demotivating. In two incentive-compatible labor experiments, framing wages as subject to an income tax reduced participants’ productivity unless they were chronically favorable toward both redistribution and government intervention. This latter group was significantly more productive when taxed. An objectively equivalent intervention that did not redistribute a portion of participants’ wages (framed as a wage “match” rather than a “tax”) did not motivate anyone to work harder. Our findings suggest that the net effect of income tax on productivity depends on the distribution of attitudes toward redistribution and government intervention.http://deepblue.lib.umich.edu/bitstream/2027.42/113260/1/1285_Rick.pd

EVALUATION OF MARKET ADVISORY SERVICE PERFORMANCE IN HOGS

The purpose of this paper is to investigate the pricing performance of agricultural market advisory services in hogs. Pricing recommendations are available for all quarters from the beginning of 1995 through the end of 2001. The results show that average differences between advisory programs and market benchmarks are small in nominal terms for all three benchmarks, -$0.41/bu.,$O.OO/cwt. and $-0.27/cwt. versus the cash, index and empirical benchmarks, respectively, and none of the average differences are significantly different from zero. Hence, advisory programs as a group do not outperform the market benchmarks in terms of average price. Advisory programs also do not outperform the market benchmarks in terms of average price and risk. Finally, there is little evidence that advisory programs with superior performance can be usefully selected based on past performance in the hog market.Marketing,

Nicotine Enhances Operant Responding for Qualitatively Distinct Reinforcers Under Maintenance and Extinction Conditions

RATIONALE—Nicotine enhancement of reward has been implicated as an important contributor to tobacco addiction. Despite the attention that reward enhancement has received, the behavioral mechanisms whereby nicotine enhances operant responding remain largely unknown. The present study sought to extend previous work by evaluating the effects of nicotine on responding for two qualitatively different rewards (visual stimulation (VS) and 4% sucrose solution) under fixed-ratio (FR) maintenance and extinction conditions. METHOD—Sprague-Dawley rats were trained to press an active lever for VS (Experiment 1) or 4% sucrose solution (Experiment 2) and evaluated over 15 sessions on a FR5 schedule of reinforcement. Nicotine (0.4 mg base/kg, SC) or saline were administered 5 min before each session; the alternate solution was given in the home cage after the session. The effects of nicotine on extinction responding were then assessed over 5 sessions and rats were divided into 4 groups based on drug of injection received during FR-maintenance and extinction phases (Maintenance- Extinction): Nic-Nic, Nic-Sal, Sal-Sal, and Sal-Nic. RESULTS—Nicotine increased active lever response rates for both VS and 4% sucrose under FR5 maintenance conditions. Nicotine also increased response rates in the Nic-Nic group relative to all other groups under extinction conditions in both experiments, though this effect had greater longevity following VS maintenance conditions than sucrose. Enhancement of responding during extinction does not appear dependent upon locomotor activation by nicotine

A quantitative analysis of the reward-enhancing effects of nicotine using reinforcer demand

Reward enhancement by nicotine has been suggested as an important phenomenon contributing toward tobacco abuse and dependence. Reinforcement value is a multifaceted construct not fully represented by any single measure of response strength. The present study evaluated the changes in the reinforcement value of a visual stimulus in 16 male Sprague–Dawley rats using the reinforcer demand technique proposed by Hursh and Silberberg. The different parameters of the model have been shown to represent differing facets of reinforcement value, including intensity, perseverance, and sensitivity to changes in response cost. Rats lever-pressed for 1-min presentations of a compound visual stimulus over blocks of 10 sessions across a range of response requirements (fixed ratio 1, 2, 4, 8, 14, 22, 32). Nicotine (0.4 mg/kg, base) or saline was administered 5 min before each session. Estimates from the demand model were calculated between nicotine and saline administration conditions within subjects and changes in reinforcement value were assessed as differences in Q0, Pmax, Omax, and essential value. Nicotine administration increased operant responding across the entire range of reinforcement schedules tested, and uniformly affected model parameter estimates in a manner suggesting increased reinforcement value of the visual stimulus