Social comparisons are associated with poorer and riskier financial decision making, no matter whether encounters are sporadic or repeated

Previous research suggests that social comparisons affect decision making under uncertainty. However, the role of the length of the social interaction for this relationship remains unknown. This experiment tests the effect of social comparisons on financial risk taking and how this effect is modulated by whether social encounters are sporadic or repeated. Participants carried out a computer task consisting of a series of binary choices between lotteries of varying profitability and risk, with real monetary stakes. After each decision, participants could compare their own payoff to that of a counterpart who made the same decision at the same time and whose choices/earnings did not affect the participants’ earnings. The design comprised three between-subjects treatments which differed in the nature of the social interaction: participants were informed that they would be matched with either (a) a different participant in each trial, (b) the same participant across all trials, or (c) a "virtual participant", i.e. a computer algorithm. Compared to the non-social condition (c), subjects in both social conditions (a and b) chose lotteries with lower expected value (z=-3.10, p<0.01) and higher outcome variance (z=2.13, p=0.03). However, no differences were found between the two social conditions (z=1.15, p=0.25 and z=0.35, p=0.73, respectively). These results indicate that social comparison information per se leads to poorer and riskier financial decisions, irrespective of whether or not the referent other is encountered repeatedly

Heterogeneous motives in the Trust Game: a tale of two roles

Trustful and trustworthy behaviors have important externalities for the society. But what exactly drives people to behave in a trustful and trustworthy manner? Building on research suggesting that individuals’ social preferences might be a common factor informing both behaviors, we study the impact of a set of different motives on individuals’ choices in a dual-role Trust Game (TG). We employ data from a large-scale representative experiment (N = 774), where all subjects played both roles of a binary TG with real monetary incentives. Subjects’ social motives were inferred using their decisions in a Dictator Game and a dual-role Ultimatum Game. Next to self-interest and strategic motives we consider preferences for altruism, spitefulness, egalitarianism, and efficiency. We demonstrate that there exists considerable heterogeneity in motives in the TG. Most importantly, among individuals who choose to trust as trustors, social motives can differ dramatically as there is a non-negligible proportion of them who seem to act out of (strategic) self-interest whereas others are driven more by efficiency considerations. Subjects’ elicited trustworthiness, however, can be used to infer such motivations: while the former are not trustworthy as trustees, the latter are. We discuss that research on trust can benefit from adding the second player’s choice in TG designs

Trustors' disregard for trustees deciding quickly or slowly in three experiments with time constraints

Many decisions in the economic and social domain are made under time constraints, be it under time pressure or forced delay. Requiring individuals to decide quickly or slowly often elicit different responses. Time pressure has been associated with inefficiency in market settings and market regulation often requires individuals to delay their decisions via cooling-off periods. Yet, recent research suggests that people who make reflective decisions are met with distrust. If this extends to external time constraints, then forcing individuals to delay their decisions may be counterproductive in scenarios where trust considerations are important, such as in market and organizational design. In three Trust Game experiments (total number of participants = 1872), including within- and between subjects designs, we test whether individuals trust (more) someone who is forced to respond quickly (intuitively) or slowly (reflectively). We find that trustors do not adjust their behavior (or their beliefs) to the trustee’s time conditions. This seems to be an appropriate response because time constraints do not affect trustees’ behavior, at least when the game decisions are binary (trust vs. don’t trust; reciprocate vs. don’t reciprocate) and therefore mistakes cannot explain choices. Thus, delayed decisions per se do not seem to elicit distust

The cognitive basis of social behavior: cognitive reflection overrides antisocial but not always prosocial motives

Even though human social behavior has received considerable scientific attention in the last decades, its cognitive underpinnings are still poorly understood. Applying a dual-process framework to the study of social preferences, we show in two studies that individuals with a more reflective/deliberative cognitive style, as measured by scores on the Cognitive Reflection Test (CRT), are more likely to make choices consistent with “mild” altruism in simple non-strategic decisions. Such choices increase social welfare by increasing the other person's payoff at very low or no cost for the individual. The choices of less reflective individuals (i.e., those who rely more heavily on intuition), on the other hand, are more likely to be associated with either egalitarian or spiteful motives. We also identify a negative link between reflection and choices characterized by “strong” altruism, but this result holds only in Study 2. Moreover, we provide evidence that the relationship between social preferences and CRT scores is not driven by general intelligence. We discuss how our results can reconcile some previous conflicting findings on the cognitive basis of social behavior

BMI is not related to altruism, fairness, trust or reciprocity: experimental evidence from the field and the lab

Over the past few decades obesity has become one of the largest public policy concerns among the adult population in the developed world. Obesity and overweight are hypothesized to affect individuals’ sociability through a number of channels, including discrimination and low self-esteem. However, whether these effects translate into differential behavioural patterns in social interactions remains unknown. In two large-scale economic experiments, we explore the relationship between Body Mass Index (BMI) and social behaviour, using three paradigmatic economic games: the dictator, ultimatum, and trust games. Our first experiment employs a representative sample of a Spanish city's population (N=753), while the second employs a sample of university students from the same city (N=618). Measures of altruism, fairness/equality, trust and reciprocity are obtained from participants’ experimental decisions. Using a variety of regression specifications and control variables, our results suggest that BMI does not exert an effect on any of these social preferences. Some implications of these findings are discussed

Organizations should know their people: a behavioral economics approach

Public and private organizations are increasingly applying behavioral economics methods to a variety of issues such as mechanism design and incentive architecture. However, there has been little focus on how experimental tools used in behavioral economics can help companies learn more about their (current or prospective) workforce and, more specifically, about their employees’ tastes and inclinations. This has important implications for broader organizational performance since some designs/incentives are likely to affect only individuals with a particular disposition (e.g. risk averse or fairness oriented) but not others, or can even have opposite effects on individuals with different sets of preferences. In this commentary, we point out a number of promising avenues for the application of a behavioral economics lens to understand and manage people within organizations. A comprehensive case study is also provided

Can exposure to prenatal sex hormones (2D:4D) predict cognitive reflection?

The Cognitive Reflection Test (CRT) is a test introduced by Frederick (2005). The task is designed to measure the tendency to override an intuitive response that is incorrect and to engage in further reflection that leads to the correct response. The consistent sex differences in CRT performance may suggest a role for prenatal sex hormones. A now widely studied putative marker for relative prenatal testosterone is the second-to-fourth digit ratio (2D:4D). This paper tests to what extent 2D:4D, as a proxy for the prenatal ratio of testosterone/estrogens, can predict CRT scores in a sample of 623 students. After controlling for sex, we observe that a lower 2D:4D (reflecting a relative higher exposure to testosterone) is significantly associated with a higher number of correct answers. The result holds for both hands’ 2D:4Ds. In addition, the effect appears to be stronger for females than for males. We also control for patience and math proficiency, which are significantly related to performance in the CRT. But the effect of 2D:4D on performance in CRT is not reduced with these controls, implying that these variables are not mediating the relationship between digit ratio and CRT

Experimental subjects are not different

Experiments using economic games are becoming a major source for the study of human social behavior. These experiments are usually conducted with university students who voluntarily choose to participate. Across the natural and social sciences, there is some concern about how this “particular” subject pool may systematically produce biased results. Focusing on social preferences, this study employs data from a survey-experiment conducted with a representative sample of a city's population (N = 765). We report behavioral data from five experimental decisions in three canonical games: dictator, ultimatum and trust games. The dataset includes students and non-students as well as volunteers and non-volunteers. We separately examine the effects of being a student and being a volunteer on behavior, which allows a ceteris paribus comparison between self-selected students (students*volunteers) and the representative population. Our results suggest that self-selected students are an appropriate subject pool for the study of social behavior

Religious pro-sociality? Experimental evidence from a sample of 766 Spaniards

This study explores the relationship between several personal religion-related variables and social behaviour, using three paradigmatic economic games: the dictator (DG), ultimatum (UG), and trust (TG) games. A large carefully designed sample of the urban adult population in Granada (Spain) is employed (N = 766). From participants' decisions in these games we obtain measures of altruism, bargaining behaviour and sense of fairness/equality, trust, and positive reciprocity. Three dimensions of religiosity are examined: (i) religious denomination; (ii) intensity of religiosity, measured by active participation at church services; and (iii) conversion out into a different denomination than the one raised in. The major results are: (i) individuals with “no religion” made decisions closer to rational selfish behaviour in the DG and the UG compared to those who affiliate with a “standard” religious denomination; (ii) among Catholics, intensity of religiosity is the key variable that affects social behaviour insofar as religiously-active individuals are generally more pro-social than non-active ones; and (iii) the religion raised in seems to have no effect on pro-sociality, beyond the effect of the current measures of religiosity. Importantly, behaviour in the TG is not predicted by any of the religion-related variables we analyse. While the results partially support the notion of religious pro-sociality, on the other hand, they also highlight the importance of closely examining the multidimensional nature of both religiosity and pro-social behaviour

Facial identity and emotional expression as predictors during economic decisions

Two sources of information most relevant to guide social decision making are the cooperative tendencies associated with different people and their facial emotional displays. This electrophysiological experiment aimed to study how the use of personal identity and emotional expressions as cues impacts different stages of face processing and their potential isolated or interactive processing. Participants played a modified trust game with 8 different alleged partners, and in separate blocks either the identity or the emotions carried information regarding potential trial outcomes (win or loss). Behaviorally, participants were faster to make decisions based on identity compared to emotional expressions. Also, ignored (nonpredictive) emotions interfered with decisions based on identity in trials where these sources of information conflicted. Electrophysiological results showed that expectations based on emotions modulated processing earlier in time than those based on identity. Whereas emotion modulated the central N1 and VPP potentials, identity judgments heightened the amplitude of the N2 and P3b. In addition, the conflict that ignored emotions generated was reflected on the N170 and P3b potentials. Overall, our results indicate that using identity or emotional cues to predict cooperation tendencies recruits dissociable neural circuits from an early point in time, and that both sources of information generate early and late interactive patterns