Cumulative dominance and heuristic performance in binary multi-attribute choice

Working paper 895, Department of Economics and Business, Universitat Pompeu FabraSeveral studies have reported high performance of simple decision heuristics in multi-attribute decision making. In this paper, we focus on situations where attributes are binary and analyze the performance of Deterministic-Elimination-By-Aspects (DEBA) and similar decision heuristics. We consider non-increasing weights and two probabilistic models for the attribute values: one where attribute values are independent Bernoulli randomvariables; the other one where they are binary random variables with inter-attribute positive correlations. Using these models, we show that good performance of DEBA is explained by the presence of cumulative as opposed to simple dominance. We therefore introduce the concepts of cumulative dominance compliance and fully cumulative dominance compliance and show that DEBA satisfies those properties. We derive a lower bound with which cumulative dominance compliant heuristics will choose a best alternative and show that, even with many attributes, this is not small. We also derive an upper bound for the expected loss of fully cumulative compliance heuristics and show that this is moderate even when the number of attributes is large. Both bounds are independent of the values of the weights.Postprint (author’s final draft

Intermittent Reinforcement and the Persistence of Behavior: Experimental Evidence

Whereas economists have made extensive studies of the impact of levels of incentives on behavior, they have paid little attention to the effects of regularity and frequency of incentives. We contrasted three ways of rewarding participants in a real-effort experiment in which individuals had to decide when to exit the situation : a continuous reinforcement schedule (all periods paid) ; a fixed intermittent reinforcement schedule (one out of three periods paid) ; and a random intermittent reinforcement schedule (one out of three periods paid on a random basis). In all treatments, monetary rewards were withdrawn after the same unknown number of periods. Overall, intermittent reinforcement leads to more persistence and higher total effort, while participants in the continuous condition exit as soon as payment stops or decrease effort dramatically. Randomness increases the dispersion of effort, inducing both early exiting and persistence in behavior ; overall, it reduces agents' payoffs. Our interpretation is that, in the presence of regime shifts, both the frequency and the randomness of the reinforcement schedules influence adjustments that participants make across time to their reference points in earnings expectations. This could explain why agents persist in activities although they lose money, such as excess trading in stock markets.Intermittent reinforcement ; ambiguity ; randomness ; incentives ; experiment

Intermittent Reinforcement and the Persistence of Behavior: Experimental Evidence

Whereas economists have made extensive studies of the impact of levels of incentives on behavior, they have paid little attention to the effects of regularity and frequency of incentives. We contrasted three ways of rewarding participants in a real-effort experiment in which individuals had to decide when to exit the situation: a continuous reinforcement schedule (all periods paid); a fixed intermittent reinforcement schedule (one out of three periods paid); and a random intermittent reinforcement schedule (one out of three periods paid on a random basis). In all treatments, monetary rewards were withdrawn after the same unknown number of periods. Overall, intermittent reinforcement leads to more persistence and higher total effort, while participants in the continuous condition exit as soon as payment stops or decrease effort dramatically. Randomness increases the dispersion of effort, inducing both early exiting and persistence in behavior; overall, it reduces agents’ payoffs. Our interpretation is that, in the presence of regime shifts, both the frequency and the randomness of the reinforcement schedules influence adjustments that participants make across time to their reference points in earnings expectations. This could explain why agents persist in activities although they lose money, such as excess trading in stock markets.randomness, ambiguity, intermittent reinforcement, incentives, experiment

U.S. households' access to and use of electronic banking. 1989-2007

Nationwide surveys show that consumers are increasingly embracing technology to make payments and manage their personal finances. However, only about one in two consumers could be considered a heavy user of electronic banking. This article examines changes over time in consumers’ access to, adoption of, and attitudes toward various e-banking products and services and looks at several emerging technologies.Consumers' preferences ; Electronic funds transfers

Understanding the Lived Experiences of Jamiacan Immigrant Youth in Two Southern Ontario Cities

Research done with immigrant youth in Canada has been largely focused on educational outcomes. The experiences of Jamiacan immigrant youth in Canada have not been explored in great depth in the literature. Canadian statistics show however that Jamiacan immigrant youth account for the largest grouping of Caribbean immigrant youth in Canada. Other data sources point to the fact that Jamiacan youth are more likely to be criminalized and face added challenges in society because of racial stereotyping. The goal of this thesis therefore was to explore the experiences of Jamiacan immigrant youth in Kitchener and Toronto, Ontario through an investigation of the factors that facilitate and impede their positive outcomes. This research was based on a qualitative method of inquiry gaining the insights of ten Jamaican immigrant youth and five key informants through in-depth interviews. Data was also collected from nine parents in a focus group. The ecological approach incorporating a risk and resiliency construct provided the framework for the research. The findings showed that the risk factors impacting the lives of Jamiacan immigrant youth in this study far outweighed the protective factors they experienced. At every sphere of functioning youth were faced with a myriad of factors impeding their success. In addition, the interplay of these factors at the various levels of the ecological framework further added to the challenges of youth’s achievement of positive outcomes. Despite these odds, the majority of youth participants reported experiencing positive outcomes like academic success and social integration. The exilic experiences of youth supported the need to clearly delineate in teh ecological construct the cultural community as distinct from the wider society. Cultural community for many youth was an important factor in shaping their national identifies and increasing their sense of belonging within the collective. The findings also raised a number of questions that may give some direction for future research. Questions about how culture impacts youth outcome and its role in the development of resilience emerged. Some of these issues were explored in the discussion of the findings

U.S. consumers and electronic banking, 1995-2003

The availability and variety of electronic banking technologies in the marketplace has greatly expanded in recent years. For financial institutions, e-banking technologies can speed processing, reduce costs, and help attract and retain customers. For consumers, they can save time and money and may be more convenient than more traditional ways of banking. This article draws on data from two nationwide surveys to look at consumer use of such products and services as debit cards, pre-authorized debits, and computer banking, particularly as use relates to consumer demographic characteristics and consumer perceptions. ; The data show a consistent increase in the proportion of consumers using a variety of e-banking technologies. Consumer attitudes toward e-banking generally have become more positive over time, with more consumers seeing e-banking as convenient, familiar, easy to use, and secure. The use of some technologies, particularly debit cards, has become more democratized over time, but it is still the case that most e-banking technologies tend to be used by higher income, higher asset, younger, and better educated households. ; E-banking technologies hold the promise of helping families manage their money, pay their bills on time, and avoid overextending themselves with credit. To take full advantage of them, however, consumers need to become aware of the evolving array of e-banking technologies available to them and understand how different technologies fit with their financial management needs. Financial planners and consumer educators, working with both families and financial institutions, can help the promise become a reality.Electronic funds transfers ; Internet banking

In-work poverty in the East Midlands

Research that explores the nature and scale of in-work poverty in the East Midlands, using several established measures

Use of Financial Services and the Poor

This paper was commissioned for Inclusion in Asset Building: Research and Policy Symposium, an event hosted in September 2000 by the Center for Social Development at Washington University in St. Louis. The paper presents results from an analysis using data from the 1998 Survey of Consumer Finances to explore several aspects of the financial relationships of low-income households. The analyses looked at an updated profile of low-income and poor households, their financial portfolios, their attachment to the mainstream financial sector, and their use of various types of financial institutions. The findings suggest ways to move low-income households into the financial mainstream and ways to make financial institutions more attractive to these low-income customers

Ambiguous incentives and the persistence of effort: Experimental evidence

International audienceWhen the assignment of incentives is uncertain, we study how the regularity and frequency of rewards and risk attitudes influence participation and effort. We contrast three incentive schemes in a real-effort experiment in which individuals decide when to quit : a continuous incentive scheme and two intermittent ones, fixed and random. In all treatments, we introduce a regime shift by withdrawing monetary rewards after the same unknown number of periods. In such an ambiguous environment, we show that less able and more risk averse players are less persistent in effort. Intermittent incentives lead to a greater persistence of effort, while continuous incentives entail exit as soon as payment stops. Randomness increases both earlier and later exiting. This selection effect in terms of ability and risk attitudes combined with the impact of intermittent rewards on persistence lead to an increase in mean performance after the regime shift when incentives are intermittent