Efficient methods for empirical tests of behavioral economics theories in laboratory and field experiments

In the quest for a descriptive theory of decision-making, the rational actor model in economics imposes rather unrealistic expectations and abilities on human decision makers. The further we move from idealized scenarios, such as perfectly competitive markets, and ambitiously extend the reach of the theory to describe everyday decision making situations, the less sense these assumptions make. Behavioural economics has instead proposed models based on assumptions that are more psychologically realistic, with the aim of gaining more precision and descriptive power. Increased psychological realism, however, comes at the cost of a greater number of parameters and model complexity. Now there are a plethora of models, based on different assumptions, applicable in differing contextual settings, and selecting the right model to use tends to be an ad-hoc process. In this thesis, we develop optimal experimental design methods and evaluate different behavioral theories against evidence from lab and field experiments.

We look at evidence from controlled laboratory experiments. Subjects are presented with choices between monetary gambles or lotteries. Different decision-making theories evaluate the choices differently and would make distinct predictions about the subjects' choices. Theories whose predictions are inconsistent with the actual choices can be systematically eliminated. Behavioural theories can have multiple parameters requiring complex experimental designs with a very large number of possible choice tests. This imposes computational and economic constraints on using classical experimental design methods. We develop a methodology of adaptive tests: Bayesian Rapid Optimal Adaptive Designs (BROAD) that sequentially chooses the "most informative" test at each stage, and based on the response updates its posterior beliefs over the theories, which informs the next most informative test to run. BROAD utilizes the Equivalent Class Edge Cutting (EC²) criteria to select tests. We prove that the EC² criteria is adaptively submodular, which allows us to prove theoretical guarantees against the Bayes-optimal testing sequence even in the presence of noisy responses. In simulated ground-truth experiments, we find that the EC² criteria recovers the true hypotheses with significantly fewer tests than more widely used criteria such as Information Gain and Generalized Binary Search. We show, theoretically as well as experimentally, that surprisingly these popular criteria can perform poorly in the presence of noise, or subject errors. Furthermore, we use the adaptive submodular property of EC² to implement an accelerated greedy version of BROAD which leads to orders of magnitude speedup over other methods.

We use BROAD to perform two experiments. First, we compare the main classes of theories for decision-making under risk, namely: expected value, prospect theory, constant relative risk aversion (CRRA) and moments models. Subjects are given an initial endowment, and sequentially presented choices between two lotteries, with the possibility of losses. The lotteries are selected using BROAD, and 57 subjects from Caltech and UCLA are incentivized by randomly realizing one of the lotteries chosen. Aggregate posterior probabilities over the theories show limited evidence in favour of CRRA and moments' models. Classifying the subjects into types showed that most subjects are described by prospect theory, followed by expected value. Adaptive experimental design raises the possibility that subjects could engage in strategic manipulation, i.e. subjects could mask their true preferences and choose differently in order to obtain more favourable tests in later rounds thereby increasing their payoffs. We pay close attention to this problem; strategic manipulation is ruled out since it is infeasible in practice, and also since we do not find any signatures of it in our data.

In the second experiment, we compare the main theories of time preference: exponential discounting, hyperbolic discounting, "present bias" models: quasi-hyperbolic (α, β) discounting and fixed cost discounting, and generalized-hyperbolic discounting. 40 subjects from UCLA were given choices between 2 options: a smaller but more immediate payoff versus a larger but later payoff. We found very limited evidence for present bias models and hyperbolic discounting, and most subjects were classified as generalized hyperbolic discounting types, followed by exponential discounting.

In these models the passage of time is linear. We instead consider a psychological model where the perception of time is subjective. We prove that when the biological (subjective) time is positively dependent, it gives rise to hyperbolic discounting and temporal choice inconsistency.

We also test the predictions of behavioral theories in the "wild". We pay attention to prospect theory, which emerged as the dominant theory in our lab experiments of risky choice. Loss aversion and reference dependence predicts that consumers will behave in a uniquely distinct way than the standard rational model predicts. Specifically, loss aversion predicts that when an item is being offered at a discount, the demand for it will be greater than that explained by its price elasticity. Even more importantly, when the item is no longer discounted, demand for its close substitute would increase excessively. We tested this prediction using a discrete choice model with loss-averse utility function on data from a large eCommerce retailer. Not only did we identify loss aversion, but we also found that the effect decreased with consumers' experience. We outline the policy implications that consumer loss aversion entails, and strategies for competitive pricing.

In future work, BROAD can be widely applicable for testing different behavioural models, e.g. in social preference and game theory, and in different contextual settings. Additional measurements beyond choice data, including biological measurements such as skin conductance, can be used to more rapidly eliminate hypothesis and speed up model comparison. Discrete choice models also provide a framework for testing behavioural models with field data, and encourage combined lab-field experiments.

Scoping review of adherence promotion theories in pelvic floor muscle training : 2011 ics state-of-the-science seminar research paper I of IV

Aims This paper, the first of four emanating from the International Continence Society's 2011 State-of-the-Science Seminar on pelvic-floor-muscle training (PFMT) adherence, aimed to summarize the literature on theoretical models to promote PFMT adherence, as identified in the research, or suggested by the seminar's expert panel, and recommends future directions for clinical practice and research. Methods Existing literature on theories of health behavior were identified through a conventional subject search of electronic databases, reference-list checking, and input from the expert panel. A core eligibility criterion was that the study included a theoretical model to underpin adherence strategies used in an intervention to promote PFM training/exercise. Results A brief critique of 12 theoretical models/theories is provided and, were appropriate, their use in PFMT adherence strategies identified or examples of possible uses in future studies outlined. Conclusion A better theoretical-based understanding of interventions to promote PFMT adherence through changes in health behaviors is required. The results of this scoping review and expert opinions identified several promising models. Future research should explicitly map the theories behind interventions that are thought to improve adherence in various populations (e.g., perinatal women to prevent or lessen urinary incontinence). In addition, identified behavioral theories applied to PFMT require a process whereby their impact can be evaluated.

Scoping review of adherence promotion theories in pelvic floor muscle training : 2011 ics state-of-the-science seminar research paper I of IV

Aims This paper, the first of four emanating from the International Continence Society's 2011 State-of-the-Science Seminar on pelvic-floor-muscle training (PFMT) adherence, aimed to summarize the literature on theoretical models to promote PFMT adherence, as identified in the research, or suggested by the seminar's expert panel, and recommends future directions for clinical practice and research. Methods Existing literature on theories of health behavior were identified through a conventional subject search of electronic databases, reference-list checking, and input from the expert panel. A core eligibility criterion was that the study included a theoretical model to underpin adherence strategies used in an intervention to promote PFM training/exercise. Results A brief critique of 12 theoretical models/theories is provided and, were appropriate, their use in PFMT adherence strategies identified or examples of possible uses in future studies outlined. Conclusion A better theoretical-based understanding of interventions to promote PFMT adherence through changes in health behaviors is required. The results of this scoping review and expert opinions identified several promising models. Future research should explicitly map the theories behind interventions that are thought to improve adherence in various populations (e.g., perinatal women to prevent or lessen urinary incontinence). In addition, identified behavioral theories applied to PFMT require a process whereby their impact can be evaluated.

El sistema multifondos de pensiones colombiano bajo las nuevas teorías del comportamiento financiero

En Colombia, después de casi dos décadas de la creación del régimen de cuentas privadas, se implementó una reforma donde se pasa de un sistema con un unico fondo a uno multifondos. Este tipo de reformas se vienen implementando en diferentes paises europeos y de Latino America. A la luz de las teorías clásicas dicha reforma trae mejoras en el bienestar de los individuos; sin embargo, la literatura sobre las nuevas teorías del comportamiento sugiere que los individuos no siempre toman decisiones que están de acuerdo con los supuestos de las teorías clásicas. Este trabajo estudia esta reforma en Colombia bajo algunas de las teorías del comportamiento financiero. Se encuentra que aún cuando el afiliado se quede en la opción default , o actúe con aversión a la pérdida, va a obtener valores en sus cuentas privadas mayores a las que obtendría con un sistema de un único fondo.

Intencionalidade, linguagem e análise do comportamento

As abordagens analítico-comportamentais da linguagem ainda não conseguiram fornecer um tratamento conceitual e empírico adequado dos comportamentos verbais complexos. Uma proposta funcionalista recente que vem abordando repertórios complexos na aquisição e no desenvolvimento da linguagem é a teoria da aquisição da linguagem baseada no uso, de Tomasello e cols. Esta teoria vem se desenvolvendo no interior de uma análise mais ampla de Tomasello e cols. sobre a evolução da cognição humana. Nesta proposta, a compreensão e o compartilhamento da intencionalidade são elementos-chave para o desenvolvimento cognitivo e linguístico humano. E é justamente o uso do conceito de intencionalidade o que tem produzido as principais críticas a esta proposta, principalmente, enquanto possibilidade de representar um retorno às propostas mentalistas sobre cognição e linguagem. Com base nisso, o presente trabalho procurou: (1) analisar a proposta de Tomasello e cols. sobre a evolução da cognição humana e a relação entre essa proposta e a aquisição e o desenvolvimento da linguagem – analisando, especificamente, o papel do conceito de intencionalidade nessa proposta e a relação entre intencionalidade e linguagem; (2) analisar o tratamento do conceito de intencionalidade nos trabalhos de John R. Searle e de Daniel C. Dennett, comparando-o com o proposto por Tomasello e cols., segundo os critérios de (a) definição de intencionalidade e (b) relação entre intencionalidade e linguagem; e (3) analisar o tratamento que o conceito de intencionalidade tem recebido na Análise do Comportamento, comparandoo com o proposto por Tomasello e cols, segundo os mesmos critérios (a) e (b). Esperava-se que estas análises permitissem um maior esclarecimento sobre o uso do conceito de intencionalidade na proposta de Tomasello e cols. e uma aproximação dessa proposta com um referencial analítico-comportamental, i.e., sem recorrer a entidades mentais como elementos explicativos da cognição e da linguagem. Tomasello e cols. propõem que a cognição humana é um tipo de cognição primata, derivada de adaptações biológicas característica dos primatas em geral para compreender os outros intencionalmente, em termos de ações, percepções, estados emocionais e objetivos, além de uma motivação exclusivamente humana para compartilhar intencionalidade com os outros. A partir dessas características, os humanos se tornaram capazes de se engajar em atividades de colaboração relacionadas à cognição cultural (envolvendo a criação e o uso de símbolos lingüísticos e matemáticos, artefatos culturais, tecnologias, práticas culturais e instituições sociais), que alteraram profundamente os modos de interação social da espécie humana, permitindo a ela acumular e modificar conhecimentos ao longo da história e transmitir esses conhecimentos para as gerações posteriores. Considerando a análise dos usos do conceito de intencionalidade nas propostas de Tomasello e cols, Searle, Dennett e da Análise do Comportamento, foi possível estabelecer uma relação entre as propostas de Tomasello e cols. e de Dennett, ambas caracterizando a intencionalidade como um conjunto de habilidades cognitivo-comportamentais dos organismos, resultante da história evolutiva das espécies. Contudo, foi possível relacionar o uso do o conceito de intencionalidade nas propostas de Searle e da Análise do Comportamento com o conceito de intencional na proposta de Tomasello e cols., ambos significando uma propriedade referencial (i.e., estar relacionado com) de certos fenômenos em relação a aspectos do mundo. No que concerne à relação entre intencionalidade e linguagem, as propostas de Tomasello e cols., Searle e de Dennett destacam a importância da interação da intencionalidade com a linguagem para a evolução da cognição humana propriamente dita. Contudo, Tomasello e cols. se aproximam mais do modelo de Searle, ao sugerirem que a linguagem simbólica é uma habilidade comportamental humana derivada da intencionalidade. Dennett, por outro lado, se contrapõe a essa hipótese, afirmando que intencionalidade e linguagem simbólica são dois fenômenos comportamentais distintos que co-evoluíram e passaram a interagir em certo momento da história evolutiva da espécie humana. Em geral, o presente trabalho sugere que os principais conceitos utilizados na proposta de Tomasello e cols. sobre a evolução da cognição humana e, especificamente, na teoria da aquisição da linguagem baseada no uso, são compatíveis com alguns conceitos aplicados em outras áreas do conhecimento, como a filosofia da mente e as ciências do comportamento. Em adição, o presente trabalho também possibilitou uma aproximação da proposta de Tomasello e cols. com um referencial analíticocomportamental. Sugere-se que (i) a adoção de um vocabulário analítico-comportamental pode contribuir para abordar os fenômenos contemplados na proposta de Tomasello e cols., evitando a recorrência a pressupostos mentalistas; e, (ii) a proposta de Tomasello e cols. pode oferecer relevantes contribuições para a Análise do Comportamento, no que se refere à investigação de processos simbólicos, principalmente, a aquisição e o desenvolvimento da linguagem simbólica, na medida em que esta proposta tem investigado processos simbólicos mais complexos do que aqueles tradicionalmente investigados na Análise do Comportamento.

International Agricultural Trade under Regulatory Asymmetry: An Economic Analysis of SME Export Behavior

Over the last three decades, international agricultural trade has grown significantly. Technological advances in transportation logistics and storage have created opportunities to ship anything almost anywhere. Bilateral and multilateral trade agreements have also opened new pathways to an increasingly global market place. Yet, international agricultural trade is often constrained by differences in regulatory regimes. The impact of “regulatory asymmetry” is particularly acute for small and medium sized enterprises (SMEs) that lack resources and expertise to successfully operate in markets that have substantially different regulatory structures. As governments seek to encourage the development of SMEs, policy makers often confront the critical question of what ultimately motivates SME export behavior. Specifically, there is considerable interest in understanding how SMEs confront the challenges of regulatory asymmetry. Neoclassical models of the firm generally emphasize expected profit maximization under uncertainty, however these approaches do not adequately explain the entrepreneurial decision under regulatory asymmetry. Behavioral theories of the firm offer a far richer understanding of decision making by taking into account aspirations and adaptive performance in risky environments. This paper develops an analytical framework for decision making of a single agent. Considering risk, uncertainty and opportunity cost, the analysis focuses on the export behavior response of an SME in a situation of regulatory asymmetry. Drawing on the experience of fruit processor in Muzaffarpur, India, who must consider different regulatory environments when shipping fruit treated with sulfur dioxide, the study dissects the firm-level decision using @Risk, a Monte Carlo computational tool.

Convention, Tradition, and the New Wave : Assessing Clinician Identity within Behavior Therapy

In the first wave, behaviorists questioned the conventional wisdom that inner experience was relevant to understanding human behavior. In the 1970s, cognitive-behavioral theories emphasized the importance of the cognitive element, not just the environment, in explaining and modifying behavior. The third wave is drawn from advances in basic and applied behavior analysis of language, Eastern mystical traditions, and less empirically oriented therapeutic approaches. Examples include Acceptance and Commitment Therapy (ACT), Dialectical Behavior Therapy (DBT), Functional Analytic Psychotherapy (FAP), and Mindfulness Based Cognitive Therapy (IBCT). This study reports a survey of clinicians and non-clinicians who self-identify with second or third wave approaches, and a group of undergraduate psychology students intended to represent a layperson or folk psychological approach. Their preferences, in the context of 10 clinical vignettes, among 5 different therapeutic responses or interventions that included "ACT-like," "cognitive," and commonsense or "neutral" options were measured. Third wave-oriented respondents exhibited more consistency than others in their preference for interventions that match their self-identified theoretical orientation, however the author suggests that construction of the vignettes may have influenced this result.

Processo de awareness dos utilizadores nas redes militares

O presente trabalho de investigação aplicada tem como titulo “Processo de Awareness dos Utilizadores nas Redes Militares”, com o intuito de “identificar a forma mais eficiente e eficaz de efetuar um design de um processo de awareness de forma a sensibilizar os utilizadores do sistema de e-mail do Exército para os ataques de phishing” que é o objetivo desta investigação. Por este motivo, de início foram selecionados objetivos específicos que remetem para este principal. Foi definido que precisamos de conhecer as principais teorias comportamentais que influenciam o sucesso dos ataques de phishing, de forma a perceber e combater estes mesmos. Foi, também, necessário perceber quais os principais métodos ou técnicas de ensino de atitudes, para possibilitar a sensibilização dos utilizadores, como também era necessário definir o meio de awareness para executar esta mesma. Por último, era necessário o processo de awareness, portanto, precisamos de critérios de avaliação e, para isso, é importante definir estes mesmos para validar a investigação. Para responder a estes quatro objetivos específicos e ao objetivo geral da investigação foi criada a questão central do trabalho que é “Como efetuar o design de um processo de awareness para o Exército que reduza o impacto dos ataques de phishing executados através do seu sistema de e-mail?” Devido ao carácter teórico-prático desta investigação, foi decidido que o método de investigação seria o Hipotético-Dedutivo, e o método de procedimento seria o Estudo de Caso. Foi uma investigação exploratória, utilizando as técnicas de pesquisa bibliográfica e análise documental para executar uma revisão de literatura completa com o intuito de apoiar a investigação, como, também, fundamentar todo o trabalho de campo realizado. Para a realização deste estudo, foi necessário estudar a temática Segurança da Informação, já que esta suporta a investigação. Para existir segurança da informação é necessário que as propriedades da segurança da informação se mantenham preservadas, isto é, a confidencialidade, a integridade e a disponibilidade. O trabalho de campo consistiu em duas partes, a construção dos questionários e da apresentação de sensibilização e a sua aplicação e avaliação (outputs da investigação). Estes produtos foram usados na sessão de sensibilização através da aplicação do questionário de aferição seguido da apresentação de sensibilização, e terminando com o questionário de validação (processo de awareness). Conseguiu-se, após a sensibilização, através do processo de awareness, que os elementos identificassem com maior rigor os ataques de phishing. Para isso utilizou-se, na sensibilização, o método de ensino ativo, que incorpora boas práticas para a construção de produtos de sensibilização, utilizando os estilos de aprendizagem auditivo, mecânico e visual, que permite alterar comportamentos.

What Influences Information Security Behavior? A Study with Brazilian Users

The popularization of software to mitigate Information Security threats can produce an exaggerated notion about its full effectiveness in the elimination of any threat. This situation can result reckless users behavior, increasing vulnerability. Based on behavioral theories, a theoretical model and hypotheses were developed to understand the extent to which human perception of threat, stress, control and disgruntlement can induce responsible behavior. A self-administered questionnaire was created and validated. The data were collected in Brazil, and complementary results regarding similar studies conducted in USA were found. The results show that there is influence of information security orientations provided by organizations in the perception about severity of the threat. The relationship between threat, effort, control and disgruntlement, and the responsible behavior towards information security was verified through linear regression. The contributions also involve relatively new concepts in the field and a new research instrument.

A study of behavioral finance: background, theories and application

Behavioral finance, or behavioral economics, consists of a theoretical field of research stating that consequent psychological and behavioral variables are involved in financial activities such as corporate finance and investment decisions (i.e. asset allocation, portfolio management and so on). This field has known an increasing interest from scholar and financial professionals since episodes of multiple speculative bubbles and financial crises. Indeed, practical incoherencies between economic events and traditional neoclassical financial theories had pushed more and more researchers to look for new and broader models and theories. The purpose of this work is to present the field of research, still ill-known by a vast majority. This work is thus a survey that introduces its origins and its main theories, while contrasting them with traditional finance theories still predominant nowadays. The main question guiding this work would be to see if this area of inquiry is able to provide better explanations for real life market phenomenon. For that purpose, the study will present some market anomalies unsolved by traditional theories, which have been recently addressed by behavioral finance researchers. In addition, it presents a practical application of portfolio management, comparing asset allocation under the traditional Markowitz’s approach to the Black-Litterman model, which incorporates some features of behavioral finance.

Essays in behavioral and neuro-economics

This thesis examines foundational questions in behavioral economics—also called psychology and economics—and the neural foundations of varied sources of utility. We have three primary aims: First, to provide the field of behavioral economics with psychological theories of behavior that are derived from neuroscience and to use those theories to identify novel evidence for behavioral biases. Second, we provide neural and micro foundations of behavioral preferences that give rise to well-documented empirical phenomena in behavioral economics. Finally, we show how a deep understanding of the neural foundations of these behavioral preferences can feed back into our theories of social preferences and reference-dependent utility.

The first chapter focuses on classical conditioning and its application in identifying the psychological underpinnings of a pricing phenomenon. We return to classical conditioning again in the third chapter where we use fMRI to identify varied sources of utility—here, reference dependent versus direct utility—and cross-validate our interpretation with a conditioning experiment. The second chapter engages social preferences and, more broadly, causative utility (wherein the decision-maker derives utility from making or avoiding particular choices).

Integrating simultaneous prosocial and antisocial behavior into theories of collective action.

Trust and cooperation constitute cornerstones of common-pool resource theory, showing that "prosocial" strategies among resource users can overcome collective action problems and lead to sustainable resource governance. Yet, antisocial behavior and especially the coexistence of prosocial and antisocial behaviors have received less attention. We broaden the analysis to include the effects of both "prosocial" and "antisocial" interactions. We do so in the context of marine protected areas (MPAs), the most prominent form of biodiversity conservation intervention worldwide. Our multimethod approach relied on lab-in-the-field economic experiments (n = 127) in two MPA and two non-MPA communities in Baja California, Mexico. In addition, we deployed a standardized fishers' survey (n = 544) to verify the external validity of our findings and expert informant interviews (n = 77) to develop potential explanatory mechanisms. In MPA sites, prosocial and antisocial behavior is significantly higher, and the presence of antisocial behavior does not seem to have a negative effect on prosocial behavior. We suggest that market integration, economic diversification, and strengthened group identity in MPAs are the main potential mechanisms for the simultaneity of prosocial and antisocial behavior we observed. This study constitutes a first step in better understanding the interaction between prosociality and antisociality as related to natural resources governance and conservation science, integrating literatures from social psychology, evolutionary anthropology, behavioral economics, and ecology.

A behavioral comparison of male and female adults with high functioning autism spectrum conditions

Autism spectrum conditions (ASC) affect more males than females in the general population. However, within ASC it is unclear if there are phenotypic sex differences. Testing for similarities and differences between the sexes is important not only for clinical assessment but also has implications for theories of typical sex differences and of autism. Using cognitive and behavioral measures, we investigated similarities and differences between the sexes in age- and IQ-matched adults with ASC (high-functioning autism or Asperger syndrome). Of the 83 (45 males and 38 females) participants, 62 (33 males and 29 females) met Autism Diagnostic Interview-Revised (ADI-R) cut-off criteria for autism in childhood and were included in all subsequent analyses. The severity of childhood core autism symptoms did not differ between the sexes. Males and females also did not differ in self-reported empathy, systemizing, anxiety, depression, and obsessive-compulsive traits/symptoms or mentalizing performance. However, adult females with ASC showed more lifetime sensory symptoms (p = 0.036), fewer current socio-communication difficulties (p = 0.001), and more self-reported autistic traits (p = 0.012) than males. In addition, females with ASC who also had developmental language delay had lower current performance IQ than those without developmental language delay (p<0.001), a pattern not seen in males. The absence of typical sex differences in empathizing-systemizing profiles within the autism spectrum confirms a prediction from the extreme male brain theory. Behavioral sex differences within ASC may also reflect different developmental mechanisms between males and females with ASC. We discuss the importance of the superficially better socio-communication ability in adult females with ASC in terms of why females with ASC may more often go under-recognized, and receive their diagnosis later, than males.

Construct validity of behavioral models of anxiety: where experimental psychopathology meets ecology and evolution

In experimental psychopathology, construct validity is usually enhanced by addressing theories from other fields in its nomological network. In the field of anxiety research, this construct is related to antipredator behavior, conserved across phylogeny in its functions and neural basis, but not necessarily on its topography. Even though the relations between behavioral models of anxiety and statements from behavioral ecology and evolutionary biology are commonly made in anxiety research, these are rarely tested, at least explicitly. However, in order to increase construct validity in experimental anxiety, testing predictions from those theories is highly desirable. This article discusses these questions, suggesting a few ways in which behavioral ecological and evolutionary hypotheses of anxiety-like behavior may be tested.