Economics and psychology in the twenty-first century

This paper begins by exploring four different possible forms of relationship between economics and psychology, which have different connotations in terms of the relative status of the two disciplines. It then focuses on the future for one of these, psychological economics. After setting out the hardcore axioms and positive and negative heuristics of a research programme in psychological economics, it explores institutional and psychological barriers to the success of such a research programme in the context of both research and teaching.

The need for dialogue between the vocational psychological and organisational perspectives on career

As editors of the recently published Vocational psychological and organisational perspectives on career: Towards a multidisciplinary dialogue (Collin & Patton, 2009), we have considerable interest in this particular issue of the Australian Journal of Career Development. This short piece will first present the purpose and thesis of that book and, in the light of them, will then comment on the four papers. The book suggests that to understand the multidimensional and multilayered nature of career, “it has to be studied in a similarly multilayered and multi-perspectival way, and, indeed, it has been” (p. 3). Scholars have pointed out that there is a wide array of disciplines including economics, sociology, anthropology, geography, political science, various branches of psychology (e.g. industrial/organisational (I/O), vocational, counselling), psychiatry, education, organisation studies, organisational behaviour, personnel/human resource management, industrial relations, and more, all of which have something to say about career. Of these, the most influential, according to Peiperl and Arthur (2000), have been psychology, sociology, education and management. These many disciplinary perspectives on career constitute the rich field of career studies.

The psychological impact of industrial strikes: Does involvement in union activity during strikes make a difference?

The current study investigated the psychological impact of a United Steelworkers of America strike on the steelworkers involved, and the relationship between psychological well-being and individuals' levels of involvement in union activity during the strike. Three hundred and fifty-one steelworkers (302 `strikers' and 49 `non-strikers') completed surveys measuring a range of demographic and psychological well-being variables. Strikers, compared to non-strikers, reported higher levels of depression, anxiety, and irritation, and lower levels of mental health. For strikers, engaging in higher levels of union activity during the strike was associated with better psychological well-being. Jahoda's theory of deprivation during unemployment is used as the lens through which to explain some of the results, supporting the view that latent benefits associated with work are important for psychological well-being. A range of practical implications are offered for unions and their members.

The role of psychological and physiological factors in decision making under risk and in a dilemma

We study the difference in the result of two different risk elicitation methods by linking estimates of risk attitudes to gender, age, personality traits, a decision in a dilemma situation, and physiological states measured by heart rate variability (HRV). Our results indicate that differences between the methods can partly be explained by gender, but not by personality traits. Furthermore, HRV is linked to risktaking in the experiment for at least one of the methods, indicating that more stressed individuals display more risk aversion. Finally, we and that risk attitudes are not predictive of the ability to decide in a dilemma, but personality traits are. Surprisingly, there is also no apparent relationship between the physiological state during the dilemma situation and the ability to make a decision.

Interaction in the Multicultural Classroom : Towards Culturally Sensitive Home Economics Education

Continuous growth in the number of immigrant students has changed the Finnish school environment. The resulting multicultural school environment is new for both teachers and students. In order to develop multicultural learning environments, there is a need to understand immigrant students everyday lives in school. In this study, home economics is seen as a fruitful school subject area for understanding these immigrant students lives as they cope with school and home cultures that may be very different from each other. Home economics includes a great deal of knowledge and skills that immigrant students need during their everyday activities outside of school. -- The main aim of the study is to clarify the characteristics of multicultural home economics classroom practices and the multicultural contacts and interaction that take place between the students and the teacher. The study includes four parts. The first part, an ethnographical prestudy, aims to understand the challenges of multicultural schoolwork with the aid of ethnographical fieldwork done in one multicultural school. The second part outlines the theoretical frames of the study and focuses on the sociocultural approach. The third part of the study presents an analysis of videodata collected in a multicultural home economics classroom. The teacher s and students interaction in the home economics classroom is analyzed through the concepts of the sociocultural approach and the cultural-historical activity theory. Firstly, this is done by analyzing the focusedness of the teacher s and the students actions as well as the questions presented and apparent disturbances during classroom interaction. Secondly, the immigrant students everyday experiences and cultural background are examined as they appear during discussions in the home economics lessons. Thirdly, the teacher s tool-use and actions as a human mediator are clarified during interaction in the classroom. The fourth part presents the results, according to which a practice-based approach in the multicultural classroom situation is a prerequisite for the teacher s and the students shared object during classroom interaction. Also, the practice-based approach facilitates students understanding during teaching and learning situations. Practice in this study is understood as collaborative teaching and learning situations that include 1) guided activating learning, 2) establishing connections with students everyday lives and 3) multiple tool-use. Guided activating learning in the classroom is defined as situations that occur and assignments that are done with a knowledgeable adult or peer and include action. The teacher s demonstrations during the practical part of the lessons seemed to be fruitful in the teaching and learning situations in the multicultural classroom. Establishing connections with students everyday lives motivated students to follow the lesson and supported understanding of meaning. Furthermore, if multiple tools (both psychological and material) were used, the students managed better with new and sometimes difficult concepts and different working habits, and accomplished the practical work more smoothly . The teacher s tool-use and role as a mediator of meaning are also highlighted in the data analysis. Hopefully, this study can provide a seedbed for situations in which knowledge produced together, as well as horizontally oriented tool-use, can make school-learned knowledge more relevant to immigrant students everyday lives, and help students to better cope with both classroom work and outside activities. KEY WORDS: home economics education, multicultural education, sociocultural perspective, classroom interaction, videoanalysis

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).

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.

A study on the Effect of Psychological Empowerment on Job Satisfaction and Job Related Stress Among the Bank Employees

The present research is carried out to understand how psychological empowerment, job satisfaction and job related stress are related.In banking sector, employees are less satisfied and less motivated than employees in other lines of work (Kelley, 1990; Bajpai, Naval and Deepak, 2004). The banking industry also suffers from high employee turnover rate (Branham, 2005; Nelson, 2007) and high level of stress (Chen and Lien, 2008). There are no adequate studies linking psychological empowerment and job satisfaction, stress, turnover etc. among employees of banking sector. Lack of psychological empowerment could be a reason for these problems faced by banking sector. Further majority of studies in psychological empowerment are carried out in manufacturing sector and studies in service sector are concentrated on hotel industry and hospitals. Empowerment takes different forms in different contexts (Zimmerman, 1995). In the light of above discussion, the present research is directed to explore the dimensions of psychological empowerment of employees in banking sector and to find out whether high psychological empowerment can increase job satisfaction and reduce job related stress among employees in banking sector

Innovation, Creativity, and Positive Psychological Capital: Examining the Relationships in Adolescents, Employees and Entrepreneurs

Innovation ist für das Überleben von Firmen und die Entwicklung von Ländern wesentlich, weil sie entscheidend für einen erhöhten Marktanteil und wettbewerbsfähigen Vorsprung ist (Baer & Frese, 2003; Dodgson, Gann & Salter; George & Zhou, 2011; Kleysen & Street, 2001). Gleichzeitig steht Innovation in engem Zusammenhang mit Erkenntnisfortschritten (West & Altink, 1996). Konzepte, die mit Innovation zu tun haben, beinhalten innovatives Verhalten und Kreativität. Kreativität ist die Produktion von neuen und nützlichen Ideen (Amabile, 1998), und Innovation ist die Umsetzung dieser neuen und nützlichen Ideen (Amabile, 1998; West, 2002). Diese Dissertation besteht aus fünf Abhandlungen, die sich mit den beiden Bereichen des Managements und der positiven Psychologie beschäftigen. Im Einzelnen verbindet die Dissertation Forschungen aus dem Bereich der positiven Psychologie mit Forschungen der Innovation, wie auch der pädagogischen Psychologie, um Antworten auf Forschungsfragen zu finden, die sich damit beschäftigen, was es ist, das die Kreativität von Mitarbeitern, Unternehmern und Jugendlichen und ihr positives psychologisches Kapital steigert (PsyCap). Luthans und seine Kollegen (2007, S.3) definieren das psychologische Kapital oder PsyCap als „den positiven psychologischen Entwicklungszustand einer Einzelperson, welcher wie folgt beschrieben wird: (1) Selbstvertrauen haben (Selbstwirksamkeit), um sich Herausforderungen zu stellen und den notwendigen Aufwand aufzubringen; (2) Eine positive Attribution (Optimismus) in Bezug auf gegenwärtigen und zukünftigen Erfolg; (3) Ziele anstreben und, wenn notwendig, die Wege zu den Zielen ändern, um Erfolg zu erreichen (Hoffnung); (4) Im Falle von Problemen und Missgeschicken standhalten und wieder zurückkommen (Widerstandsfähigkeit), um Erfolg zu erreichen.“

Psychological study of consumer novelty seeking and mass media consumption

The thesis integrates theory from psychology and marketing, finding that those with an innate desire to seek out information on new products / brands are motivated to do so by aspects of regulatory focus, needs for uniqueness, and their susceptibility to interpersonal influence. In turn, these people consume more media and have higher information exposure.

The psychological and physical needs of workers impacting office design

Office design needs to be based on the needs of the most important producers of profit and value for any organisation – the workforce. Drivers affecting office design have been economics – space being often viewed as a cost-centre rather than a business enabler; and more recently, ideas that office design can impact organisational culture – resulting in the adoption of more collaborative working spaces in an attempt to force interaction. What is not always considered are the actual working styles
of the individuals and their motivations nor the requirements of the work itself. There is a need to profile not only the workforce, but also the work carried out. Recent research into space requirements for work is reviewed and reported with recommendations for better consideration of the psychological and physical needs of workers for office design.