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This study discusses whether decisions made under uncertain conditions are affected by the representativeness heuristic in terms of employed and unemployed women. For this purpose, we investigated whether female physicians and housewives use prior information when making predictions. The main purpose of study is to understand the disadvantaged position of women in the labor market. The study's main contribution to the literature is to explore the effect of the representativeness heuristic on women's deviations from rationality. To measure the representativeness heuristic, 14 questions were asked to 428 employed and unemployed women with an online survey. Our results were consistent with the literature, and we concluded that decisions made under uncertain conditions are influenced by the representativeness heuristic, resulting in deviations from rationality. Keywords: behavioral economics, woman, representtativeness heuristic, employment. Bu calismada bireylerin belirsizlik altlinda aldigi kararlannda temsiliyet kisa yolundan etkilenip etkilenmedigi, istihdam edilen ve edilmeyen kadmlar cercevesinde ele atmmistir. Bunun icin doktor otan kadmlann ve ev kadinlannin karar alirken bnsel bilgiyi kullamp kullanmadiklan incelenmistir. Calismanm ana amaci kadinin emek piyasasmdaki dezavantajti konumunu antamaktu. Cahsmanm literature temel katkisi ise kadmlann rasyonellikten sapmalannda temsiliyet kisa yolunun etkisini kesfetmektir. Uygulama yapihrken online anket teknigiyle istihdam editmis ve edilmemis 428 kadma temsiliyet kisa yolunu olcmek icin on dort soru sorulmustur. Analiz sonucu literature uygun olup, bireylerin belirsizlik altmda temsiliyet kisa yolu ile karar alarak rasyonellikten saptigi sonucuna ulasilmistir. Anahtar Ketimeler: davrarissal iktisat, kadin, temsiliyet kisa yolu, istihdam., Introduction Traditional economics employs homo economicus, a model of Homo sapiens where psychological and sociological characteristics are set aside to simplify statistical analysis and individuals can be represented innumbers. In [...]

TABLE OF CONTENTS Introduction. 1351 I. The Contours of "Cognitive" and the Aggregation of "Collective" 1358 A. Defining the Broad Scope of "Cognitive". 1358 B. Defining and Justifying "Collective" 1360 [...], This Article calls for a new project for law and neuroscience. It outlines a structural, not individual, application of brain and behavioral science that is aligned with the general goal of basic science research: improving the lives of citizens with a better understanding of the human experience. It asks brain and behavioral science to move explicitly into public policy territory, and specifically onto ground more traditionally occupied by economists--but in ways the project of "behavioral economics" has not yet ventured. Put simply, policy analysts should focus on brains--"collective cognitive capital"--with the same intensity with which they focus on money, rights, or other policy metrics. To that end, this Article introduces and explores the novel framework of "collective cognitive capital": a way of thinking of brain health and brain function as an aggregated resource. Collective cognitive capital is a conceptual framework for synthesizing brain and behavioral data and using it to assess the impacts of policy choices. The core thesis for this future of "law and neuroscience" is simple: we can and should use brain and behavioral science to evaluate public policy decisions by how they affect the brain functioning of the people. Normatively, policies should seek to maximize "collective cognitive capital" because it is inherently valuable. Cognitive and emotional functioning, and overall brain health, subserve and maximize individual agency and freedom.

We present a lab-field experiment designed to systematically assess the external validity of social preferences elicited in a variety of experimental games. We do this by comparing behavior in the different games with several behaviors elicited in the field and with self-reported behaviors exhibited in the past, using the same sample of participants. Our results show that the experimental social preference games do a poor job explaining both social behaviors in the field and social behaviors from the past. We also include a systematic review and meta-analysis of previous literature on the external validity of social preference games. History: Accepted by John List, behavioral economics. Funding: M. M. Galizzi gratefully acknowledges funding from the Economic and Social Research Council [Future Research Leader Fellowship ES/K001965/1], D. Navarro-Martinez acknowledges support from the Spanish Ministry of Economy and Competitiveness [MINECO-PSI2013-41909-P]. Supplemental Material: Data are available at https://doi.org/10.1287/mnsc.2017.2908. Keywords: field behavior * external validity * experimental games * social preferences, 1. Introduction The last few decades have seen a strong surge of interest in what is now widely known in economics as 'social preferences.' While the study of social behaviors [...]

This study provides novel evidence that expert economic agents' work-related activities are systematically influenced by the time of day. We use archival data derived from time-stamped quarterly earnings conference calls together with linguistic algorithms to measure and track the moods of executives and analysts at different times of the day. The evidence indicates that the tone of conference call discussions deteriorates markedly over the course of the trading day, with both analysts' and executives' moods becoming more negative as the day wears on. Capital market pricing tests reveal that the time-of-day-induced negative tone leads to temporary stock mispricings. Our findings are relevant because the diurnal variations in behavior documented in the context of quarterly earnings calls are likely to extend across other important corporate communication, decision making, and performance situations, leading to potentially significant economic consequences. History: Accepted by Shiva Rajgopal, accounting. Keywords: conference calls * textual analysis * management communication * investor relations * circadian rhythms * diurnal variations * abnormal returns * behavioral economics, 1. Introduction Most of us sense that our moods, physical energy levels, and cognitive functioning skills vary over the course of the day, and a substantial body of psychological and [...]

This paper investigates the effect of work interruption on workers' subsequent productivity. We employ a data set of individual productivity and machine conditions, in which each worker faces the chance, on a daily basis, that her machine will break down randomly. Our analysis finds that compared to a workday with smooth production, experiencing a machine breakdown is associated with a 3.3 percentage point decline in the worker's productivity the following day. We discuss possible explanations for the observed effect, including negative emotions, increased cautiousness in operating the machine, and proficiency loss. Our findings shed light on the importance of understanding and managing interruptions in the workplace, and contribute to a growing literature on the determinants of productivity at the micro level. History: Accepted by John List, behavioral economics. Funding: X. Cai acknowledges financial support from the Fundamental Research Funds for the Central University [Grant 0140ZK1110]. S. Zhong acknowledges financial support from the Singapore Ministry of Education Academic Research Fund Tier 1. Supplemental Material: Data and the online appendix are available at https://doi.org/10.1287/ mnsc.2017.2792. Keywords: productivity * labor supply * work interruption * reference dependence * emotion, 1. Introduction Interruptions are common in the workplace and costly to individuals, firms, and organizations. From equipment breakdowns to unscheduled meetings and communication requests, unplanned breaks from a smooth and [...]

Abstract. The rising obesity epidemic is a worldwide concern for consumers, firms, and policy makers. One reason for the rise in obesity is consumers' over-consumption of vice goods such as [...]

Previous research has documented a behavioral distinction between 'social risk,' or risk caused by human factors, and natural risk. In particular, people tend to demand a premium on the probability of a favorable outcome in order to expose themselves to a social source of risk rather than a natural source of risk. Several explanations for what drives this social risk premium have been offered--most prominently, (i) an aversion to a counterparty's potentially malign intentions and (ii) a more general aversion to ceding control to someone with conflicting interests. We propose that a fundamental determinant of the social risk premium may relate to a counterparty's capacity to engage in intentional action. We employ a between-subjects experimental design in which we manipulate subjects' capacity for intentional action. Our design allows us to identify the component of the social risk premium related to an aversion to betrayal, independent of any aversion to ceding control. Furthermore, our results show that intentions are a crucial determinant of the social risk premium. We identify factors that eliminate, and may even change the sign of, the social risk premium. Our results contribute to our understanding of the factors that influence the perception of social risk and have implications for optimal contract design in a wide variety of situations involving social risk. History: Accepted by Uri Gneezy, behavioral economics. Funding: J. B. Miller gratefully acknowledges support from a 2011 grant awarded by the Einaudi Institute for Economics and Finance (EIEF). Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2016.2694. Keywords: social risk * social perception * intention * betrayal aversion * trust * control, 1. Introduction The canonical framework for describing decision making under risk is that of a lottery--that is, a probability distribution over consequences. However, a growing body of research argues that [...]

Abstract. Crowdsourcing relies on online platforms to connect a community of users to perform specific tasks. However, without appropriate control, the behavior of the online community might not align with [...]

Abstract. Recommender systems are an integral part of the online retail environment. Prior research has focused largely on computational approaches to improving recommendation accuracy, and only recently researchers have started [...]

TABLE OF CONTENTS I. INTRODUCTION 179 II. THE EITC: HOW IT WORKS AND COMPLIANCE CHALLENGES 186 A. EITC Overview 186 B. Compliance and the EITC...... 191 1. Measures of the [...], The Internal Revenue Service (Service) is a nontraditional but key player in delivering social benefits to the nation's working poor. In fact, it administers one of the nation's largest anti-poverty programs: the earned income tax credit (EITC). The EITC is generally praised for its role in reducing poverty and incentivizing low-wage work. While the credit has bipartisan support, the Service continues to face strong criticism over EITC compliance issues. The Service has generally focused on tax return characteristics in identifying and preventing erroneous EITC claims. We believe that adding an additional focus on taxpayer characteristics may offer new opportunities to improve EITC compliance (and perhaps other areas where there is systemic noncompliance). To supplement existing approaches and build on insights that derive from a taxpayer-centric (rather than tax return-centric) model of compliance, we argue that the Service should draw insights from the field of cognitive psychology. Research in cognitive psychology, a study fundamental to the field of behavioral economics, suggests that people may be more truthful when confronted with increasing psychological costs and a higher perceived likelihood of detection. We offer specific proposals for further exploration. We note that this approach has potential application in other areas of the tax law, but we focus on the EITC because of its broad importance as a matter of national policy, the longstanding and persistent criticism of stubbornly high EITC error rates, and the limitations of the Service's current approach addressing EITC compliance.

We report an experiment to study the effect of defaults on charitable giving. In three different treatments, participants face varying default levels of donation. In three other treatments that are paired with the first three, they receive the same defaults, but are informed that defaults are thought to have an effect on their donation decisions. The emotional state of all individuals is monitored throughout the sessions using Facereading software, and some participants are required to report their emotional state after the donation decision. We find that the level at which a default is set has no effect on donations, and informing individuals of the possible impact of defaults also has no effect. Individuals who are happier and in a more positive overall emotional state donate more. Donors experience a negative change in the valence of their emotional state subsequent to donating, when valence is measured with Facereading software. This contrasts with the self-report data, in which donating correlates with a more positive reported subsequent emotional state. (JEL C91), I. INTRODUCTION Charitable giving, in the form of money, time, or in kind, constitutes a nonnegligible fraction of the economy in many countries. Nevertheless, there does appear to be scope [...]

In recent years, heterodox economists challenging 'mainstream' theories and policy prescriptions have been criticised for misrepresenting the heterogeneity of the latter (e.g. Fullbrook 2001; Garnett 2006). Their categorisation of 'mainstream [...]

ABSTRACT The dominant justification for copyright is based on the notion that authors respond rationally to economic incentives. Despite the dominance of this incentive model, many aspects of existing copyright [...]

We provide evidence from field experiments with three different banks that reminder messages increase commitment attainment for clients who recently opened commitment savings accounts. Messages that mention both savings goals and financial incentives are particularly effective, whereas other content variations such as gain versus loss framing do not have significantly different effects. Nor do we find evidence that receiving additional late reminders has an additive effect. These empirical results do not map neatly into existing models, so we provide a simple model where limited attention to exceptional expenses can generate undersaving that is in turn mitigated by reminders. Data, as supplemental material, are available at https://doi.org/10.1287/mnsc.2015.2296. Keywords: economics: microeconomic behavior; behavior and behavioral decision making; finance History: Received November 25, 2013; accepted December 6, 2015, by Teck-Hua Ho, behavioral economics. Published online in Articles in Advance January 19, 2016., 1. Introduction Consumption, savings, and borrowing behavior is sometimes difficult to reconcile with traditional models of intertemporal choice. Calibrations of U.S. data suggest that extremely high short-term discount rates are [...]

A seller often needs to determine the amount of product information to provide to consumers. We model costly consumer information search in the presence of limited information. We derive the [...]

ABSTRACT From 2000 to 2014, Mexico exported around 9 billion barrels of oil equivalent--representing approximately $562 billion dollars (USD) in revenues--yet in December 2014, the remnant sum in the Oil [...]

Nudging is a form of soft paternalism whereby governments manipulate the choice architectures of citizens to steer them toward desired outcomes (including eating better, voting more often, being less aggressive and violent, being more compassionate, living healthier, and leading more fulfilling lives). From the perspective of social activists (including moral entrepreneurs of various stripes), public health officials, social marketers, and government actors, the more subtle forms of nudging help mitigate populist backlash against nanny states which are viewed as overly aggressive and instrusive in mandating by force of law that citizens do what's best for them or face repurcussions. In his latest book, Cass Sunstein examines both the pros and cons of the use of behavioral economics by governments to nudge sometimes reluctant publics to pursue goals and establish lifestyles which experts believe will maximize life, liberty, and the pursuit of happiness., Author(s): James J. Chriss[sup.1] Author Affiliations: James J. Chriss is Professor in the Department of Criminology, Anthropology, and Sociology (CAS) at Cleveland State University. His most recent books are Confronting [...]

Since the 2008 financial crisis, consumer regulators have closely supervised sellers of credit cards and home mortgages to stamp out anticompetitive practices. Supervision programs give financial regulators ongoing access to [...]

3. The Individual as a Subject and Decisionmaker in International Law A third response to the individualist methodological objection would be to simply focus on individual decisionmaking that relates to [...]

Economic analysis and rational choice have made significant inroads into the study of international law and institutions in the last decade, relying upon standard assumptions of perfect rationality of states [...]

Myopia with regard to individuals' decisions whether to consume in the present versus save for the future is increasingly believed to be a significant determinant of behavior. Moreover, the prospect [...], This article analyzes the effect of savings-related policies on labor supply in a model that explicitly incorporates myopic decision-making. Both social security and capital taxation may cause labor supply to rise or fall when individuals are myopic, depending on the curvature of individuals 'utility as a function of consumption. Moreover, whatever is the sign of these effects under one assumption about how myopia relates to labor supply decisions, the sign is reversed under the other assumption that is considered. Additionally, some interventions have a first-order effect on labor supply from the outset but others do not, and some labor supply effects rise with the magnitude of the intervention whereas others fall. Keywords: capital taxation, labor supply, myopia, optimal taxation, savings, social security JEL Codes: D11, D91, H21, H24, H31, H55, J22, J26

Competitor orientation, i.e., the focus on beating the competition rather than maximizing profits, seems to thrive in business situations despite being, by definition, suboptimal for profit-maximizing firms. Our research explains [...]

In many service markets such as consulting, auto repair, financial planning, and healthcare, the service provider may have more information about the customer's problem than the customer, and different customers [...]

Granted, Behavioral Economics has demonstrated that 'people' (implying all) are unable to act as strong definitions of rationality assume. Their cognitive limitations are 'hard wired'. However Behavioral Economics' own data show that important segments of the population find 'the' rational answer to choices posed to them. How do these findings square with the thesis that limitations are hard wired and universal? And, more attention should be paid to the extent to which various people deviate from the rational choice, and--whether training can improve performance despite the claim that flaws are hard wired. Keywords Behavioral economics * Rationality * Training * Methodology, This article argues that (a) behavioral economics (BE) has produced an unusually robust body of evidence about human deliberations and decision making (in short, choice behavior); that (b) this body [...]

We examine a prevalent form of client--agent interaction through a feedback-giving game. In this game, a client undertakes a nontrivial task and is compensated based on her task performance, which is only made known to her when the client--agent interaction ends. Meanwhile, her performance is disclosed to an agent, who must then give the client feedback on her performance. Upon receiving the feedback, the client reports her happiness level, which in turn determines the agent's payoff. In eight studies involving 928 subjects, we vary the way the agent's cash earnings depend on the client's reported happiness. When we make the agent's earnings proportional to the client's reported happiness, the agent inflates his feedback, and the client reports a higher level of happiness (than that reported in a control condition where the agent always provides honest feedback). We show that neither the agent nor the client behaves altruistically in their reporting. The client reports being happier because she overestimates her performance and mistakenly believes that the agent's feedback is genuine. The agent stops inflating his feedback when doing so no longer benefits him. Finally, our main findings are shown to be robust with respect to several factors, including making the agent's feedback consequential in affecting the client's payoff. In summary, we show that the agent behaves opportunistically, and the client's overconfidence of her own performance is what makes this strategy successful. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2013.1846. Keywords: opportunism; altruism; overconfidence; feedback giving game; client--agent interaction; behavioral economics History: Received September 20, 2012; accepted August 29, 2013, by Uri Gneezy, behavioral economics. Published online in Articles in Advance February 12, 2014., 1. Introduction Giving and receiving feedback are central to social interaction. People regularly give and receive feedback. For example, as professors, we give feedback to our students about their class [...]

Contrary to the views of some libertarians, 'libertarian paternalism' is not an oxymoron. But are its two most prominent advocates, Richard Thaler and Cass Sunstein, really libertarian paternalists or are they paternalists in sheep's clothing? Thaler seems to be somewhat of a libertarian paternalist whereas Sunstein appears to be more of a straight coercive paternalist. But even Thaler passes up major chances to advocate reducing straight paternalism by making it more libertarian. Those who favor freedom should not reject the concept of libertarian paternalism altogether. Instead they should apply the concept more consistently than Thaler and Sunstein have doneand use it to push for a less coercive government. Indeed, the fact that government officials who plan our lives also have human foibles argues for less government, not true. Keywords libertarian * paternalism * Sunstein * Thaler * Hayek * Social Security, In the last few years, two academics, University of Chicago economist Richard H. Thaler and Harvard University law professor Cass R. Sunstein, have made a case for what they call [...]

What accounts for the excesses of the regulatory state? Economists have shown that bad regulations are often due to 'rent seeking' and 'regulatory capture' and have provided compelling accounts of the incentives that drive these processes. However, there remain many unwarranted regulations, such as recent gun control measures, that cannot be explained by an economic rationale. Rather, it is essential to understand the distinctively ideological origins and functions of such regulations. This paper examines both the economic and ideological corruptions on the regulatory state, suggesting that those concerned with the growth of state power will have to address both of these phenomena. Keywords Regulation * Ideology * Rent seeking * Regulatory capture * Gun control, In a recent review essay, the Stanford Political Scientist Mo Fiorina recounts what it's like to live in California: 'Today I cannot cut down a tree without an inspection and [...]

Price delegation to the salesforce is a practice widely adopted by firms. This paper examines the relationship between price delegation and managerial profits using a laboratory economics experiment. A novel feature of our experiment is that we study how varying the relationship organization of the sales manager and salesperson to allow for (1) requests by the salesperson for the manager to choose price delegation, and for (2) the manager to award a small bonus after observing the salesperson's decisions, can affect behavior. The results show that, contrary to the theoretical prediction, managers choose price delegation frequently and salespeople respond reciprocally, leading to higher manager profits under price delegation. Moreover, this behavior increases when requests and bonuses are allowed. We show that a behavioral economics model that incorporates positive reciprocity can explain these results well. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2013.1778. Keywords: sales management; experimental economics; behavioral economics; price delegation History: Received April 17, 2012; accepted May 21, 2013, by Pradeep Chintagunta, marketing. Published online in Articles in Advance October 28, 2013., 1. Introduction In many industries, sales managers can let salespeople determine the prices of the products they sell to customers. This practice is known as price delegation. (1) In an [...]

Abstract Racial/ethnic minorities are less likely to use higher-quality hospitals than whites. We propose that a higher level of information-related complexity in their local hospital environments compounds the effects of [...]

Abstract Evidence from behavioral economics reveals that decision making in health care settings can be affected by circumstances and choice architecture. This paper conducts an analysis of choice of private [...]

IV. THE IMPLICATIONS OF CONSUMERS' IRRATIONALITY IN THE CREDIT-REPORTING SYSTEM A. Unawareness of Rights Under the FCRA In 1979, the Credit Research Center at Purdue University conducted a survey of [...]

TABLE OF CONTENTS I. Introduction II. Background: Credit Reporting Agencies in the United States A. The Consumer-Credit-Reporting Industry B. Credit Reports and Credit Scores C. CRAs, Clients, and Consumers: Relationships [...], The significant increase in the number of consumer transactions, along with the expansion of information technology, has created massive amounts of detailed information on an individual's credit history. Consumer credit reporting agencies (CRAs) play an important role in this financial-information market. Although the credit-reporting system has significant economic benefits, CRAs have a tarnished reputation as far as consumer protection is concerned. While making their business out of gathering, compiling, and analyzing consumers' information, CRAs generally do not have privity of contract with those very same consumers. Thus, the CRAs have little or no incentive to protect consumers' privacy and ensure the accuracy of every single credit report. such lack of incentive has resulted in numerous consumer problems, including inaccuracies in credit reports and erroneous credit scores; infringement of consumers' right to privacy; contribution to the prevalence of identity theft; and the creation of a fertile ground for consumer manipulation through targeted marketing lists. This Article suggests that the current regulatory system has been captivated by the misconception of the consumer as a homo economicus. Existing regulations have given consumers a significant role in facilitating the production of more accurate credit, envisioning rational, vigilant, and alert consumers who regularly monitor their credit reports, dispute errors, and opt out from marketing lists. studies have shown, however, that consumers' rationality in decision-making is in fact doubtful, and so too is the justification of imposing monitoring responsibilities on consumers. This Article challenges the economic-regulatory approach through the behavioral-economic approach--a relatively new model that aspires to explain consumers' biases and cognitive limitations, which are absent in the standard economic framework. This Article explores two potential consumer-protection mechanisms, drawn from the behavioral-economic framework: applying psychological tools, such as disclosure and framing, for a better-designed system; and enhancing consumer financial literacy.

Millennium Development Goals (MDGs) 4 and 5 set ambitious targets to reduce maternal, newborn and child mortality by 2015. With 2015 fast approaching, there has been a concerted effort in the global health community to 'close the gap' on the MDG targets. Recent consensus initiatives and frameworks have refocused attention on evidence-based, low-cost interventions that can reduce mortality and morbidity, and have argued for additional funding to increase access to and coverage of these lifesaving interventions. However, funding alone will not close the gap on MDGs 4 and 5. Even when high-quality, affordable products and services are readily available, uptake is often low. Progress will therefore require not just money, but also advances in health-related behavior change and decision-making. Behavioral economics offers one way to achieve real progress by improving our understanding of how individuals make choices under information and time constraints, and by offering new approaches to make it easier for individuals to do what is in their best interest and harder to do what is not. We introduce five behavioral economic principles and demonstrate how they could boost efforts to improve maternal, newborn, and child health in pursuit of MDGs 4 and 5. Keywords Behavior change * Behavioral economics * Maternal and child health * Millennium development goals, The burden of maternal, newborn and child mortality remains staggering: 265,000 maternal deaths, 880,000 stillbirths, 1.2 million neonatal deaths, and 3.2 million infant and child deaths annually, the vast majority [...]

III. AGAINST PATERNALISM: WELFARE Let us put the definitional issues to one side. Why might paternalism be objectionable? There are two time-honored reasons; both have firm roots in Mill's own [...]

FEATURE CONTENTS INTRODUCTION I. OCCASIONS FOR PATERNALISM? A. Two Systems in the Mind: Of Humans and Econs B. Behavioral Market Failures 1. Present Bias and Time Inconsistency 2. Ignoring Shrouded [...], A growing body of evidence demonstrates that in some contexts and for identifiable reasons, people make choices that are not in their interest, even when the stakes are high. Policymakers in a number of nations, including the United States and the United Kingdom, have used this evidence to inform regulatory initiatives and choice architecture. Both the resulting actions and the relevant findings have raised the possibility that an understanding of human errors opens greater space for paternalism (and thus raises doubts about John Stuart Mill's famous "harm principle"). Such errors can be thought of as behavioral market failures, and they are an important supplement to the standard account of market failures. Actions taken to correct behavioral market failures can sometimes be justified, even if the resulting actions are paternalistic. While hard forms of paternalism cannot be haled out of bounds, a general principle of behaviorally informed regulation--its first and only law--is that the appropriate responses to behavioral market failures usually consist of nudges, generally in the form of disclosure, warnings, and default rules. Some people invoke autonomy as an objection to paternalism, but the strongest objections are welfarist in character. Official action may fail to respect heterogeneity, may diminish learning and self-help, may be subject to pressures from self-interested private groups (the problem of "behavioral public choice"), and may reflect the same errors that ordinary people make. Where paternalism is optional, the objections, though plausible, are unhelpfully abstract; they depend on empirical assumptions that may not hold in identifiable contexts. There are many opportunities for improving human welfare through improved choice architecture.