Irrational Choices Research Articles

Experimentally revealed stochastic preferences for multicomponent choice options.

Realistic, everyday rewards contain multiple components. An apple has taste and size. However, we choose in single dimensions, simply preferring some apples to others. How can such single-dimensional preference relationships refer to multicomponent choice options? Here, we measured how stochastic choices revealed preferences for 2-component milkshakes. The preferences were intuitively graphed as indifference curves that represented the orderly integration of the 2 components as trade-off: parts of 1 component were given up for obtaining 1 additional unit of the other component without a change in preference. The well-ordered, nonoverlapping curves satisfied leave-one-out tests, followed predictions by machine learning decoders and correlated with single-dimensional Becker-DeGroot-Marschak (BDM) auction-like bids for the 2-component rewards. This accuracy suggests a decision process that integrates multiple reward components into single-dimensional estimates in a systematic fashion. In interspecies comparisons, human performance matched that of highly experienced laboratory monkeys, as measured by accuracy of the critical trade-off between bundle components. These data describe the nature of choices of multicomponent choice options and attest to the validity of the rigorous economic concepts and their convenient graphic schemes for explaining choices of human and nonhuman primates. The results encourage formal behavioral and neural investigations of normal, irrational, and pathological economic choices.

Option framing for upselling tourism services: Does cognitive availability prevent irrational choices?

This article examines the effect of option framing and cognitive load on consumer choices of tourism services. Previous literature has shown that consumers tend to choose more options and spend more money when they begin the choice process from a complete set of options (downgrade/delete framing) than when they start choosing from a more basic set of options (upgrade/add framing). To exam this irrational behavior, we conducted two experimental studies with 561 consumers of leisure travel. The results of the two experiments provided robust evidence on the effect of the downgrade framing strategy on upselling tourism services and revealed that cognitive availability did not prevent consumers from making irrational choices. These findings indicate that decisions involving leisure trips may be even more susceptible than previously thought to cognitive biases and contextual influences due to their emotional and hedonic aspects, extending the existing literature on behavioral economics in tourism.

Modified Asano-Ohya-Khrennikov quantum-like model for decision-making process in a two-player game with nonlinear self- and cross-interaction terms of brain's amygdala and prefrontal-cortex.

In this report, we propose a modification on the Asano-Ohya-Khrennikov quantum-like decision-making process model of a two-player game by adding additional nonlinear terms to the related comparison step dynamical equation. The additions are in the form of a self-interaction and cross-interaction of the brain’s amygdala and prefrontal cortex. We show that the cross-interaction significantly determines the final decision of a player, whether it becomes a rational or an irrational choice. In contrast, the nonlinear self-interaction term provides a feedback mechanism that speeds up the corresponding decision-making process. We also suggest the form of expectation values of the overall reaction rate coefficients of those nonlinear terms by making an analogy with the original model formulation.

Fundamentals of Behavioral Economics: Role of Symmetry in Irrational Choice

Symmetry is a fundamental concept in modern physics and other related sciences. Being such a powerful tool, almost all physical theories can be derived from symmetry, and the effectiveness of such an approach is astonishing. Since physicists do not actually believe that symmetry is a fundamental feature of nature, it seems more likely it is a fundamental feature of human cognition. According to evolutionary psychologists, humans have a sensory bias for symmetry. The unconscious quest for symmetrical patterns has developed as a solution to specific adaptive problems related to survival and reproduction. Therefore, it comes as no surprise that some fundamental concepts in behavioral economics necessarily involve symmetry. The purpose of this paper is to draw attention to the role of symmetry in decision-making and to illustrate how it can be algebraically operationalized through the use of mathematical group theory.

A modified Monty Hall problem

We conduct a laboratory experiment using the Monty Hall problem to study how simplified examples improve learning behavior and correct irrational choices in probabilistic situations. In particular, we show that after experiencing a simplified version of the MHP (the 100-door version), subjects perform better in the MHP (the 3-door version), compared to the control group who only experienced the 3-door version. Our results suggest that simplified examples strongly induces learning.

Blockchain adoption drivers: The rationality of irrational choices

SummaryThere has been a huge increase in interest in blockchain technology. However, little is known about the drivers behind the adoption of this technology. In this article we identify and analyze these drivers, using six real‐world and representative scenarios. We confirm in our analysis that blockchain is not an appropriate technology for some scenarios, from a purely technical point of view. The choice for blockchain technology in such scenarios may therefore seem as an irrational choice. However, our analysis reveals that there are nontechnical drivers at play that drive the adoption of blockchain, such as philosophical beliefs, network effects, and economic incentives. These nontechnical drivers may explain the rationality behind the choice for blockchain adoption.

Experimentally Revealed Stochastic Preferences for Multi-Component Choice Options

Realistic, everyday rewards contain multiple components. An apple has taste and size. However, we choose in single dimensions, simply preferring some apples to others. How can such single-dimensional preference relationships refer to multi-component choice options? Here, we measured how stochastic choices revealed preferences for two-component milkshakes. The preferences were intuitively graphed as indifference curves that represented the orderly integration of the two components as trade-off: parts of one component were given up for obtaining one additional unit of the other component without a change in preference. The well-ordered, non-overlapping curves satisfied leave-one-out tests, followed predictions by machine learning decoders and correlated with single-dimensional Becker-DeGroot-Marschak (BDM) auction-like bids for the two-component rewards. This accuracy suggests a decision process that integrates multiple reward components into single-dimensional estimates in a systematic fashion. In inter-species comparisons, human performance matched that of highly experienced laboratory monkeys, as measured by accuracy of the critical trade-off between bundle components. These data describe the nature of choices of multi-component choice options and attest to the validity of the rigorous economic concepts and their convenient graphic schemes for explaining choices of human and non-human primates. The results encourage formal behavioral and neural investigations of normal, irrational and pathological economic choices.

Four core properties of the human brain valuation system demonstrated in intracranial signals.

Estimating the value of alternative options is a key process in decision-making. Human functional magnetic resonance imaging and monkey electrophysiology studies have identified brain regions, such as the ventromedial prefrontal cortex (vmPFC) and lateral orbitofrontal cortex (lOFC), composing a value system. In the present study, in an effort to bridge across species and techniques, we investigated the neural representation of value ratings in 36 people with epilepsy, using intracranial electroencephalography. We found that subjective value was positively reflected in both vmPFC and lOFC high-frequency activity, plus several other brain regions, including the hippocampus. We then demonstrated that subjective value could be decoded (1) in pre-stimulus activity, (2) for various categories of items, (3) even during a distractive task and (4) as both linear and quadratic signals (encoding both value and confidence). Thus, our findings specify key functional properties of neural value signals (anticipation, generality, automaticity, quadraticity), which might provide insights into human irrational choice behaviors.

Rationalizing predictably irrational choices: the social capital synthesis

This paper presents a synthesis of the main characteristics of neoclassical, behavioral, and socioeconomic models. The main characteristics of this synthesis is that it includes social capital-produced relational goods whose value and meaning depend on their connections to people. We contrast relational goods with commodities. Then, we examine whether the synthesis can resolve some of the sometimes conflicting explanations and predictions of economic exchange models. Finally, we apply the synthesis to rural development and find it provides useful explanations and recommendations.

347 Numeracy Performance and the Relationship to Age and Retirement among Community-Dwelling Adults

Abstract Background Remaining in the workforce in later life may be based on financial need, role fulfillment or opportunities for social participation. Employment can also provide intellectual stimulation, including the use of everyday math skills. Normal age-related decline in numeracy performance has been documented, but the role of retirement in the capacity to perform these functions is less understood. This research uses population-based telephone surveys to analyze whether the interaction of age and retirement influences the ability of community-dwelling adults to calculate simple math problems. Methods Data was drawn from three independently sampled surveys in 2006 (n=991), 2010 (n=1,023) and 2014 (n=997). In addition to standard demographic questions, the survey measured individuals’ ability to perform basic computations. Three questions were asked regarding temporal (now or 5 years later) preferences about jobs, a community bond, and an inheritance payout. Respondents were then asked to calculate the amount needed to select the other option instead. Deficient numeracy performance was defined as either no response or an irrational choice (e.g. a lesser amount of inheritance with the alternative choice.) Results Approximately 30% of persons age 65+ chose not to perform the follow-up calculations for these questions. Moreover, a 1% increase in age decreased the likelihood of rationally calculating the discount rate by between 0.15 and 0.25 percentage points, depending on the scenario. A sharp decline in numeracy was observed starting at age 66 with the addition of an age x retirement interaction, even when controlling for key variables such as education and income. Conclusion Retirement may reduce the opportunity for intellectual challenges afforded in the workplace and consequently, the ability to perform math calculations may decline. Alternatively, decisions to retire may be due to declining health, including cognitive impairments. The timing of retirement has major implications for public policy. Future research more deeply exploring the causal influence of retirement on health and well-being is warranted.

Gully Erosion Control Practices in Northeast China: A Review

Gully erosion is the destructive and dramatic form of land degradation in Northeast China. The region is the grain production and ecological security base of China where the fertile and productive Mollisols are distributed. Though the region was agriculturally developed relatively recently, it went through high intensity cultivation and fast succession processes within short-time scales. Coupled with irrational farming practice choice and land use, hillslope erosion and gully erosion are seriously threatening agricultural production and environmental stability in the region. The awareness of gully erosion by the local governments started in the 1970s, and conservation measures were thus implemented. In this paper, based on our survey, communications with local farmers and stakeholders as well as investigation for gully erosion for the past three years, we summarize the practical and efficient practices to manage gully erosion developed by researchers and farmers in Northeast China during the past 50 years. These practices include various drop structures, soil check dams, masonry check dams, gabion check dams, wicker check dams, continuous live wicker, a shrub plant enclosure, and an arbor plant enclosure. We specifically expound how a gully erosion practice is set up and identify the site conditions for which they are well-suited. The application of these practices depends on topography, gully size, and local economy. Bioengineering techniques in Northeast China, such as continuous live wicker, a shrub plant enclosure, and an arbor plant enclosure, are highly effective in controlling gully erosion. Problems and challenges are also presented.

Irrational Behavior of Youth When Taking Financial Decisions

Purpose: The article contains research on internal factors of irrational behaviour initiated by the objective to reveal correlation between individual and personal, psychological peculiarities and irrational behavior in life situations. Design/Methodology/Approach: The article is based on a hypothesis that there is a correlation between personal peculiarities and an irrational choice when students of economic HEIs make decisions of economic nature. Such life-purpose orientations as “Locus of control ─ Me” and “Locus of control ─ Life” are connected with irrational economic behavior. Findings: The study allows enriching the subject field of behavioral economics from the point of view of the specificity of economic and psychological characteristics, attitudes towards an economic choice, and the identification of emotional and personal indicators of irrational behavior. It has been revealed that the psychological characteristics of a person (mental processes, orientation of an individual, life-purpose orientations) influence students’ irrational economic behavior. Practical Implications: The results of the study can be used by economic institutions (HEIs) in the selection of students for educational programs. The developed diagnostic game technique, the styles of irrational behavior described by the authors can be used in the practice of the educational process of economic HEIs or in assessing the propensity to make irrational economic decisions in other areas of human activity Originality/Value: The main contribution of this study is the clarification of factors of finacial behavior of youth.

Anatomia di una scelta irrazionale Verso una nuova ipotesi di studio sul decision making e il disfunction effect

It often happens that the most relevant decisions in terms of consequences are taken in situations of uncertainty and risk, as well as in conditions of strong temporal stress. In such situations, some decisions are more considered, others, instead, appear more irrational. In the last twenty years, studies on decision making have focused mainly on problem solving skills and cognitive processes underlying rational choices. Only since the fifties of the twentieth century, different research paradigms have tried to shed light on the mechanisms responsible for choices that do not conform to the classical model of rational choice. Among these mechanisms the disjunction effect stands out which, although scarcely investigated, could prove to be a fundamental variable. Method: In order to analyze the reference literature and the studies of the last ten years, a research was carried out on different online science servers (PubMed, ScienceDirect, Google Scholar, ResearchGate), using the following search keys: irrational choices, rational choices, decision making, decision style, intuitive decisions, deliberate decisions, self-awareness, self-regulation, disjunction effect. Starting from the theoretical assumptions indicated above, a methodological hypothesis was formulated for the study of decision-making processes, based on unconventional methods, which move away from the administration of the classic tests and decision tasks expressed in verbal form. Objectives: The aim of this work is to highlight the most relevant studies on irrational choices, in order to outline their anatomy. The final objective is to lay the foundations for the development of an empirical research that thoroughly investigates irrational choices and the disjunction effect through tools such as the Implicit Association Test (IAT) and Virtual Reality (VR). Expected results: Using technologically advanced tools applied to psychology research, it would be possible to allow the experimental subjects to act the choice through VR applications, producing an immersive experience. It is expected to reduce the disturbance variables and be able to obtain more precise measurements, overcoming the problems related to the verbal formulation of the decision task, more and more often posed as a fundamental criticism to the study of decision making. Kayword: Decision-making, disjunction effect, virtual reality, implicit association test, irrational choices. ABSTRACT IN ITALIANO Introduzione: Accade spesso che le decisioni piu rilevanti in termini di conseguenze siano prese in situazioni d’incertezza e rischio, oltre che in condizioni di forte stress temporale. In tali situazioni, alcune decisioni risultano piu ponderate, altre, invece, appaiono piu irrazionali. Negli ultimi venti anni, gli studi sul decision making si sono concentrati principalmente sulle capacita di problem solving e sui processi cognitivi alla base delle scelte razionali. Solo a partire dagli anni cinquanta del XX secolo, diversi paradigmi di ricerca hanno cercato di far luce sui meccanismi responsabili di scelte non conformi al modello classico di scelta razionale. Tra questi meccanismi spicca l’effetto di disgiunzione che, sebbene scarsamente indagato, potrebbe rivelarsi una variabile fondamentale. Metodo: Al fine di analizzare la letteratura di riferimento e gli studi degli ultimi dieci anni, si e svolta una ricerca su diversi science server online (PubMed, ScienceDirect, Google Scholar, ResearchGate), utilizzando le seguenti chiavi di ricerca: irrational choices, rational choices, decision making, decision style, intuitive decisions, deliberate decisions, self-awareness, self-regulation, disjunction effect. A partire dai presupposti teorici indicati in precedenza, e stata formulata un’ipotesi metodologica per lo studio dei processi decisionali, basata su metodi non convenzionali, che si allontanano dalla somministrazione dei classici test e decision task espressi in forma verbale. Obiettivi: Scopo di questo lavoro e evidenziare gli studi piu rilevanti sulle scelte irrazionali, al fine di delinearne l’anatomia. L’obiettivo finale e porre le basi per lo sviluppo di una ricerca empirica che indaghi a fondo le scelte irrazionali e l’effetto di disgiunzione tramite strumenti quali l’Implicit Association Test (IAT) e la Virtual Reality (VR). Risultati attesi: Utilizzando strumenti tecnologicamente all’avanguardia applicati alla ricerca in psicologia, sarebbe possibile consentire ai soggetti in fase sperimentale di agire la scelta tramite applicazioni VR, producendo un’esperienza immersiva. Ci si aspetta di ridurre le variabili di disturbo e riuscire a ottenere misurazioni piu precise, superando i problemi legati alla formulazione verbale dei decision task, sempre piu spesso posta come critica fondamentale allo studio del decision making. Parole chiave: Decision-making, effetto di disgiunzione, realta virtuale, implicit association test, scelte irrazionali.

Decision Forest: A Nonparametric Approach to Modeling Irrational Choice

Customer behavior is often assumed to follow weak rationality, which implies that adding a product to an assortment will not increase the choice probability of another product in that assortment. However, an increasing amount of research has revealed that customers are not necessarily rational when making decisions. In this paper, we propose a new nonparametric choice model that relaxes this assumption and can model a wider range of customer behavior, such as decoy effects between products. In this model, each customer type is associated with a binary decision tree, which represents a decision process for making a purchase based on checking for the existence of specific products in the assortment. Together with a probability distribution over customer types, we show that the resulting model -- a decision forest -- is able to represent any customer choice model, including models that are inconsistent with weak rationality. We theoretically characterize the depth of the forest needed to fit a data set of historical assortments and prove that with high probability, a forest whose depth scales logarithmically in the number of assortments is sufficient to fit most data sets. We also propose two practical algorithms -- one based on column generation and one based on random sampling -- for estimating such models from data. Using synthetic data and real transaction data exhibiting non-rational behavior, we show that the model outperforms both rational and non-rational benchmark models in out-of-sample predictive ability.

EU-financed peripheral large-scale infrastructure projects and the White Elephant syndrome: The example of Rail Baltica

The present study revolves around the question of the appropriateness of “the White Elephant syndrome” to characterise the nature of the planned trans-Baltic railway project Rail Baltica (RB) in terms of its initial financing, long-term profitability and symbolic importance. Whereas, in general, the expected outcome of the project goes well together with the EU Cohesion Policy goals, in its concrete application RB could serve as an example of the tendency of politicians and public servants to institutionally lock themselves into certain irrational choices about publicly financed mega-projects. This is what “the White Elephant syndrome” metaphor illustrates. Methodologically, this paper aims to analyse whether RB meets the common criteria of “the White Elephant syndrome” of public investments or if it can be seen as a sustainable and profitable long-term project after the initial investment.

Who needs a brain? Slime moulds, behavioural ecology and minimal cognition

Although human decision making seems complex, there is evidence that many decisions are grounded in simple heuristics. Such heuristic models of decision making are widespread in nature. To understand how and why different forms of information processing evolve, it is insightful to study the minimal requirements for cognition. Here, we explore the minimally cognitive behaviour of the acellular slime mould, Physarum polycephalum, in order to discuss the ecological pressures that lead to the development of information processing mechanisms. We discuss evidence for memory, basic forms of learning and economically irrational choice in P. polycephalum. We compare P. polycephalum’s behaviour with a number of other non-neuronal organisms in order to question the evolutionary need for complex nervous systems to develop cognitive traits. By highlighting a few examples of common mechanisms, we conclude that all organisms contain the building blocks for more complex information processing. Returning the debate about cognition to the biological basics demystifies some of the confusion around the term ‘cognition’.

Predictable irrationality in managerial accounting: Does knowledge overcome cognitive biases of undergraduate students?

Managerial accounting teaches students to make rational decisions by evaluating sunk costs, incremental costs, and opportunity costs. The behavioral literature suggests that biases and heuristics overcome rational thinking. The authors explore whether learning cost concepts attenuates behavioral biases. They find a statistically significant proportion of students completing a managerial accounting course exhibit predictable irrationality in personal choices. By matching behavioral choices with final exam answers, the authors also find that learning rationality principles in accounting does not reduce predictably irrational choices in other settings. The study findings are robust across three key rational concepts. Overall, the authors cannot reject the hypothesis that behavioral choices are independent of knowledge of the underlying principle of rationality.

Physiological centers of decision-making: manipulation of neural activity in insular cortex by AAV

Decision-making is a key activity process that influences many aspects of daily living and both mental and physical health. In general, healthy participants reveal rational choice, but patients with neuropsychiatric disorders reveal irrational and risky choice in decision-making. Addiction is one of typical diseases revealed risky decision-making, addicts select risky action and options that confer short-term rewards at the cost of long-term disadvantages. Thus, irrational and risky decision-making is recognized as a core problem in patients with neuropsychiatric disorders, and a better understanding of the mechanisms underlying altered decision-making would provide insights into potential therapeutic approaches for these diseases. However, the neural pathway and substrates underlying these deficits are particularly unknown. Recently, we found that insular cortex is one of key regions for risky decision-making in an animal model of methamphetamine addiction, by using the designer receptor exclusively activated by designer drug (DREADD) technology, and that GABAergic dysfunction in insular cortex is involved in evaluating the subjective value of reward and reward prediction error. These brain dysfunctions would be related to risk taking behavior in addiction. In this review, we introduced the possible neural pathway related to risky decision-making and behavioral changes in choice strategy using adeno associated virus (AAV).

Loss: When yearning is pleasure

19 Longing is itself a pleasure. Sometimes it’s the greater pleasure. I once yearned for a stu≠ed rabbit, embraced and adored it every time I went to The Moon and Sixpence, the gift store in Newton Upper Falls that lay on the route of my family’s weekend errand run. The rabbit cost about fifteen dollars, which was a lot for an eleven-year-old in 1985. It had a pink silk ribbon around its neck and movable limbs and fuzzy white fur resembling the poufs of the angora rabbit, Precious, that hopped around the grounds of my summer camp in Maine. Part of the appeal of the rabbit, both the real one and the one in the shop, was that I had to go to it; that I did not, could not, possess it. Then one day at camp I got a package. My parents had bought me the rabbit. They might as well have boosted a religious icon from a church and shipped it to Camp Three Pines in a cardboard box. O≠ the altar, out of context, the icon was just a picture, and the rabbit was just a toy. I didn’t play with it. I’d never wanted to play with it, I understood as soon as I lifted it out of its tissue-paper bed. I’d wanted only to want it. Loss When yearning is pleasure Sarah Manguso essay 20 | SARAH MANGUSO Perhaps I was hungry for religious experience; what I had then was Sunday school at a Reform Jewish synagogue, where we were taught to read and sing Hebrew phonetically and assured that Jews didn’t need to believe in God. But I wanted to believe in magic, hence the pewter crescent moon I pinned on my jean jacket, hence the silver bell that quietly gonged when it bounced on my chest as I walked. Hence all the little sacred things I bought at The Moon and Sixpence, the tarot cards and the woven mandalas. I didn’t want to erase the distance between me and the great mysteries. I wanted to maintain them, and to wear and possess the things that reminded me that I was surrounded by powerful forces I couldn’t change. I wanted the great mysteries to swirl around me more than I wanted success, or possessions, or boys to kiss. I wanted to write a love letter and never send it; I wanted to keep my feelings to myself and never tell anyone, never relieve any of their thrilling pressure. I didn’t need to try to psychologize my yearning or eliminate it or hide it. I wanted to harbor it for myself. In the Boston of my childhood, where everyone seemed to be at least a little bit Italian and a little bit Irish, the Pats and Celtics and Bruins and Sox, especially the Sox, were revered as gods. It was impossible to live in my corner of the world without gaining some understanding of its dominant culture, of what it is to follow a team with unwavering attention. Even if I didn’t understand it, I saw the e≠ect of it on the faces and lives of the true believers like my father and the flocks depicted in the stands, on television, in the rain. The Sox symbolized all that could yet couldn’t be. Believing the Sox could win a World Series was an irrational choice made deliberately. I asked my friend Jimmy, who was from Boston and was the sort of sports fan who wore team jerseys and endured a baseball season as a spiritual voyage, about the Soxes’ six pennants and subsequent failures to win the Series. Why did they always lose? “Let’s take ’em in order,” he said in his radio voice, perfectly calm. And over the next several minutes, without stopping, he recited the litany from Johnny Pesky’s slow throw home in 1946 to Bill Buckner’s LOSS | 21 losing the ball between his legs during Game 6 in 1986. I sensed his comfort in the certainty that the Sox were the team that could play well but would always lose. And then it was...

Behavioral Economics in Management Decision Making

Behavioral economics has gained much attention in field of psychology and public policy. The field of study known as behavioral economics initially began as a purely academic attempt at modeling irrational consumer choices, thereby challenging the notion of the rational consumer of traditional economics. Management functions in 21st century workplaces have witnessed the paradigm shift in the decision making. According to Richard Thaler (Nobel Memorial Prize winner), Economic Sciences is a nudge for marketers to learn about behavioral economics. His work explains how can marketers nudge quick-thinking, short-attention consumers? This article seeks to examine and explain the difference which behavioral economics can make in formulating marketing strategies using the nudging concept given by Nobel prize winner Richard Thaler.