Overoptimistic Expectations Research Articles

Information provision and preferences for more sustainable dairy farming: Choice experimental evidence from Sweden

AbstractDairy farming in Europe faces profound environmental, social, and economic sustainability challenges, which are of significant policy interest. These challenges support the need for a transition toward the uptake of more sustainable dairy farming practices. This paper examines the effects of an advisory instrument “balanced sustainability information” on farmers’ preferences for more grass-based feeding systems using a between-subjects design and a discrete choice experiment among a sample of Swedish dairy farmers. Conceptually, we develop a state-dependent utility framework with Bayesian updating to motivate the impact pathway. Our results demonstrate that on average, balanced sustainability information has negligible effects on farmers’ feed choices, which could be a consequence of opposing responses to the information, among others. Considering farmer heterogeneity based on their identities and prior knowledge, we find support for some evidence of treatment effects. Our findings highlight important and policy-relevant critical reflections about overoptimistic expectations of information provision as an instrument to nudge behavioral change toward more sustainable farming practices.

Accuracy of Expected Symptoms and Subsequent Quality of Life Measures Among Adults With COPD

Patients' expectations for future health guide their decisions and enable them to prepare, adapt, and cope. However, little is known about how inaccurate expectations may affect patients' illness outcomes. To assess the association between patients' expectation inaccuracies and health-related quality of life. This cohort study of patients with severe chronic obstructive pulmonary disease (COPD) was conducted from 2017 to 2021, which included a 24-month follow-up period. Eligible participants received outpatient primary care at pulmonary clinics of a single large US health system. Data were analyzed between 2021 and 2023. Expectation accuracy, measured by comparing patients' self-reported expectations of their symptom burden with their actual physical and emotional symptoms 3, 12, and 24 months in the future. Health-related quality of life, measured by the St George's Respiratory Questionnaire-COPD at 3, 12, and 24 months. A total of 207 participants were included (median age, 65.5 years [range, 42.0-86.0 years]; 120 women [58.0%]; 118 Black [57.0%], 79 White [38.2%]). The consent rate among approached patients was 80.0%. Most patients reported no or only limited discussions of future health and symptom burdens with their clinicians. Across physical and emotional symptoms and all 3 time points, patients' expectations were more optimistic than their experiences. There were no consistent patterns of measured demographic or behavioral characteristics associated with expectation accuracy. Regression models revealed that overoptimistic expectations of future burdens of dyspnea (linear regression estimate, 4.68; 95% CI, 2.68 to 6.68) and negative emotions (linear regression estimate, -3.04; 95% CI, -4.78 to 1.29) were associated with lower health-related quality of life at 3 months after adjustment for baseline health-related quality of life, forced expiratory volume over 1 second, and interval clinical events (P < .001 for both). Similar patterns were observed at 12 months (dyspnea: linear regression estimate, 2.41; 95% CI, 0.45 to 4.37) and 24 months (negative emotions: linear regression estimate, -2.39; 95% CI, -4.67 to 0.12; dyspnea: linear regression estimate, 3.21; 95% CI, 0.82 to 5.60), although there was no statistically significant association between expectation of negative emotions and quality of life at 12 months. In this cohort study of patients with COPD, we found that patients are overoptimistic in their expectations about future negative symptom burdens, and such inaccuracies were independently associated with worse well-being over time. Developing and implementing strategies to improve patients' symptom expectations may improve patient-centered outcomes.

On the Direction of Causality between Business and Financial Cycles

This paper investigates whether business cycles cause financial cycles or vice versa. We also assess whether the US plays a leading role in causing the domestic business and financial cycles of other countries. The literature has established that business and financial cycles are linked through several channels such as credit constraints, the real effects of financial information and the reversal of overoptimistic expectations. Our analysis evaluates the direction of Granger causality using a novel approach based on the mixed-frequency vector autoregression model for the G7 countries. Our approach exploits the fact that real economic activity measured by industrial production is observed at a higher frequency than aggregate credit. We find strong evidence of bidirectional causality between the business and financial cycles, especially in recessions. Furthermore, the US is a global leader since the US business cycle significantly affects other countries’ business cycles, especially in terms of expansions.

Afforestation triggers water mining and a single pulse of water for carbon trade-off in deep soil

Clarifying the water-root-carbon nexus in the entire root zone is crucial for unlocking the potential of afforestation in mitigating climate change. But the nexus in deep soil (depth > 1 m) remains poorly understood. Here we report contrasts in deep soil water and root distributions across 72 paired sites of adjacent farmlands, representing typical pre-afforestation conditions, and tree plantations, representing modern afforestation across the Loess Plateau of China. Ranging from 6 to 25 m of depth, these profiles included plantations of 13 tree species ranging from 1 to 25 years of age. The observations revealed sustained water mining in deep soil following afforestation with mean soil water decline of 75.2 ± 9.8 mm yr−1 that were accompanied by root deepening rates of 1.00 ± 0.06 m yr−1 with an associated biomass input of 0.18 ± 0.04 Mg C ha−1 yr−1. A water for carbon trade-off in deep soil become evident, likely involving a single pulse of C gains and water losses as no signs of soil rewetting under tree plantations where observed total soil water exhaustion that accumulated the equivalent of up to 2.8 years of mean annual precipitation inputs. The reported water-root-carbon nexus reveals overlooked hydrological costs and, more importantly, over-optimistic expectations of sustained C sequestration under afforestation that may rather represent a single-pulsed C gain supported by deep soil water exhaustion.

Critical meta-analysis of problem-solving serious games: Clear signs of pedagogists’ disengagement and over-optimistic expectations

Problem-solving is placed at top of the ten most important life skills recommended by World Economic Forum. Serious game has been one of the dominant tools for educating people in different subjects over the last 10 years. This study aims to critically analyse previous empirical studies conducted on Problem-Solving Serious Games (PSSG). Using Constant Comparative Method (CCM) framework, 737 studies in this area are listed; and after applying several filters, 36 studies are refined and finally chosen. The analysis shows that serious games not alone improve people’s problem-solving ability, it also positively impacts on their problem-solving motivation, problem-solving measurement ability, critical thinking, and learning attitude. However, there is a lack of pedagogists’ engagement with PSSG studies. As a result, those studies suffered from lack of educational rationale behind and lack of right direction in choosing their participants, research methods, focus, genre, and expected outputs. Theoretical and practical implications of this critical analysis are outlined at the end of this paper, shedding light on the future directions of PSSG studies. the main conclusions of this study are as following: 1. An inter-disciplinary approach led by pedagogists is needed to design, develop, and examine PSSGs effectively. 2. The over-optimistic viewpoint about serious games in general and PSSGs in specific should be moderated by looking more closely at the negative marginal and side effects of implementing these games on gamers.

A Land of Milk and Honey with Streets Paved with Gold: Do Emigrants Have Over-Optimistic Expectations About Incomes Abroad?

Millions of people emigrate every year in search of better economic and social opportunities. Anecdotal evidence suggests that emigrants may have over-optimistic expectations about the incomes they can earn abroad, resulting in excessive migration pressure, and in disappointment among those who do migrate.Yet there is almost no statistical evidence on how accurately these emigrants predict the incomes that they will earn working abroad. In this paper the authors combine a natural emigration experiment with unique survey data on would-be emigrants'probabilistic expectations about employment and incomes in the migration destination. Their procedure enables them to obtain moments and quantiles of the subjective distribution of expected earnings in the destination country. The authors find a significant underestimation of both unconditional and conditional labor earnings at all points in the distribution. This underestimation appears driven in part by potential migrants placing too much weight on the negative employment experiences of some migrants, and by inaccurate information flows from extended family, who may be trying to moderate remittance demands by understating incomes.

Know What You Don’t Know: Assessment of Overlooked Microplastic Particles in FTIR Images

Assessing data analysis routines (DARs) for microplastics (MP) identification in Fourier-transform infrared (FTIR) images left the question ‘Do we overlook any MP particles in our sample?’ widely unanswered. Here, a reference image of microplastics, RefIMP, is presented to answer this question. RefIMP contains over 1200 MP and non-MP particles that serve as a ground truth that a DAR’s result can be compared to. Together with our MatLab® script for MP validation, MPVal, DARs can be evaluated on a particle level instead of isolated spectra. This prevents over-optimistic performance expectations, as testing of three hypotheses illustrates: (I) excessive background masking can cause overlooking of particles, (II) random decision forest models benefit from high-diversity training data, (III) among the model hyperparameters, the classification threshold influences the performance most. A minimum of 7.99% overlooked particles was achieved, most of which were polyethylene and varnish-like. Cellulose was the class most susceptible to over-segmentation. Most false assignments were attributed to confusion of polylactic acid for polymethyl methacrylate and of polypropylene for polyethylene. Moreover, a set of over 9000 transmission FTIR spectra is provided with this work, that can be used to set up DARs or as standard test set.

The computational roots of positivity and confirmation biases in reinforcement learning.

Humans do not integrate new information objectively: outcomes carrying a positive affective value and evidence confirming one's own prior belief are overweighed. Until recently, theoretical and empirical accounts of the positivity and confirmation biases assumed them to be specific to 'high-level' belief updates. We present evidence against this account. Learning rates in reinforcement learning (RL) tasks, estimated across different contexts and species, generally present the same characteristic asymmetry, suggesting that belief and value updating processes share key computational principles and distortions. This bias generates over-optimistic expectations about the probability of making the right choices and, consequently, generates over-optimistic reward expectations. We discuss the normative and neurobiological roots of these RL biases and their position within the greater picture of behavioral decision-making theories.

Collaborative governance in Social Impact Bonds: aligning interests within divergent accountabilities?

ABSTRACT Social Impact Bonds (SIBs) are a novel form of cross-sector collaborations and an alternative way of financing innovative social services. Based on an in-depth longitudinal case analysis and drawing from agency theory as well as resource dependence theory, we examine the process of interest alignment among involved partners over the lifespan of a SIB pilot project in Austria. Our study shows the multitude of problems and costs that such a challenging arrangement of multiple stakeholders brings along, thus dampening overoptimistic expectations in SIBs. We also suggest an analytical framework that improves the assessment of SIBs’ probability of success.

Great Recession and news shocks: evidence based on an estimated DSGE model

This paper examines whether productivity news shocks were among the drivers of the Great Recession. To do this, the Smets and Wouters (Am Econ Rev 97(3):586–606, 2007. https://doi.org/10.1257/aer.97.3.586 ) model is extended by a generalized preference specification which allows for scaling wealth effects on the labor supply. The resulting model is estimated using Bayesian methods which draw upon the US data from the period 1965Q2 to 2014Q3. There are four main results: (i) Estimation of the model is inconclusive regarding the degree of wealth elasticity of the labor supply. As a result, two complementary versions of the model prevail, each of which has differing implications for the transmission and the quantitative importance of exogenous shocks. (ii) When the degree of wealth elasticity of the labor supply is low, news shocks replace risk premium shocks, suggesting that news shocks are one possible reason for fluctuations in US business cycles. (iii) When the Great Recession period is analyzed through the lenses of the two complementary versions of the model, two explanations emerge as potential reasons behind the deepening of the crisis: worsening credit conditions as well as the collapse of over-optimistic expectations regarding future productivity. (iv) For both model specifications, general developments in productivity are estimated to be positive. Therefore, productivity slowdown is not considered to be among the reasons for the emergence or persistence of the Great Recession.

Going beyond mean effect size: Presenting prediction intervals for on-farm network trial analyses

Abstract The aim of on-farm research is to identify and test a new technology, product or management practice (e.g. more efficient seeding rate, enhanced row spacing, better disease management treatment, etc.) suited to local conditions by comparing it to a standard farmer practice across several farmers’ fields. Typically, each trial includes two treatments (new practice vs. standard control practice) replicated at least three times in each field. The statistical analysis of yield data collected in such trials provides growers with useful information about the effectiveness of the tested farming practice on crop productivity and its uncertainty. We used a random-effects model to i) estimate the performance of a treatment compared to a control in individual trials, ii) estimate the overall mean yield response across all trials, iii) compute prediction intervals describing a range of plausible yield response for a new (out-of-sample) field at the trial level, and iv) compute the probability that the tested management practice will be ineffective in a new field. We used frequentist (classical) and Bayesian approaches for data collected in 26 on-farm trial categories managed by the Iowa Soybean Association. Depending on the level of between-trial variability, we found that prediction intervals were 2.2–12.1 times larger than confidence intervals for the estimated mean yield responses for all tested management practices. We conclude that prediction intervals should be systematically reported to provide additional information about future trials or experiments with associated uncertainties. Nevertheless, prediction intervals should be interpreted with caution when the between-trial variance is small. Using prediction intervals and, when appropriate, the probability of ineffective treatment will prevent farmers from overoptimistic expectations that a significant effect at the overall population level will lead with high certainty to a yield gain on their own farms.

Researches of higher education development in Ukraine (1990s)

The article deals with the state of research in the contemporary historical scientific literature of the problems of higher Ukrainian education in the 1990s, and clarifies a range of topical and promising issues for the study of the educational field. Various studies on the history of higher education in Ukraine are controversial. After all, the evolution of educational systems is determined by the educational policy, which is a field of interaction, interconnection of different social groups with the involvement of public institutions to realize their interests and needs. The consistency and directionality of the analysis is ensured by the use of the problem-chronological approach and the structural-functional method, which allows to determine the level of knowledge regarding the different stages of development of the educational process in the scientific literature.Therefore, the historiography of the development of higher education in Ukraine in the 1990s has undergone several major stages. The writings of the early 1990s were dominated by negative evaluations of Soviet higher education and over-optimistic expectations about its reform and borrowing from the achievements of the Western Defense Law.&#x0D; The purpose of the article is to provide a historiographical overview of the basic scientific approaches of historians to the development of higher education in Ukraine in the 1990s.In modern research, there is a tendency to consider higher education in the 1990s through the prism of certain elements of its system: legislation, structural changes, quantitative indicators, funding and more. There is a lack of research that combines all the components of higher education and, most importantly, with the subjects of the educational process, human potential. The complex causes of the crisis phenomena in higher education, the peculiarities of the formation of the higher education network, the role of public organizations, the protection of the interests of participants in the educational process, the shadow relations, and so on, remain unanswered. To this day, comprehensive coverage by historians of the deep problems of higher education is relevant, which will help to understand the causes of its current crisis and the optimal ways to solve it.

Buy to Let: The Role of Investors in Housing Booms

How do buy-to-let investors affect housing price dynamics? I develop a structural search model that allows housing owners to invest in rental housing, and let rents be determined endogenously. To motivate the model, I present empirical evidence that a significant share of buyers are buy-to-let investors, and rents and the buy-to-let share are positively correlated with housing prices. The calibrated model matches the high investor share and housing price increase of a housing boom. A buy-to-let sector in a search framework is able to explain much of the observed increase in price-to-rent ratio, without shocks to credit or over-optimistic expectations. Buy-to-let introduces two mechanisms that increase prices compared to a standard search model. First, the endogenous correlation of rents and housing prices makes it attractive for non-owners to buy in “hot” markets, to avoid paying high rents. Second, the increased incentives to become landlords in high rent periods further increase the number of buyers and amplify the effect of high demand on housing prices.

Firm Life Stage and Earnings Announcement Reactions

Prior literature documents that corporate decisions are influenced by firm life stage, yet whether firm life stage affects investors’ reactions is not well understood. Using a cash flow-based life stage classification, this study finds that investors’ reactions to earnings announcements differ by firm life stage. Introduction and decline stage companies exhibit three-day cumulative abnormal returns (CARs) around earnings announcements that are at least 112 bps lower than firms in growth, maturity, and shake-out stages. Specifically, introduction and decline stage stocks exhibit less positive reactions to positive earnings surprises and more negative reactions to negative earnings surprises relative to companies in other life stages. Lottery stocks’ excess returns around earnings announcements (Liu, Wang, Yu, and Zhao 2020) also vary based on firm life stage. Our findings suggest that noise/retail traders’ overoptimistic expectations for introduction and decline stage stocks are met with disappointment when value-relevant earnings news is released. This study demonstrates that firm life stage has real implications for stock price reactions to earnings announcements in financial markets.

Adjustment for exploratory cut-off selection in randomized clinical trials with survival endpoint.

Defining the target population based on predictive biomarkers plays an important role during clinical development. After establishing a relationship between a biomarker candidate and response to treatment in exploratory phases, a subsequent confirmatory trial ideally involves only subjects with high potential of benefiting from the new compound. In order to identify those subjects in case of a continuous biomarker, a cut-off is needed. Usually, a cut-off is chosen that resulted in a subgroup with a large observed treatment effect in an exploratory trial. However, such a data-driven selection may lead to overoptimistic expectations for the subsequent confirmatory trial. Treatment effect estimates, probability of success, and posterior probabilities are useful measures for deciding whether or not to conduct a confirmatory trial enrolling the biomarker-defined population. These measures need to be adjusted for selection bias. We extend previously introduced Approximate Bayesian Computation techniques for adjustment of subgroup selection bias to a time-to-event setting with cut-off selection. Challenges in this setting are that treatment effects become time-dependent and that subsets are defined by the biomarker distribution. Simulation studies show that the proposed method provides adjusted statistical measures which are superior to naïve Maximum Likelihood estimators as well as simple shrinkage estimators.

Corrigendum to “The statistical significance filter leads to overoptimistic expectations of replicability” [J. Mem. Lang. 103 (2018) 151–175

Corrigendum to “The statistical significance filter leads to overoptimistic expectations of replicability” [J. Mem. Lang. 103 (2018) 151–175

Why bright city lights dazzle and illuminate: A cognitive science approach to urban promises

Despite the many uncertainties of life in cities, promises of economic prosperity, social mobility and happiness have fuelled the imagination of generations of urban migrants in search of a better life. Access to jobs, housing and amenities, and fewer restrictions of personal choices are some of the perceived advantages of cities, characterised here as ‘urban promises’. But while discourses celebrating the triumph of cities became increasingly common, urban rewards are not available everywhere and for everyone. Alongside opportunity, cities offer inequality, conflict and poor living conditions. Their narrative of promise has been persistent across different times and places, but the outcomes and experiences of urban life compare poorly with the overoptimistic expectations of many newcomers. And yet, millions still come and stay regardless of odds, raising the question why we have such positive and persistent expectations about cities. To examine this question, this paper considers the process of urban migration from the perspective of decision-making under uncertainty. It discusses how decisions and evaluations are based on imperfect information and offers a novel contribution by examining how the cognitive biases and heuristics which restrict human rationality shape our responses to urban promises. This approach may allow a better understanding of how people make decisions regarding urban migration, how they perceive their urban experiences and evaluate their life stories. We consider the prospects and limitations of the behavioural approach and discuss how biases favouring narratives of bright urban futures can be exploited by ‘triumphalist’ accounts of cities which neglect their embedded injustices.

The statistical significance filter leads to overoptimistic expectations of replicability

Abstract It is well-known in statistics (e.g., Gelman & Carlin, 2014) that treating a result as publishable just because the p-value is less than 0.05 leads to overoptimistic expectations of replicability. These effects get published, leading to an overconfident belief in replicability. We demonstrate the adverse consequences of this statistical significance filter by conducting seven direct replication attempts (268 participants in total) of a recent paper (Levy & Keller, 2013). We show that the published claims are so noisy that even non-significant results are fully compatible with them. We also demonstrate the contrast between such small-sample studies and a larger-sample study; the latter generally yields a less noisy estimate but also a smaller effect magnitude, which looks less compelling but is more realistic. We reiterate several suggestions from the methodology literature for improving current practices.

Understanding the Macro-Financial Effects of Household Debt: A Global Perspective

We confirm the negative relationship between household debt and future GDP growth documented in Mian, Sufi, and Verner (2017) for a wider set of countries over the period 1950–2016. Three mutually reinforcing mechanisms help explain this relationship. First, debt overhang impairs household consumption when negative shocks hit. Second, increases in household debt heighten the probability of future banking crises, which significantly disrupts financial intermediation. Third, crash risk may be systematically neglected due to investors’ overoptimistic expectations associated with household debt booms. In addition, several institutional factors such as flexible exchange rates, higher financial development and inclusion are found to mitigate this impact. Finally, the tradeoff between financial inclusion and stability nuances downside risks to growth.

Securitisation, Ring-Fencing, and Housing Bubbles: Financial Stability Implications of UK and EU Bank Reforms

Declines in property markets played a central role in the Great Financial Crisis. Off-balance sheet financing activities, particularly securitisations, were used to fund higher volumes of bank lending, concentrated in real estate. In response to the current low appetite for securitisations, the European Union has proposed a new Securitisation Regulation, with the aim of restarting EU securitisation markets. This article explores the possible legal and economic significance of this Regulation and argues that the proposed approach to regulating securitisation is likely to be deficient. Instead of addressing flaws in the securitisation process through improved incentives—which I term ‘process-focused’ regulation—regulation ought to concentrate on the excessive credit-origination which securitisation may facilitate. This is particularly relevant to housing bubbles, which in general are driven by over-optimistic expectations about future house prices, shared amongst lenders, borrowers, and investors. Improving incentives in credit-channel widening structured finance when all parties are over-optimistic is unlikely to guard against future bubble formation. This is particularly relevant to the UK market in light of structural reforms to the UK banking sector (so-called ‘ring-fencing’), which is likely to result in today’s large universal banks being converted into monoline mortgage lenders.