This dissertation presents four independent papers that advance experimental methods and test theories on saving using experimentally elicited characteristics. The first two papers test two behavioral theories on precautionary saving based on the characteristics loss aversion and prudence by using a combination of survey data and experimental measures of these preferences from a sample of poor households in Bogota. In that context, the second paper presents a new method to elicit risk preferences with their intensities. The last two papers make a methodological contribution to binary and mu...
Mainstream economists are reluctant to integrate features of bounded rationality into their behavioural assumptions. However, particularly in the field of economic policy the scope for irrational behaviour is given, since voters lack incentives for rational reasoning concerning their voting decision. The explanatory power of irrational behaviour is demonstrated for the example of reform resistance. Status quo preferences, endowment effects and loss aversion are typical deviations from full rationality and explain resistance against beneficial reforms even if there is full information. From this psychological perspective, a major precondition for the implementation of reforms is the loss of the status quo as an available option. This loss might result from changing external constraints caused by political integration (European Union) or market integration (globalisation). Test runs of policy options might also be helpful for overcoming psychological reform resistance.
The Truckers and Turnover Project is a statistical case study of a single firm and its employees which matches proprietary personnel and operational data to new data collected by the researchers to create a two-year panel study of a large subset of new hires. The project's most distinctive innovation is the data collection process which combines traditional survey instruments with behavioral economics experiments. The survey data include information on demographics, risk and loss aversion, time preference, planning, non-verbal IQ, and the MPQ personality profile. The data collected by behavioral economics experiments include risk and loss aversion, time preferences (discount rates), backward induction, patience, and the preference for cooperation in a social dilemma setting. Subjects will be followed over two years of their work lives. Among the major design goals are to discover the extent to which the survey and experimental measures are correlated, and whether and how much predictive power, with respect to key on-the-job outcome variables, is added by the behavioral measures. The panel study of new hires is being carried out against the backdrop of a second research component, the development of a more conventional in-depth statistical case study of the cooperating firm and its employees. This is a high-turnover service industry setting, and the focus is on the use of survival analysis to model the flow of new employees into and out of employment, and on the correct estimation of the tenure-productivity curve for new hires, accounting for the selection effects of the high turnover.
Machine generated contents note: -- Acknowledgments ix Introduction 1 I Political Psychology 13 1 Understanding Beliefs 15 2 The Drunkard's Search 40 II Heuristics and Biases 61 3 Representativeness, Foreign Policy Judgments, and Theory-Driven Perceptions 63 4 Prospect Theory: The Political Implications of Loss Aversion 85 III Political Psychology And International Relations Theory 105 5 Signaling and Perception: Projecting Images and Drawing Inferences 107 6 Political Psychology Research and Theory: Bridges and Barriers 125 7 Why Intelligence and Policymakers Clash 148 8 Identity and the Cold War 169 IV Psychology And National Security 189 9 Deterrence and Perception 191 10 Psychology and Crisis Stability 216 11 Domino Beliefs 234 12 Perception, Misperception, and the End of the Cold War 261 Index 281
Objectives-Political theories of agenda setting and policy choice are still limited in predicting when an issue will become salient and, once it has, what policy option will be used to address it. This article illustrates that for a large class of externality problems, perspectives from three other social science disciplines can refine those predictions. Methods-A synthesis of implications from economics on assignment of property rights, loss aversion from prospect theory, and image of the policy target from social construction is used to determine the conditions under which issues gain attention and the likely policy solutions. Results-Assignment of property rights establishes a baseline used to assess any further government actions, with losses from that base more likely to generate political attention. The assignment of rights also determines if a problem is defined as a negative or positive externality, which restricts the type of policies used to address the problem. This initial allocation of rights is in turn affected both by the political power and social construction of the groups involved. Conclusions-The result is a bias in policy attention and outcomes strongly influenced by the norms used in assignment of property rights, which typically favor those generating the negative externality. References. Adapted from the source document.
"Elgar Advanced Introductions are stimulating and thoughtful introductions to major fields in the social sciences, business and law, expertly written by the world s leading scholars. Designed to be accessible yet rigorous, they offer concise and lucid surveys of the substantive and policy issues associated with discrete subject areas.This highly informative Advanced Introduction explores the diverse and far-reaching legal implications of some of the key findings of behavioral economics. Cass Sunstein, a leader in this field, adopts an interdisciplinary approach to examining cutting-edge topics such as air pollution and climate change; public health and safety; pandemic response; occupational safety; road safety; and contract, property, and tort law. This Advanced Introduction provides a much-needed assessment and analysis of the law as a critical domain for the use of behavioral economics, and investigates how techniques including nudging, mandates, and taxes can be used to enhance the effectiveness and improve the implementation of the law.Key Features:Explains how legal systems and governments employ behavioral economicsExplores the crucial relationship between law, behavioral economics and human welfareHighlights the use of algorithms in law and policy, considering the relationship between algorithms, noise and bias Examines key concepts from behavioral economics including sludge, present bias, loss aversion, unrealistic optimism, and anchoringThis erudite Advanced Introduction will be an essential read for legal students, academics and researchers with an interest in behavioral economics, public policy and economic psychology. Highlighting how behavioral economics interacts with various other disciplines, it will also prove valuable to professionals and practitioners working in law, medicine, education and politics."
"Technological progress and globalization have generated indisputable benefits, but also relevant costs, such as growing economic inequality, economic fluctuations and financial instability. Mainstream economics has usually considered these costs as temporary, evenly distributed and more than compensated by the gains of the phases of economic expansion. In this book, which focuses mainly (though not only) on the labor market, the authors contend that the major costs of the intensified process of creative destruction, through which economic change proceeded, have been ignored and the benefits overrated, thus incorrectly estimating the net impact of economic growth on subjective wellbeing. The book argues that the positive consequences of economic change and globalization do not compensate for the negatives, because psychological losses are felt more strongly than gains (due to loss aversion) and the costs are unequally distributed (those on low incomes disproportionately suffer more). The result is an overall reduction in well-being and therefore appropriate policies are necessary to allow more people to enjoy the benefits of technological progress without suffering the costs. The authors develop a comprehensive framework in which the socio-psychological context and educational level of a community determine the most suitable policies both for the short and for the long run. The book makes an invaluable contribution to the literature on economic growth and development, labor economics, the economics of well-being, and applications of behavioral economics. The readers that may be interested in this book are economists and other social scientists, but also general readers, since the analysis is maintained simple and accessible. University teachers can use the book for courses on economic growth and development, on labor economics, on economics of human capital, on economics of well-being, and on applications of behavioral economics."
Justification for policies to encourage investments in education, particularly for individuals at the lower end of the ability distribution, may be provided by behavioural economics. We present a prototypical model where individuals who are potentially loss averse around their expected outcome make risky investments in education and we draw on optimal tax theory to explore the design of policy. The model highlights the critical roles played by (i) the relationship between behavioural risk preferences, standard risk aversion and labour supply behaviour, (ii) the risk properties of education, and (iii) the degree of observability of individual academic ability.
Understanding how preferences are formed is a key question in the social sciences. The ability of agents to interact with each other is a prerequisite for well-functioning societies. Nevertheless, the process whereby the preferences of agents in conflict are formed have often been black boxed, and the literature on the effects of armed conflict on individuals reveals a great variation in terms of outcomes. Sometimes, individuals are willing to cooperate and interact even with former enemies, while sometimes, we see outright refusal to cooperate or interact at all. In this dissertation, I look at the role of threat in driving some of these divergent results. Armed conflict is rife with physical threats to life, limb and property, and there has been much research pointing to the impact of threat on preferences, attitudes and behavior. Research in the field of evolutionary psychology has revealed that threat is not a singular category, but a nuanced phenomenon, where different types of threat may lead to different responses. I argue that by taking a more nuanced approach to threat, drawing on theories from the field of evolutionary psychology, some of the variance in outcomes can be explained. In particular, some commonly observed features of protracted conflicts, such as seemingly indivisible issues and parochialism may be moderated by threat. In the four essays, I address this from both a theoretical and empirical point of view. In Essay I, I illustrate in a formal bargaining setting how threats can lead actors to prefer risky all-or-nothing gambles to division schemes, preventing bargaining solutions to be found. In the second essay (Essay II), I show that willingness to make compromises with members of other groups are not contingent on group affiliation alone, but rather on the expected reciprocity of that group. Furthermore, characteristics of others beyond group can also affect pro-sociality. Based on a threat management perspective, me and my coauthors in Essay III show that non-threatening social categories, such as women or the elderly, are shown higher levels of altruism, also when there individuals are outgroup members. Exposure to violence can even increase altruism across group lines, but only to these non-threatening groups. Finally, in Essay IV, I show that those who experience post-traumatic growth as a result of traumatic events reverse the standard loss aversion people generally display, even showing gain-seeking preferences. Together, these results point to the importance of bringing in a more nuanced conceptualization of the role of threat in the study of peace and conflict. Even in the most brutal and destructive conflicts, humans are able to cooperate, also across group lines. However, for this cooperation to function, managing the threats in conflict is of central importance.
Offers an overview of the principal causes of economic crisis in Cuba & the related impact of US policy toward the country, sketching the history of the US's ideological aversion since 1898 through President Clinton's current foreign policy. The crisis is attributed to: extraordinary US pressure since the 1959 revolution; the US embargo, strengthened in 1992; loss of Eastern European trade; treatment as a Third World country; & internal structural problems. The complex interplay of party politics, ideology, status, election battles, & resource allocation in US decision making is discussed. A major change of US policy is not anticipated; rather, an increased exertion of unilateral, bilateral, & multilateral tools is predicted. It is concluded that only global, structural reforms can diminish the dominance of northern states. 24 References. Adapted from the source document.
"A new history of liberalism which argues that liberalism has been predicated on definite morality and should be viewed as an attempt to encompass both fear and hope. Liberalism, argues Alan Kahan, is the search for a society in which people need not be afraid. Freedom from fear is the most basic freedom. If we are afraid, we are not free. These insights, found in Montesquieu and Judith Shklar, are the foundation of liberalism. What liberals fear has changed over time (revolution, reaction, totalitarianism, religious fanaticism, poverty, and now populism) but the great majority of liberal thinkers have relied on three pillars to ward off their fears and to limit the concentrated power that causes fear: freedom, markets, and morals, or, to put it another way, politics, economics, and religion or morality. Most liberal thinkers emphasize one or two pillars more than another, but it is typical of liberalism down to the Second World War to rely on all three, although there were always minority voices who preferred to stand on only one leg. After WWII, "thin" procedural/market liberals, who wanted to strip any moral or religious basis or purpose from liberalism, dominated "thick" liberal moralists, who thought liberalism needed a moral basis and/or goal. It is the political contention of this book that liberalism is most convincing as program, language, and social analysis when it relies on all three pillars, and that the relative weakness of liberalism at the end of the twentieth century had much to do with neglect of the moral pillar of liberalism. Its historical contention is that for much of the past two centuries it did rely on all three pillars. But Kahan also argues that liberalism is not only a party of fear. It is also a party of hope, or the party of progress. Many of the contradictions typical of liberalism derive from the seemingly contradictory effort to encompass both hope and fear. If in case of conflict fear often trumps hope for liberals (loss aversion applies in politics as much as in economics), and utopia is subject to indefinite postponement, progress in personal autonomy and development has always been at the heart of liberalism. Liberals typically support their hopes on the same three pillars of freedom, markets, and morals which they use to ward off their fears. Nevertheless, in one respect those historians and political theorists who identify liberalism with laissez-faire economics are not wrong. It is characteristic of liberalism then that it bases its hopes not on the state but on civil society, which for liberals is the common source of a free politics, a free market, and of morals. Alan S. Kahan is Professor of History at the Université de Versailles. His previous books include Tocqueville, Democracy, and Religion: Checks and Balances for Democratic Souls (Oxford 2015), Alexis de Tocqueville (Continuum Books) and Mind vs Money: The War Between Intellectuals and Capitalism (Transaction Publishing, 2010)"--
