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The Fictional Self: Implications for Theories of Decision Making

The Fictional Self: Implications for Theories of Decision Making. Nick Chater Behavioural Science Group. OVERVIEW. THE FICTIONAL SELF THE ILLUSION OF DEPTH WHY BEHAVIOUR IS (SOMEWHAT) COHERENT IMPLICATIONS. 1. THE FICTIONAL SELF. The claim.

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The Fictional Self: Implications for Theories of Decision Making

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  1. The Fictional Self: Implications for Theories of Decision Making Nick Chater Behavioural Science Group

  2. OVERVIEW • THE FICTIONAL SELF • THE ILLUSION OF DEPTH • WHY BEHAVIOUR IS (SOMEWHAT) COHERENT • IMPLICATIONS

  3. 1. THE FICTIONAL SELF

  4. The claim • We infer our own inner life from our words and actions, just as we infer those of a third person • A popular viewpoint in many areas of social psychology and philosophy • Corollary 1: We do not have any direct access to “inner” beliefs, desires etc... • Corollary 2: Indeed, there are no such beliefs and desires (illusion of depth)

  5. Inferring our own beliefs 1 • Festinger and Carlsmith, 1963 1. People do a boring task 2. Then paid $1 or $20 to persuade others to do it • People paid more find it more aversive; less likely to do it again, etc. • Why did I do this? • “If I was only paid $1, it can’t have been too bad” • (Daryl Bem self-perception interpretation, not quite Festinger’s)

  6. Inferring our own beliefs 2 • Reber & Schwarz 1999 • “fluency” of reading (!) affects plausibility of a statement • Osarno is a town in Chile • Osarno is a town in Chile • But effect is cancelled when people have an alternative explanation (poor photocopier) • Alter and Oppenheimer 2006 • IPOs with ‘fluent’ names do substantially better (though effect washes out) RDO vs KAR

  7. Inferring our own beliefs 3 (Schwarz et al) • Generate 3 reasons why... • Happy with decision, • like partner • 3 is easy; high ‘fluency’  infer strong commitment  high self-report on happiness with decision, partner, etc. • Generate 6 reasons why... • Happy with decision, • like partner • 6 is hard; low ‘fluency’  infer weak commitment  lower self-report on happiness with decision, partner, etc.

  8. Inferring our own emotions 1 • Schachter and Singer (1962) • Epinephrine or placebo injections • Raising (or not) arousal • informed (or not) about side-effects • Put with euphoric or angry ‘stooges’ • Higher arousal  participants are more euphoric/angry • When people can ‘explain away’ arousal, effect much reduced

  9. Inferring our own emotions 2 • Dutton and Aron (1974) • Male/female interviewers of male bridge-crossers low vs high bridge • Interviewers give phone number “further explanation” of study • More calls to female interviewers for high bridge Arousal (caused by high bridge) misattributed as caused by attractiveness

  10. Inferring our own preferences 1 • Johansson, Hall et al., Science • False feedback on choices • not noticed • rationalization given • later preferences changed • And it works with jam

  11. Inferring our own preferences 2 • Can people stably determine preferences between pains and money? • Or do they have little idea what is a “reasonable” trade-off? • BDM auction with small electric shocks Vlaev, Seymour, Dolan & Chater, Psych Science, 2009

  12. Pain magnitudes were presented in pairs in three blocks of ten trials • Two “endowment” conditions • £0.40 per trial • £0.80 per trial

  13. People double their offers, when they have double the money... • Value of pain changes by x2 within minutes!

  14. In a slogan: • We are fictional characters of our own creation • i.e., the body isn’t fictional; but the ‘character’ is! • Daily life (and decision making) is a bit like improvisational acting • “What would X do now?”

  15. 2. THE ILLUSION OF DEPTH

  16. Where does a rocket take off? • Triangulation will solve it; and the more measurements, the more error can be reduced

  17. Where does a rainbow touch down? • Triangulation won’t work... • And the problem is not eliminating noise!

  18. Rainbows, like beliefs and values have the illusion of depth • But different ‘bearings’ don’t converge • Because they are improvised on the fly • Not products of stable, (if somewhat hidden, motives) • Different methods of elicitation will yield irrenconcilable “bearings”

  19. Reason-based choice (Shafir et al) Expensive, but exciting holiday vs. Cheap, but dull holiday Bali Bournmouth

  20. Which holiday would you choose? Reason: “It’s exciting!” Bali Bournmouth

  21. Which holiday would you reject? Reason: “It’s too expensive!” Bali Bournmouth

  22. 3. WHY BEHAVIOUR IS (SOMEWHAT) COHERENT

  23. But behaviour is by no means wholly incoherent • Rationality constraints • Rules (moral or other) • Herding and self-herding (what do I/we normally do?) • Hierarchies of goals • Prices (multiplicative  additive) What does my character do next?

  24. Rationality constraints • £1 + £1 + £1 + £1 is not really preferred to £20 - £15 (despite prospect theory) • We don’t always break a diet when passing the fridge (despite temporal discounting) • We don’t actually fall for Dutch books • Rational choice theory helps capture qualitative patterns of reasoning that govern the ‘stories’ we create about ourselves (or others) • Rationality constraints on “story generation” are a (partial and local) stabilizing force

  25. Prices • Decision by arguments (cfLoomes): • Comfortable vs uncomfortable seating • Cost £X vs £Y  strength of ‘argument’ driven by ratio X:Y • Duration tends to be forgotten about How much would you pay for 1 h of sitting (more) comfortably? Or 4h 50m of sitting (more) comfortably?

  26. EVERYTHING IS RELATIVE... How much would you pay for 1 h of sitting (more) comfortably? Or 4h 50m of sitting (more) comfortably? London to Edinburgh, return Second: £108.30 First: £229.90 2nd class: £164.10 Business: £325.10 In each case, double the basic price: comparison in action

  27. By being able to ‘unbundle’ enforces additivity (and thus more stability) • Bundled -> multiplicative • House size and location • Car quality + stereo system • Doubling of all wine prices in a restaurant • Taking a percentage of sale in auctions, house sales, mergers • Same good: but will happily pay wildly different amounts • Unbundled • Computer hardware + software • Unlicensed restaurant; bring your own drinks • The supermarket, rather than the restaurant. • Same good, same price (but not via same utility)

  28. 4. IMPLICATIONS

  29. IMPLICATION 1: THE POWER OF THE STATUS QUO • Current house prices soon seem ‘normal’ • Wage increases rapidly ‘fade out’ as contributors to happiness; And even lottery wins • Tax and other cost changes have much less long-term impact on behaviour than is typically expected • Levels of risk are viewed relatively: sub-prime lending, complex instruments etc judged against each other

  30. IMPLICATION 2: THE POWER OF THE HERD • No absolute anchors • Comparison against other’s beliefs and behaviors • Risk-takers will be relatively risk seeking, w.r.t., peer group

  31. IMPLICATION 3UNANCHORED PRICES “value” “price” • People can’t “know” their values • So they must partly infer them from market prices • Allowing feedback loops between values and prices • The origin of booms and crashes? PEOPLE KNOW THE PRICE OF EVERYTHING, BUT THE VALUE OF NOTHING

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