Behavioral bias in number processing: Evidence from analysts’ expectations. Tristan Roger, Patrick Roger, Alain Schatt. Journal of Economic Behavior & Organization, Volume 149, May 2018, Pages 315-331. https://doi.org/10.1016/j.jebo.2018.02.026
Highlights
• Research in neuropsychology shows that the human brain processes small and large numbers differently.
• Small numbers are processed on a linear scale, while large numbers are processed on a logarithmic scale.
• We show that financial analysts process small prices and large prices differently.
• Analysts are more optimistic about small price stocks than about large price stocks even after controlling for differences in risk factors.
• A deeply-rooted behavioral bias in number processing drives analysts return expectations.
Abstract: Research in neuropsychology shows that individuals process small and large numbers differently. Small numbers are processed on a linear scale, while large numbers are processed on a logarithmic scale. In this paper, we show that financial analysts process small prices and large prices differently. When they are optimistic (pessimistic), analysts issue more optimistic (pessimistic) target prices for small price stocks than for large price stocks. Our results are robust when controlling for the usual risk factors such as size, book-to-market, momentum, profitability and investments. They are also robust when we control for firm and analyst characteristics, or for other biases such as the 52-week high bias, the preference for lottery-type stocks and positive skewness, and the analyst tendency to round numbers. Finally, we show that analysts become more optimistic after stock splits. Overall, our results suggest that a deeply-rooted behavioral bias in number processing drives analysts’ return expectations.
Thursday, April 26, 2018
Individuals with low cognitive ability are less likely to support equal rights for same-sex couples, regardless of education and other confounds
The cognitive roots of prejudice towards same-sex couples: An analysis of an Australian national sample. Francisco Perales. Intelligence, Volume 68, May–June 2018, Pages 117–127. https://doi.org/10.1016/j.intell.2018.03.012
Highlights
• We examine the links between cognitive ability & prejudice towards same-sex couples.
• We use a large Australian national sample (n = 11,564) & 3 separate ability measures.
• High cognitive ability leads to lower prejudice, net of a large set of confounds.
• Results hold across different ability measures & are strongest for verbal ability.
• Education partially mediates, but does not moderate, the effect of ability.
Abstract: There are well-known correlations between low cognitive ability and support of prejudicial or non-egalitarian attitudes. This paper adds to existing knowledge by providing the first analyses of the associations between cognitive ability and attitudes towards LGBT issues in a non-US sample (Australia), comparing these across three measures of cognitive ability, and examining the separate, joint and interactive effects of education and cognitive ability. Findings from a high-quality, national Australian dataset (n = 11,564) indicate that individuals with low cognitive ability are less likely to support equal rights for same-sex couples. This pattern holds in the presence of confounds, is consistent across measures of ability, and is more pronounced for verbal ability. Education and cognitive ability affect attitudes through similar channels, but retain independent effects.
Keywords: Cognitive ability; LGBT issues; Intergroup prejudice; Same-sex couples; Socio-political attitudes
Highlights
• We examine the links between cognitive ability & prejudice towards same-sex couples.
• We use a large Australian national sample (n = 11,564) & 3 separate ability measures.
• High cognitive ability leads to lower prejudice, net of a large set of confounds.
• Results hold across different ability measures & are strongest for verbal ability.
• Education partially mediates, but does not moderate, the effect of ability.
Abstract: There are well-known correlations between low cognitive ability and support of prejudicial or non-egalitarian attitudes. This paper adds to existing knowledge by providing the first analyses of the associations between cognitive ability and attitudes towards LGBT issues in a non-US sample (Australia), comparing these across three measures of cognitive ability, and examining the separate, joint and interactive effects of education and cognitive ability. Findings from a high-quality, national Australian dataset (n = 11,564) indicate that individuals with low cognitive ability are less likely to support equal rights for same-sex couples. This pattern holds in the presence of confounds, is consistent across measures of ability, and is more pronounced for verbal ability. Education and cognitive ability affect attitudes through similar channels, but retain independent effects.
Keywords: Cognitive ability; LGBT issues; Intergroup prejudice; Same-sex couples; Socio-political attitudes
Higher psychopathy scores were associated with decreased concerns about preventing harm and promoting justice. Individuals higher in psychopathic traits did not evidence deficits in moral judgement
Relations among psychopathy, moral competence, and moral intuitions in student and community samples. Jeremy G. Gay, Michael J. Vitacco, Amy Hackney, Courtney Beussink, Scott O. Lilienfeld. Legal and Criminological Psychology, https://doi.org/10.1111/lcrp.12128
Abstract
Purpose: The nature of moral decision‐making in those with pronounced psychopathic traits has been passionately debated, both in scientific literature and in the public policy arena. Research investigating the relationship between psychopathic traits and moral decision‐making capacities has been largely inconclusive. However, recent research suggests individuals with elevated psychopathic traits may exhibit abnormal moral intuitions regarding the prevention of harm (Harm) and promotion of fairness (Fairness). Although moral intuitions are widely assumed to be related to moral judgement, no research has simultaneously examined the relations among psychopathy, moral intuition, and moral judgement.
Methods: We hypothesized that psychopathic traits would not be directly related to moral judgement outcomes but would be indirectly related by way of Harm and Fairness moral intuitions. To test these hypotheses, 121 undergraduate students and 205 community residents, across two studies, completed measures of psychopathy, moral intuitions, and moral judgement.
Results: Higher psychopathy scores were associated with decreased concerns about preventing harm and promoting justice across both samples. Individuals higher in psychopathic traits did not evidence deficits in moral judgement.
Conclusions: Our findings indicate that, although individuals with elevated psychopathic traits may organize their sense of morality differently, they can accurately discern moral from immoral decisions.
Abstract
Purpose: The nature of moral decision‐making in those with pronounced psychopathic traits has been passionately debated, both in scientific literature and in the public policy arena. Research investigating the relationship between psychopathic traits and moral decision‐making capacities has been largely inconclusive. However, recent research suggests individuals with elevated psychopathic traits may exhibit abnormal moral intuitions regarding the prevention of harm (Harm) and promotion of fairness (Fairness). Although moral intuitions are widely assumed to be related to moral judgement, no research has simultaneously examined the relations among psychopathy, moral intuition, and moral judgement.
Methods: We hypothesized that psychopathic traits would not be directly related to moral judgement outcomes but would be indirectly related by way of Harm and Fairness moral intuitions. To test these hypotheses, 121 undergraduate students and 205 community residents, across two studies, completed measures of psychopathy, moral intuitions, and moral judgement.
Results: Higher psychopathy scores were associated with decreased concerns about preventing harm and promoting justice across both samples. Individuals higher in psychopathic traits did not evidence deficits in moral judgement.
Conclusions: Our findings indicate that, although individuals with elevated psychopathic traits may organize their sense of morality differently, they can accurately discern moral from immoral decisions.
Refined models say that selection favors our looking for new partners while in relationships and to allow our partners to do the same. Non‐looking is only expected to evolve if there is an extremely large cost associated with being left by your partner
Can Strategic Ignorance Explain the Evolution of Love? Adam Bear, David G. Rand. Topics in Cognitive Science, https://doi.org/10.1111/tops.12342
Abstract: People's devotion to, and love for, their romantic partners poses an evolutionary puzzle: Why is it better to stop your search for other partners once you enter a serious relationship when you could continue to search for somebody better? A recent formal model based on “strategic ignorance” suggests that such behavior can be adaptive and favored by natural selection, so long as you can signal your unwillingness to “look” for other potential mates to your current partner. Here, we re‐examine this conclusion with a more detailed model designed to capture specific features of romantic relationships. We find, surprisingly, that devotion does not typically evolve in our model: Selection favors agents who choose to “look” while in relationships and who allow their partners to do the same. Non‐looking is only expected to evolve if there is an extremely large cost associated with being left by your partner. Our results therefore raise questions about the role of strategic ignorance in explaining the evolution of love.
Abstract: People's devotion to, and love for, their romantic partners poses an evolutionary puzzle: Why is it better to stop your search for other partners once you enter a serious relationship when you could continue to search for somebody better? A recent formal model based on “strategic ignorance” suggests that such behavior can be adaptive and favored by natural selection, so long as you can signal your unwillingness to “look” for other potential mates to your current partner. Here, we re‐examine this conclusion with a more detailed model designed to capture specific features of romantic relationships. We find, surprisingly, that devotion does not typically evolve in our model: Selection favors agents who choose to “look” while in relationships and who allow their partners to do the same. Non‐looking is only expected to evolve if there is an extremely large cost associated with being left by your partner. Our results therefore raise questions about the role of strategic ignorance in explaining the evolution of love.
Individuals employed in jobs requiring product promotion were less trusting than individuals employed in other jobs—particularly jobs in which honesty is highly expected
Mandates of Dishonesty: The Psychological and Social Costs of Mandated Attitude Expression. Marko Pitesa, Zen Goh, Stefan Thau. Organization Science, https://doi.org/10.1287/orsc.2017.1190
Abstract: This paper explains and tests empirically why people employed in product promotion are less willing to trust others. Product promotion is a prototypical setting in which employees are mandated to express attitudes that are often not fully sincere. On the basis of social projection theory, we predicted that organizational agents mandated to express insincere attitudes project their self-perceived dishonesty onto others and thus become more distrustful. An initial large-scale, multi-country field study found that individuals employed in jobs requiring product promotion were less trusting than individuals employed in other jobs—particularly jobs in which honesty is highly expected. We then conducted two experiments in which people were tasked with promoting low-quality products and either were allowed to be honest or were asked to be positive (as would be expected of most salespeople). We found that mandated attitude expression reduced willingness to trust, and this effect was mediated by a decrease in the perceived honesty of the self, which, in turn, reduced the perceived honesty of other people. Our research suggests that the widely used practice of mandating attitude expression has the effect of undermining an essential ingredient of economic functioning—trust.
Keywords: trust; mandated attitude expression; product promotion; social projection
Abstract: This paper explains and tests empirically why people employed in product promotion are less willing to trust others. Product promotion is a prototypical setting in which employees are mandated to express attitudes that are often not fully sincere. On the basis of social projection theory, we predicted that organizational agents mandated to express insincere attitudes project their self-perceived dishonesty onto others and thus become more distrustful. An initial large-scale, multi-country field study found that individuals employed in jobs requiring product promotion were less trusting than individuals employed in other jobs—particularly jobs in which honesty is highly expected. We then conducted two experiments in which people were tasked with promoting low-quality products and either were allowed to be honest or were asked to be positive (as would be expected of most salespeople). We found that mandated attitude expression reduced willingness to trust, and this effect was mediated by a decrease in the perceived honesty of the self, which, in turn, reduced the perceived honesty of other people. Our research suggests that the widely used practice of mandating attitude expression has the effect of undermining an essential ingredient of economic functioning—trust.
Keywords: trust; mandated attitude expression; product promotion; social projection
Is self-promotion evaluated more positively if it is accurate? It is, but modest claims are evaluated even more positively than self-promotional claims
Is self-promotion evaluated more positively if it is accurate? Reexamining the role of accuracy and modesty on the perception of self-promotion. Erin M. O’Mara, Benjamin R. Kunz, Angela Receveur & Sierra Corbin. Self and Identity, https://doi.org/10.1080/15298868.2018.1465846
Abstract: The present research sought to conceptually replicate and extend previous research showing that accurate self-promotional claims were associated with more favorable interpersonal evaluations than inaccurate claims, but that modest self-claims were evaluated most favorably. Across two experiments we found consistent evidence that a self-promotional claim paired with information that substantiates the claim is associated with more favorable interpersonal evaluations compared to when the claim is unsubstantiated. Despite proposed generational increases in narcissism and public venues for self-promotion, we found that that modest claims are evaluated even more positively than self-promotional claims. The discussion emphasizes the contribution of these findings to an understanding of the consequences of self-promotion.
Keywords: Self-promotion, modesty, self-enhancement, self-superiority, impression management
Abstract: The present research sought to conceptually replicate and extend previous research showing that accurate self-promotional claims were associated with more favorable interpersonal evaluations than inaccurate claims, but that modest self-claims were evaluated most favorably. Across two experiments we found consistent evidence that a self-promotional claim paired with information that substantiates the claim is associated with more favorable interpersonal evaluations compared to when the claim is unsubstantiated. Despite proposed generational increases in narcissism and public venues for self-promotion, we found that that modest claims are evaluated even more positively than self-promotional claims. The discussion emphasizes the contribution of these findings to an understanding of the consequences of self-promotion.
Keywords: Self-promotion, modesty, self-enhancement, self-superiority, impression management
Status threat, not economic hardship, explains the 2016 presidential vote
Status threat, not economic hardship, explains the 2016 presidential vote. Diana C. Mutz. Proceedings of the National Academy of Sciences, April 23, 2018, https://doi.org/10.1073/pnas.1718155115
Significance: Support for Donald J. Trump in the 2016 election was widely attributed to citizens who were “left behind” economically. These claims were based on the strong cross-sectional relationship between Trump support and lacking a college education. Using a representative panel from 2012 to 2016, I find that change in financial wellbeing had little impact on candidate preference. Instead, changing preferences were related to changes in the party’s positions on issues related to American global dominance and the rise of a majority–minority America: issues that threaten white Americans’ sense of dominant group status. Results highlight the importance of looking beyond theories emphasizing changes in issue salience to better understand the meaning of election outcomes when public preferences and candidates’ positions are changing.
Abstract: This study evaluates evidence pertaining to popular narratives explaining the American public’s support for Donald J. Trump in the 2016 presidential election. First, using unique representative probability samples of the American public, tracking the same individuals from 2012 to 2016, I examine the “left behind” thesis (that is, the theory that those who lost jobs or experienced stagnant wages due to the loss of manufacturing jobs punished the incumbent party for their economic misfortunes). Second, I consider the possibility that status threat felt by the dwindling proportion of traditionally high-status Americans (i.e., whites, Christians, and men) as well as by those who perceive America’s global dominance as threatened combined to increase support for the candidate who emphasized reestablishing status hierarchies of the past. Results do not support an interpretation of the election based on pocketbook economic concerns. Instead, the shorter relative distance of people’s own views from the Republican candidate on trade and China corresponded to greater mass support for Trump in 2016 relative to Mitt Romney in 2012. Candidate preferences in 2016 reflected increasing anxiety among high-status groups rather than complaints about past treatment among low-status groups. Both growing domestic racial diversity and globalization contributed to a sense that white Americans are under siege by these engines of change.
Significance: Support for Donald J. Trump in the 2016 election was widely attributed to citizens who were “left behind” economically. These claims were based on the strong cross-sectional relationship between Trump support and lacking a college education. Using a representative panel from 2012 to 2016, I find that change in financial wellbeing had little impact on candidate preference. Instead, changing preferences were related to changes in the party’s positions on issues related to American global dominance and the rise of a majority–minority America: issues that threaten white Americans’ sense of dominant group status. Results highlight the importance of looking beyond theories emphasizing changes in issue salience to better understand the meaning of election outcomes when public preferences and candidates’ positions are changing.
Abstract: This study evaluates evidence pertaining to popular narratives explaining the American public’s support for Donald J. Trump in the 2016 presidential election. First, using unique representative probability samples of the American public, tracking the same individuals from 2012 to 2016, I examine the “left behind” thesis (that is, the theory that those who lost jobs or experienced stagnant wages due to the loss of manufacturing jobs punished the incumbent party for their economic misfortunes). Second, I consider the possibility that status threat felt by the dwindling proportion of traditionally high-status Americans (i.e., whites, Christians, and men) as well as by those who perceive America’s global dominance as threatened combined to increase support for the candidate who emphasized reestablishing status hierarchies of the past. Results do not support an interpretation of the election based on pocketbook economic concerns. Instead, the shorter relative distance of people’s own views from the Republican candidate on trade and China corresponded to greater mass support for Trump in 2016 relative to Mitt Romney in 2012. Candidate preferences in 2016 reflected increasing anxiety among high-status groups rather than complaints about past treatment among low-status groups. Both growing domestic racial diversity and globalization contributed to a sense that white Americans are under siege by these engines of change.
Subjective well-being across education levels: More educated people require better circumstances to be equally satisfied, and as expectations are met the net effect on life satisfaction is negligible
Great Expectations: Education and Subjective Wellbeing. Ingebjørg Kristoffersen. Journal of Economic Psychology, https://doi.org/10.1016/j.joep.2018.04.005
Highlights
• The study investigates subjective wellbeing across education levels.
• A novel method is used to capture and decompose these differences.
• More educated people require better circumstances to be equally satisfied.
• As expectations are met the net effect on life satisfaction is negligible.
• Different results emerge within specific domains of life.
Abstract: This paper examines the association between education and subjective wellbeing. The evidence on this relationship is scarce, inconsistent and poorly understood, and reports of a negative association are common. Such results may appear counter-intuitive, but are in fact consistent with the idea that education is associated with higher expectations with respect to life circumstances. Consequently, education may be associated with greater subjective wellbeing only insofar as the ability to meet (or exceed) expectations is improved. This paper uses panel data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey to evaluate the evidence for differences in reference points across education levels, and to determine the overall association between education and subjective wellbeing. The results of the analysis confirm moderate rightward drifts across education levels for satisfaction with life in general, which are ‘neutralised’ by observed differences in actual circumstances. Other patterns emerge within specific life domains. Positive overall associations are observed for satisfaction with financial circumstances and health, while negative overall associations are observed for satisfaction with work and the amount of leisure time.
Keywords: Education; Subjective Wellbeing; Happiness; Satisfaction; Expectations; Adaptation
Highlights
• The study investigates subjective wellbeing across education levels.
• A novel method is used to capture and decompose these differences.
• More educated people require better circumstances to be equally satisfied.
• As expectations are met the net effect on life satisfaction is negligible.
• Different results emerge within specific domains of life.
Abstract: This paper examines the association between education and subjective wellbeing. The evidence on this relationship is scarce, inconsistent and poorly understood, and reports of a negative association are common. Such results may appear counter-intuitive, but are in fact consistent with the idea that education is associated with higher expectations with respect to life circumstances. Consequently, education may be associated with greater subjective wellbeing only insofar as the ability to meet (or exceed) expectations is improved. This paper uses panel data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey to evaluate the evidence for differences in reference points across education levels, and to determine the overall association between education and subjective wellbeing. The results of the analysis confirm moderate rightward drifts across education levels for satisfaction with life in general, which are ‘neutralised’ by observed differences in actual circumstances. Other patterns emerge within specific life domains. Positive overall associations are observed for satisfaction with financial circumstances and health, while negative overall associations are observed for satisfaction with work and the amount of leisure time.
Keywords: Education; Subjective Wellbeing; Happiness; Satisfaction; Expectations; Adaptation
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