New marketing paradigms that exploit the capabilities for data collection, aggregation, and dissemination introduced by the Internet provide benefits to consumers but also pose real or perceived ...privacy hazards. In four experiments, we seek to understand consumer decisions to reveal or withhold information and the relationship between such decisions and objective hazards posed by information revelation. Our central thesis, and a central finding of all four experiments, is that disclosure of private information is responsive to environmental cues that bear little connection, or are even inversely related, to objective hazards. We address underlying processes and rule out alternative explanations by eliciting subjective judgments of the sensitivity of inquiries (experiment 3) and by showing that the effect of cues diminishes if privacy concern is activated at the outset of the experiment (experiment 4). This research highlights consumer vulnerabilities in navigating increasingly complex privacy issues introduced by new information technologies.
We propose a theory of preferences for acquiring or avoiding information and for exposure to uncertainty (i.e., risk or ambiguity) which is based on thoughts and feelings about information as well as ...information gaps, that is, specific questions that the decision maker recognizes and is aware of. In our theoretical framework utility depends not just on material payoffs but also on beliefs and the attention devoted to them. We specify assumptions regarding the determinants of attention to information gaps, characterize a specific utility function that describes feelings about information gaps, and show with examples that our theory can make sense both of the acquisition of noninstrumental information and of the avoidance of possibly useful information, as well as source-specific risk and ambiguity aversion and seeking.
•We investigate when second opinions are likely to be beneficial or detrimental.•Primary advisors give more biased advice when they are aware of a second advisor.•Primary advisors reduce bias when ...they fear that poor quality advice will be exposed.•Primary advisors reduce bias when they fear economic consequences.•Second opinions in general improve the quality of advisees’ decisions.
Second opinions have been advocated as an antidote to bias in advice when primary advisors have conflicts of interest. In four experiments, we demonstrate how primary advisors alter their advice due to knowledge of the presence of a second advisor. We show that advisors give more biased advice and adopt a profit-maximizing frame when they are aware of the mere availability of a second opinion. The bias increases when primary advisors are aware that the second opinion is of low quality, and decreases when they know the second opinion is of high quality and easy to access. Both economic concerns (e.g., losing future business) and noneconomic concerns (e.g., concern that a second advisor will expose the poor quality advice) decrease bias in primary advisors’ advice. Based on these findings, we discuss circumstances in which second opinions are likely to be beneficial or detrimental to advice-recipients.
Two sets of studies illustrate the comparative nature of disclosure behavior. The first set investigates how divulgence is affected by signals about others' readiness to divulge and shows a "herding" ...effect: Survey respondents are more willing to divulge sensitive information when told that previous respondents have made sensitive disclosures (Study 1a). The authors provide evidence of the process underlying this effect and rule out alternative explanations by showing that information on others' propensity to disclose affects respondents' discomfort associated with divulgence (Study 1b) but not their interpretation of the questions (Study 1c). The second set of studies investigates how divulgence is affected by the order in which inquiries of varying intrusiveness are made and suggests that divulgence is anchored by the initial questions in a survey. People are particularly likely to divulge when questions are presented in decreasing order of intrusiveness and less likely when questions are presented in increasing order (Study 2a). The authors show that the effect arises by affecting people's judgments of the intrusiveness of the inquiries (Study 2b). The effect is altered when, at the outset of the study, privacy concerns are primed (Study 2c) and when respondents are made to consider the relative intrusiveness of a different set of questions (Study 2d). This research helps illuminate how consumers' propensity to disclose is affected by continual streams of requests for personal information and by the equally unavoidable barrage of personal information about others.
Large Stakes and Big Mistakes ARIELY, DAN; GNEEZY, URI; LOEWENSTEIN, GEORGE ...
Review of economic studies/The review of economic studies,
04/2009, Volume:
76, Issue:
2
Journal Article
Peer reviewed
Open access
Workers in a wide variety of jobs are paid based on performance, which is commonly seen as enhancing effort and productivity relative to non-contingent pay schemes. However, psychological research ...suggests that excessive rewards can, in some cases, result in a decline in performance. To test whether very high monetary rewards can decrease performance, we conducted a set of experiments in the U.S. and in India in which subjects worked on different tasks and received performance-contingent payments that varied in amount from small to very large relative to their typical levels of pay. With some important exceptions, very high reward levels had a detrimental effect on performance.
People frequently face decisions that require making inferences about withheld information. The advent of large language models coupled with conversational technology, e.g., Alexa, Siri, Cortana, and ...the Google Assistant, is changing the mode in which people make these inferences. We demonstrate that conversational modes of information provision, relative to traditional digital media, result in more critical responses to withheld information, including: (1) a reduction in evaluations of a product or service for which information is withheld and (2) an increased likelihood of recalling that information was withheld. These effects are robust across multiple conversational modes: a recorded phone conversation, an unfolding chat conversation, and a conversation script. We provide further evidence that these effects hold for conversations with the Google Assistant, a prominent conversational technology. The experimental results point to participants' intuitions about why the information was withheld as the driver of the effect.
Many situations involving exploration, such as businesses expanding into new products or locations, expose the explorer to the potential for subjective losses. How does the potential to experience ...losses during the course of a search affect individuals' appetite for exploration? In three incentivized studies, we manipulate search outcomes by presenting participants either with a gain‐only environment or a gain‐loss environment. The two environments offer objectively identical incentives for exploration: Using a framing manipulation, we decrease gain‐loss payoffs and provide participants an initial endowment to offset the difference. Participants decide how to explore a one‐dimensional space, receiving payoffs based on their location each period. We predict and find that participants are motivated to avoid losses, which increases exploration when they are incurring losses but decreases exploration when they face the potential for losses. We conclude that exploration is driven by hope of potential gains, constrained by fear of potential losses, and motivated by avoidance of experienced losses.
Intertemporal choices -- decisions involving trade-offs among costs and benefits occurring at different times -- are important and ubiquitous. Such decisions not only affect one's health, wealth and ...happiness, but, may also, as Adam Smith's first recognized, determine the economic prosperity of nations. In this paper, empirical research on intertemporal choice is reviewed, and an overview of recent theoretical formulations that incorporate insights gained from this research are presented. The insights have spawned new series of intertemporal choice that revive many of the psychological considerations discussed by early students of intertemporal choice -- considerations that were effectively dismissed with the introduction of the discounted utility model.
We review literature examining the effects of laws and regulations that require public disclosure of information. These requirements are most sensibly imposed in situations characterized by ...misaligned incentives and asymmetric information between, for example, a buyer and seller or an advisor and advisee. We review the economic literature relevant to such disclosure and then discuss how different psychological factors complicate, and in some cases radically change, the economic predictions. For example, limited attention, motivated attention, and biased assessments of probability on the part of information recipients can significantly diminish, or even reverse, the intended effects of disclosure requirements. In many cases, disclosure does not much affect the recipients of the information but does significantly affect the behavior of the providers, sometimes for the better and sometimes for the worse. We review research suggesting that simplified disclosure, standardized disclosure, vivid disclosure, and social comparison information can all be used to enhance the effectiveness of disclosure policies.
Abstract
We develop a model of fragile self-esteem—self-esteem that is vulnerable to objectively unjustified swings—and study its implications for choices that depend on, or are aimed at enhancing or ...protecting, one’s self-view. In our framework, a person’s self-esteem is determined by sampling his memories of ego-relevant outcomes in a fashion that in turn depends on how he feels about himself, potentially creating multiple fragile “self-esteem personal equilibria.” Self-esteem is especially likely to be fragile, as well as unrealistic in either the positive or the negative direction, if being successful is important to the agent. A person with a low self-view might exert less effort when success is more important. An individual with a high self-view, in contrast, might distort his choices to prevent a collapse in self-esteem, with the distortion being greater if his true ability is lower. We discuss the implications of our results for mental well-being, education, job search, workaholism, and aggression.
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