It is critical for economics to incorporate methods and insights developed in other disciplines, notably the natural sciences. 1. Observe and characterize human economic behavior 2. Make efforts to understand the biological foundation of that behavior 3. Build improved economic models that incorporate constraints and processes consistent with the biology of economic decision making
Temptation
Temptations are unavoidable… 10:00 am 2:00 pm 7:00 am 5:00 pm Resist!
Resisting a temptation requires energy… The marshmallow test (Mischel, 1972)
The famous “marshmallow test.” • Mischel and Ebbeson, with 4-year-old subjects. “Here is a marshmallow for you. I have to leave the lab for 10 minutes. If you can refrain from eating the marshmallow until I return, you can have a second marshmallow.” • Results put children into three categories: – Some children did wait for the delayed reward. • A predictor of later academic success! – Many children chose to take the lesser reward immediately. – A third group of children waited several minutes, only to end up eating the marshmallow before the researcher returned.
The Marshmallow Experiment Attention to the rewards strongly influenced the outcomes in the experiment. – Children who managed to distract themselves from the marshmallow (or other reward) were much more likely to “pass” the marshmallow test. – Follow-up research found that putting the marshmallow inside a desk drawer helped the subjects become much more successful at waiting.
Self-regulation is governed by a limited resource that allows people to control impulses and desires (Baumeister and Heatherton, 1996) willpower available resource Effort required to control behavior in one domain leads to diminished capacity for self regulation in other domains (Vohs and Heatherton, 2000).
• To encourage worker productivity, offices adopt policies prohibiting Internet use during work hours, with some even monitoring employees' internet activities. • As a result, many employees delay gratification and wait to the end of the workday to use the Internet. • Is this a good idea? Has this prohibition an effect on workers’ productivity?
Task 1: Task 2: Temptation Work Asked to resist => less productive? Not asked to resist => more productive?
Bucciol, Houser, Piovesan, 2010 Simple experiment: Temptation Work No Temptation
Why children (of different ages)? Self-regulatory resources are depleted more quickly in children aged less than 8 than in children aged over 10 (see, e.g., Mischel and Metzner, 1962). Young: Strong effect (<9) Old: Weak effect (>9)
Our experiment: CUS summer camp (Padova) 2 days in July 123 children
Control Treatment Temptation Treatment
Task (10 min): 1. First fold the sheet 2. Then fold it once more 3. And once more again 4. Place the label, highlight the star and close the sheet with a paper clip
Payment: 1 token per sheet (approx. 0.10 Euro) Tokens can be exchange at the club house of the summer camp
Bucciol, Houser, Piovesan, 2010 Effect of exposure to temptation on their productivity: Children < 9 are 21. 5% less productive in TT than in CT. Children ≥ 9 are not significantly influenced by exposure to temptation.
Summary: • Children aged between 6 and 13 were exposed (or not) to a consumption temptation. • Exposure to temptation reduces economic productivity. • Consistent with willpower depletion, temptation exposure negatively affects the productivity of younger children only.
Bucciol, Houser, Piovesan, 2011
Simple experiment: Temptation Work Work No Temptation
Counting task Short videos (approx 1 min. each) are shown. In these videos there are people passing each other a ball. Subjects have to count the number of passes and indicate the exact number of passes they have seen.
Temptation Subjects are randomly assigned to two groups: A (No Willpower) and B (Willpower). Subjects in group A will watch a humorous video for 10 minutes. This video start automatically.
Temptation G roup B cannot see the video but they hear the sound. A red button appears saying “VIDEO” . They are asked not press the button. . If they press, after a first warning, the video will start automatically. All subjects receive 250 points in this phase.
Bucciol, Houser, Piovesan, 2011 Results (# of mistakes) 3 3 3 3 2.5 2.5 2 2 NWT 1.5 1.5 WT 1 1 0.5 0.5 0 0 0 0 3 1 2 3 4 5 6 7 8 9 10 1 2 3 10 Phase 1 Phase 3
Implications: Resisting temptation reduces productivity and increases errors. Solutions? 1. Remove temptations 2. Breaks/vacations
Debate: Fiv ive Minute inute Eco Economis mist's 's Blog Blog
Salletta, Houser, et. al, 2010 What about Working for Others?
Salletta, Houser, et. al, 2010 Task: Delayed match to sample task.
Task: Delayed match to sample task. 1 Display H P W X L
Task: Delayed match to sample task. 2 Brief Delay
Task: Delayed match to sample task. 3 Display W P J
Task: Delayed match to sample task. 1 Display H P W X L 2 brief delay, 3 Display W P J 4 Decide Is (3) a proper subset of (1)? YES/NO
Task: Delayed match to sample task. 1 Display H P W X L 2 brief delay, 3 Display W P J 4 Decide Is (3) a proper subset of (1)? YES/NO 5 Correct responses earn money
Treatments: Four monetary reward conditions: * Self * Stranger (who cannot affect payoffs) * Neither * None Two avoidable effort costs: * Zero, 15 (only to Self)
Average Number of Attempts from Second Half of the Experiment Plus/Minus Two Standard Deviations 92% Avg. Ind. Success Frequency 20 15 No Cost 10 Stranger 5 0 Self Other Neither Both Treatment
Average Number of Attempts from Second Half of the Experiment Plus/Minus Two Standard Deviations Frequency 89% Avg. Ind. Success 20 15 No Cost 10 Stranger 5 0 Self Other Neither Both Treatment
Average Number of Attempts from Second Half of the Experiment Plus/Minus Two Standard Deviations Frequency 20 62% Avg. Ind. Success 15 No Cost 10 Stranger 5 0 Self Other Neither Both Treatment
Average Number of Attempts from Second Half of the Experiment Plus/Minus Two Standard Deviations Frequency 20 15 No Cost 10 Stranger 5 0 Self Other Neither Both Treatment
Average Number of Attempts from Second Half of the Experiment Plus/Minus Two Standard Deviations Frequency 20 15 No Cost Cost 10 Stranger 5 0 Self Other Neither Both Treatment
Average Number of Attempts from Second Half of the Experiment Plus/Minus Two Standard Deviations Frequency 20 15 No Cost Cost 10 Stranger 5 0 Self Other Neither Both Treatment
Average Number of Attempts from Second Half of the Experiment Plus/Minus Two Standard Deviations Frequency 20 15 No Cost Cost 10 Stranger 5 0 Self Other Neither Both Treatment
Average Number of Attempts from Second Half of the Experiment Plus/Minus Two Standard Deviations Frequency 20 15 No Cost Cost 10 Stranger 5 0 Self Other Neither Both Treatment
Motivation Small monetary cost extinguishes effort First question : Which neural mechanisms are involved in delaying gratification and evaluating rewards for others?
Stimulus “potential” phase “results” phase
Results: Other > Self Medial frontal activation Figure 12. [Other>Neither] – [Self>Neither] medial frontal activation in Other>Self conditions when viewing results. Corrected at p<.05
Results Left superior temporal activation Figure 13 [Other>Neither] – [Self>Neither] Left Superior Temporal activation in Other>Self conditions when viewing results. Corrected at p<.05
Results Right temporal pole activation Figure 14 [Other>Neither] – [Self>Neither] Right temporal pole activation in Other>Self conditions when viewing results. Corrected at p<.05
Results in Context Typical * reward activation Viewing results earned for counterpart Viewing results earned for self Typical theory of mind activation
Discussion on To work for others – including one’s future self - requires one to exercise willpower and delay gratification. ToM mechanisms – implicated in cooperation - seem to mediate delay of gratification even when other people (such as one’s future self) are absent from the environment. Money is seen as an individual resource: its presence can change one’s willingness/ability to delay gratification.
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