January 19, 2018

From Labour Economics:

This paper estimates the effects of personality traits and IQ on lifetime earnings of the men and women of the Terman study, a high-IQ U.S. sample. Age-by-age earnings profiles allow a study of when personality traits affect earnings most, and for whom the effects are strongest. I document a concave life-cycle pattern in the payoffs to personality traits, with the largest effects between the ages of 40 and 60. An interaction of traits with education reveals that personality matters most for highly educated men. The largest effects are found for Conscientiousness, Extraversion, and Agreeableness (negative), where Conscientiousness operates partly through education, which also has significant returns.

From Journal of Personality and Social Psychology:

Rationally, people should want to receive information that is costless and relevant for a decision. But people sometimes choose to remain ignorant. The current paper identifies intuitive-deliberative conflict as a driver of information avoidance. Moreover, we examine whether people avoid information not only to protect their feelings or experiences, but also to protect the decision itself. We predict that people avoid information that could encourage a more thoughtful, deliberative decision to make it easier to enact their intuitive preference. In Studies 1 and 2, people avoid learning the calories in a tempting dessert and compensation for a boring task to protect their preferences to eat the dessert and work on a more enjoyable task. The same people who want to avoid the information, however, use it when it is provided. In Studies 3-5, people decide whether to learn how much money they could earn by accepting an intuitively unappealing bet (that a sympathetic student performs poorly or that a hurricane hits a third-world country). Although intuitively unappealing, the bets are financially rational because they only have financial upside. If people avoid information in part to protect their intuitive preference, then avoidance should be greater when an intuitive preference is especially strong and when information could influence the decision. As predicted, avoidance is driven by the strength of the intuitive preference (Study 3) and, ironically, information avoidance is greater before a decision is made, when the information is decision relevant, than after, when the information is irrelevant for the decision (Studies 4 and 5).

From Cognitive Science:

Occam's razor - the idea that all else being equal, we should pick the simpler hypothesis - plays a prominent role in ordinary and scientific inference. But why are simpler hypotheses better? One attractive hypothesis known as Bayesian Occam's razor (BOR) is that more complex hypotheses tend to be more flexible - they can accommodate a wider range of possible data - and that flexibility is automatically penalized by Bayesian inference. In two experiments, we provide evidence that people's intuitive probabilistic and explanatory judgments follow the prescriptions of BOR. In particular, people's judgments are consistent with the two most distinctive characteristics of BOR: They penalize hypotheses as a function not only of their numbers of free parameters but also as a function of the size of the parameter space, and they penalize those hypotheses even when their parameters can be "tuned" to fit the data better than comparatively simpler hypotheses.

From Journal of Consumer Research:

Why are people often uncomfortable dealing with financial decisions? We propose that people perceive financial decisions – more so than decisions in many other equally complex and important domains – as compatible with a cold, analytical mode of thinking and as incompatible with feelings and emotions. Consequently, the more people perceive themselves as inclined to rely on affect in their decisions, the more they experience self-concept incongruity with financial decisions (i.e., feeling that financial decisions are “not them”), and consequently show an increased tendency to avoid such decisions. Five studies demonstrate this phenomenon using both consequential and hypothetical decisions, provide evidence for the proposed mechanism, and rule out alternative accounts, including perceived financial knowledge, expertise and self-efficacy perceptions, decision confidence, and preference for numerical information. The findings contribute to research on thinking styles and decision avoidance, and they underscore a characteristic of financial decisions that makes them stand out among many other decision types. In addition to their theoretical significance, the findings have practical implications for the communication of financial products and services.

From Journal of Consumer Research:

Consumers’ choices are often accompanied by unrelated incidental moods. The positive mood caused by receiving a compliment, for example, may persist when one is choosing what service to book or which product to buy. How might being in a positive mood affect consumers’ subsequent, unrelated choices? The present research demonstrates that being in a positive mood can make consumers more likely to defer choice. Four studies show that when choosing requires trade-offs between important choice attributes, being in a positive (vs. neutral) mood makes choosing more difficult and therefore increases the likelihood of deferring choice altogether. The findings further understanding of how incidental factors shape choice processes and outcomes and the role of emotions in decision making.