College of Behavioral & Social Sciences
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The collections in this community comprise faculty research works, as well as graduate theses and dissertations..
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Item Essays on Information and Non-Bayesian Beliefs(2024) Liu, Zhenxun; Filiz-Ozbay, Emel; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation, I present a comprehensive discussion of a class of biases within the realm of probabilistic reasoning, namely confirmation bias (encompassing or closely related to commonly seen terms in the literature such as motivated reasoning and wishful thinking). The dissertation consists of three main chapters. In Chapter 1, I propose a new and improved belief updating model that can accommodate both motivated and unmotivated confirmation bias. The model improves upon existing models in its ability to explain data better, and its applicability to settings beyond binary-state spaces. I characterize the model with three intuitive axioms. In two extended applications, I show that the model establishes a link between confirmation bias and several well-known phenomena, such as the significance of first impressions, the polarization of beliefs, and the perseverance of inaccurate beliefs. In Chapter 2, I turn to the experimental elicitation of motivated and unmotivated confirmation bias. Previous experiments have provided evidence for motivated and unmotivated confirmation bias individually, but never discussed the possibility that the two can occur together in depth. This chapter presents one of the first experiments that examines both forms of confirmation bias together. Subjects were asked to update their beliefs regarding both politically contextualized questions and neutral questions. Subjects exhibited both motivated and unmotivated confirmation bias, but there was also significant heterogeneity among them. Notably, motivated confirmation bias is significantly stronger in later rounds of the experimental tasks, which may be correlated with the shorter response times in the later rounds. In Chapter 3, which is joint work with Emel Filiz-Ozbay, we discuss wishful thinking (motivated confirmation bias) within a major application. In a rational inattention setting where consumers acquire information on the good’s quality before making purchasing decisions, we examine the implications of the presence of consumers with wishful thinking. These biased consumers are unaware of their bias, and weigh any good news about the product quality more heavily than a Bayesian consumer. The firm, which aims to increase the volume of sales, can strategically constrain the accuracy of the information that consumers can acquire. We show that in the presence of biased consumers, a firm would find it profitable to constrain information acquisition unless the prior belief on the quality of the product is too low. We characterize the conditions under which the entry of a competitor firm can effectively alleviate this type of exploitation. Our findings shed light on the incentives of review platforms for bombarding wishful consumers with low quality product reviews and limit consumers’ ability to identify to reviews with informative contents.Item Essays in Behavioral Economics(2017) Tonguc, Ozlem; Ozbay, Erkut Y; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation consists of three studies in behavioral and experimental economics. In the first chapter, I study how vote buying may occur in environments where promises cannot be enforced and investigate how different kinds of behavioral biases lead to the use of different types of payments (pre-voting transfers vs. promises of post-voting transfer). I provide a simple model of the vote buying exchange as a one-shot interaction of a buyer and a voter, where voting is costly and done in private, and the buyer may make offers with different payments types. I investigate the effects of three behavioral biases on buyer and voter behavior: inequity aversion, guilt aversion and voter reciprocity. Using a laboratory experiment, I present evidence that support the presence of all three behavioral biases. The second chapter is a joint work with Erkut Ozbay. We study the optimality of pre- and post-voting payments to buy votes in an environment where both the buyer and the voter are able to commit to their promises. Using a modified version of the model used in Chapter 1, we investigate the implications of different risk attitudes and inequity aversion on agent behavior. We test the predictions of different preferences using a lab experiment. Our results support the presence of inequity aversion in this environment. In the third chapter, I study whether and under what conditions a decision maker may decline a transfer made to her by another person. I identify the behavioral biases of inequity aversion, guilt aversion and reciprocity as possible explanations: an inequity averse decision maker may reject if the resulting allocation is very inequitable, while a guilt averse one may reject if she believes that she cannot fulfill the other person’s payoff expectations, and a reciprocal decision maker may reject if she believes the other person made the transfer with good intentions, but she cannot respond in kind. By modifying a widely used experimental two-player game introduced to study trust and reciprocity, I show that a decision maker takes the cost of reciprocating a transfer into consideration when deciding whether to accept, regardless of whether she is reciprocal, inequity averse, or guilt averse. However, the three biases have different implications for how the decision maker's belief about the other player’s material payoff expectations affect her behavior. Using a laboratory experiment, I confirm that both guilt aversion and reciprocity motives are present, and they are able to explain different aspects of the behavior.Item The Valuation of Social Reinforcement in Schizophrenia(2015) Catalano, Lauren Theresa; Blanchard, Jack J; Psychology; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Facial affect perception impairments impede social functioning in schizophrenia. What remains unknown is how individuals with schizophrenia assign value to pleasant facial expressions that typically motivate social affiliation. The current study adapted a matching pennies game (Shore & Heerey, 2011) to assess the subjective value of social feedback in terms of money. Individuals with schizophrenia and controls were instructed to choose the same side of a coin as six computerized partners, each of whom provided different rates of monetary feedback and types of social feedback. In a later test phase, participants chose which partner to play from amongst pairs of partners. Among participants who appropriately learned task contingencies, individuals with schizophrenia failed to use genuine smiles to motivate choices to the same extent as controls; however, money was equally valued. These findings suggest that there is a reduced sensitivity to social rewards in schizophrenia.Item Friends and Partners: The Impact of Network Ties(2009) Cangiano, Giulia Cristina; Murrell, Peter; Kranton, Rachel; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)How does a high-tech entrepreneur find the most qualified engineer for her startup? How does a scientific inventor acquire funding or recruit the best partner for his project? In chapter 1 I develop a discrete matching model with heterogeneous values and an undirected social network to address these questions. My model offers a framework to study how relative network positions affect payoffs and incentives. While an entrepreneur's expected return increases with the size of her own network, the network externalities from competing entrepreneurs are more complex. There is a tradeoff between the size of an entrepreneur's network and the competitive externality she exerts. When an entrepreneur's network increases, her closest competitors are hurt, but her less similar competitors may actually have a better chance of finding a suitable partner. In a more connected network, fewer frictions interfere with compatible matches. Results are consistent with observable patterns in high-tech and biotechnology in Silicon Valley and Massachusetts, as well as the turn of the 20th century German synthetic dye manufacturing. Initiatives to promote social networks within innovative sectors are critical and deserve future research. In Chapter 2 I consider a two-period endogenous network search model in which entrepreneurs build relationships with specialists. The model includes a period of costly network search and applies results from my companion paper. In the presence of network externalities, entrepreneurs over-invest in networking. Networks in which is it not costly to build new relationships are the least efficient. While positive externalities reduce this problem some negative inefficiencies will likely prevail. Networks in which participation is cheap - such as online career networks LinkedIn or Monster.com - have limited information about individual specialists and are the most inefficient. A network that is costly to participate in, but is more effective at targeting entrepreneur's search for qualified candidates results in a more compatible and, likely, efficient partnership. These networks might include alumni groups, trade associations or head-hunters. This chapter provides one explanation for the varied successes of government programs in fostering effective business networks. Efficient networks foster fewer, more specific relationships.