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The dual self model in economics: More examples
 

The dual self model in economics: More examples

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Examples of the use of the dual-self model of consumer decision-making in economics

Examples of the use of the dual-self model of consumer decision-making in economics

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  • Full Name Full Name Comment goes here.
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  • Good question. Probably just like any other internet document with the title being, e.g., 'Dual-self models of consumer decisions in behavioral economics.'
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  • BTW, I would like to make a proper references to your slides. How can I do it? (At some point in my work I mention self-control problems and do not want to mention many papers. but just your source as a review)
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  • Thanks indeed for these slides!!! I was able to get the point withing minutes without going into technicalities of seminal paper by Sherin and others
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  • Since this is a “G” rated class, let’s look at an example of this using “hunger”
  • Since this is a “G” rated class, let’s look at an example of this using “hunger”
  • Shiv, B. & Fedorikhin, A. (1999). Heart and mind in conflict: The interplay of affect and cognition in consumer decision making. Journal of Consumer Research, 26(2), 278-292.
  • Shiv, B. & Fedorikhin, A. (1999). Heart and mind in conflict: The interplay of affect and cognition in consumer decision making. Journal of Consumer Research, 26(2), 278-292.
  • Ward, A., & Mann, T. (2000). Don’t mind if I do: Disinhibited eating under cognitive load. Journal of Personality and Social Psychology, 78(4), 753-763.
  • Ward, A., & Mann, T. (2000). Don’t mind if I do: Disinhibited eating under cognitive load. Journal of Personality and Social Psychology, 78(4), 753-763.

The dual self model in economics: More examples The dual self model in economics: More examples Presentation Transcript

  • Dual-self models of consumer decisions in behavioral economics
    Dr. Russell James III
    University of Georgia
  • Examples of dual-self models in behavioral economics
    Short-term/impulsive
    Doer
    Passions
    Affective/Visceral
    Hot state
    Long-term/patient
    Planner
    Impartial spectator
    Deliberative
    Cold state
    Fudenberg & Levine
    Shefrin & Thaler
    Adam Smith
    Loewenstein
    Bernheim & Rangel; Loewenstein
  • Short-run impulsive & long-run patient
    “Our theory proposes that many sorts of decision problems should be viewed as a game between a sequence of short-run impulsive selves and a long-run patient self.”
    Drew Fudenburg (Harvard U.) and David K. Levine (Washington U.), 2006, A dual-self model of impulse control. American Economic Review, 96(5), 1449-1476.
  • Fudenberg & Levine (2006)
    Long-run (patient) self
    This side tries to maximize utility across time
    Short-run (impulsive) selves
    • Sequential selves that exist only for a brief time
    • Each cares only about immediate experience
  • The “planner” and the “doer”
    “our work is the first systematic, formal treatment of a two-self economic man.
    The conflict between short-run and long-run preferences is introduced by viewing the individual as an organization.
    At any point in time the organization consists of a planner and a doer.”
    R.H. Thaler (Santa Clara) & H. M. Shefrin (Cornell), 1981, An Economic theory of self-control, Journal of Political Economy, 89(2), 392-406.
  • “The planner
    is concerned
    with lifetime
    utility…”
    R.H. Thaler (Santa Clara) & H. M. Shefrin (Cornell), 1981, An economic theory of self-control, Journal of Political Economy, 89(2), 392-406.
  • “the
    doer
    exists only for one
    period and is
    completely selfish
    or myopic.”
    R.H. Thaler (Santa Clara) & H. M. Shefrin (Cornell), 1981, An economic theory of self-control, Journal of Political Economy, 89(2), 392-406.
  • Thaler & Shefrin (1981)
    “Planner”
    This side tries to maximize utility across time
    “Doer”
    • Sequential selves that exist only for a brief time
    • Each cares only about immediate experience
  • Match the concepts
    Thaler and Shefrin’s “Planner” is similar to
    Thaler and Shefrin’s “Doer”
    Fudenberg & Levine’s short-run, impatient selves
    Fudenberg & Levine’s long-run, patient self
    The rational homo economicus of standard economic theory
    Both C & D
  • Match the concepts
    Thaler and Shefrin’s “Doer” is similar to
    Thaler and Shefrin’s “Planner”
    Fudenberg & Levine’s short-run, impatient selves
    Fudenberg & Levine’s long-run, patient self
    The rational homo economicus of standard economic theory
    Both C & D
  • Several economicmodels identifyspecificemotions or drives with the short-run/impulsive self.
    This approach in economics is actually much older.
    Emotions, feelings, and drives
    =
  • Adam Smith: The Father of Modern Economics
    1776 published The Wealth of Nations
    First modern work of economics
  • Before The Wealth of Nations
    In 1758 Adam Smith published The Theory of Moral Sentiments. This work provided the underpinnings to The Wealth of Nations.
  • The passions and the spectator
    “In his first book, The Theory of Moral Sentiments, Smith argued that behavior was determined by the struggle between what Smith termed the ‘passions’ and the ‘impartial spectator.’
    N. Ashraf (Harvard), C. Camerer (Cal Tech), G. Loewenstein (Carnegie-Mellon), 2005, Adam Smith, behavioral economist. The Journal of Economic Perspectives, 19(3), 131-145
    v.
  • “The passions included drives such as hunger and sex, emotions such as fear and anger, and motivational feeling states such as pain…”
    N. Ashraf (Harvard), C. Camerer (Cal Tech), G. Loewenstein (Carnegie-Mellon), 2005, Adam Smith, behavioral economist. The Journal of Economic Perspectives, 19(3), 131-145
  • “The spectator, in contrast, ‘does not feel the solicitations of our present appetites. To him the pleasure which we are to enjoy a week hence, or a year hence, is just as interesting as that which we are to enjoy this moment’ (IV, ii, 272)”
    N. Ashraf (Harvard), C. Camerer (Cal Tech), G. Loewenstein (Carnegie-Mellon), 2005, Adam Smith, behavioral economist. The Journal of Economic Perspectives, 19(3), 131-145
  • Adam Smith’s “Impartial Spectator” is similar to…
    Thaler and Shefrin’s “Doer”
    Fudenberg & Levine’s long-run, patient self
    The rational homo economicus of standard economic theory
    Thaler and Shefrin’s Planner
    B, C, & D
  • Adam Smith’s “The Passions” is similar to…
    The rational homo economicus of standard economic theory
    Thaler and Shefrin’s “Planner”
    Fudenberg & Levine’s short-run impulsive selves
    Thaler and Shefrin’s “Doer”
    C & D
  • Hot state and cold state models
    G. Loewenstein (Carnegie Mellon), 2000, Emotions in economic theory and economic behavior. American Economic Review, 90(2), p. 428
    “cold state (i.e., not hungry, angry, in pain, etc.”
    “hot state (i.e., craving, angry, jealous, sad, etc.)”
  • “a person’s instantaneous utility can be written as u(c,s), where c is her consumption and s is a ‘state’ that parameterizes her tastes.”
    G. Loewenstein (Carnegie Mellon), T. O’Donoghue (Cornell), M. Rabin (UC-Berkeley), 2003, Projection bias in predicting future utility. Quarterly Journal of Economics, 118(4), 1210
    My tastes are different when I am in a cold state
    Than they are when I am in a hot state
  • Hot/cold model of addiction
    B.D. Bernheim (Stanford) & A. Rangel (Stanford), 2004, Addiction and cue-triggered decision processes, American Economic Review, 94(5), 1558-1590
    The individual may also operate in a “cold” mode, wherein he considers all alternatives and contemplates all consequences.”
    “the individual may enter a “hot” decision-making mode in which he always consumes the substance”
  • Review
    Which of the following is NOT similar to the “cold” state?
    Adam Smith’s “Impartial Spectator”
    Fudenberg & Levine’s long-run, patient self
    The rational homo economicus of standard economic theory
    Thaler and Shefrin’s “Planner”
    Adam Smith’s “The Passions”
  • Review
    The “hot” state is similar to
    The rational homo economicus of standard economic theory
    Adam Smith’s “The Passions”
    Fudenberg & Levine’s short-run impulsive selves
    Thaler and Shefrin’s “Doer”
    B, C & D
  • Affective and deliberative systems
    “We develop a two-system model in which a person’s behavior is the outcome of an interaction between…
    G. Loewenstein (Carnegie Mellon) and T. O’Donoghue (Cornell), 2004, Animal spirits: Affective and deliberative processes in economic behavior, p. 1
    “affective system that encompasses emotions such as anger and fear and motivational drives such as those involving hunger and sex.”
    “deliberative system that assesses options with a broad, goal-based perspective (roughly along the lines of the standard economic conception)”
  • Visceral factors and rationality
    “Visceral factors refer to a wide range of negative emotions (e.g., anger, fear), drive states (e.g., hunger, thirst, sexual desire), and feeling states (e.g., pain), that grab people's attention and motivate them to engage in specific behaviors…
    G. Loewenstein, 2000, Emotions in economic theory and economic behavior. American Economic Review, 90(2), 426-432, p. 426
    I restrict attention to negative emotions because their effects resemble those of drive states such as hunger and feeling states such as pain. The effects of positive emotions are more subtle and complex.”
  • Which emotions are in the first system [passions/hot state/affective/visceral]?
    A
    B
    Hunger
    Anger
    Fear
    Sexual Lust
    Thirst
    Pain
    Kindness
    Generosity
    Peacefulness
    Forgiveness
    Thankfulness
    Compassion
  • System Parallels
    The emotions and drives selected for the “the passions,” “affective system,” or “hot state” are also associated with “short-term/impulsive” behavior.
    The emotions and drives excluded are more likely to be associated with “long-term/patient” behavior.
    Kindness
    Generosity
    Serenity
    Forgiveness
    Thankfulness
    Hunger
    Anger
    Fear
    Sexual Lust
    Pain
  • Hunger: An example of affective and deliberative conflict
    The affective system desires immediate gratification.
    The deliberative system considers longer-term effects on weight, appearance, and health based upon calorie content, fat, sugar, etc.
  • Affective and deliberative conflict
    If “self-control” in decision is the outcome of conflict between the deliberative and the affective systems, what happens if the deliberative system is busy with another task?
    An experiment to test this was conducted by Dr. Baba Shiv (University of Iowa) and Dr. Alexander Fedorikhin (Washington State University).
    Shiv, B. & Fedorikhin, A. (1999). Heart and mind in conflict: The interplay of affect and cognition in consumer decision making. Journal of Consumer Research, 26(2), 278-292.
  • An experiment with numbers and cake Shiv & Fedorikhin (1999)
    Memorize a two-digit number (Group A) or seven-digit number (Group B).
    Walk to a table and choose between two desserts, chocolate cake and fruit salad.
    Walk to another room and repeat the memorized number.
    OR
  • What do you think?
    Which group was more likely to choose the chocolate cake?
    Group memorizing 2-digit number
    Group memorizing 7-digit number chose chocolate cake
    Both were equally likely
    OR
  • When the deliberative “self” is busy…
    Group memorizing 2-digit number chose chocolate cake
    41% of the time
    Group memorizing 7-digit number chose chocolate cake
    63% of the time
    OR
  • An experiment with art and cookies
    Experiment with undergraduate female participants who were dieting.
    Group A asked to memorize 60 art slides in preparation for a recognition test.
    Group B had no memory task.
    Conducted by Dr. Andrew Ward (Swarthmore College) and Dr. Traci Mann (UCLA). Ward, A., & Mann, T. (2000). Don’t mind if I do: Disinhibited eating under cognitive load. Journal of Personality and Social Psychology, 78(4), 753-763.
  • An experiment with art and cookies
    Participants in both conditions were requested to have a snack as part of the experiment.
    Left with large bowls of Doritos, M&M's, and chocolate chip cookies during the 10-minute task.
  • What do you think?
    Which group ate more of the snacks
    Group A (asked to memorize 60 art slides)
    Group B (no memory task)
    Both group about the same
    Dr. Andrew Ward (Swarthmore College) and Dr. Traci Mann (UCLA). Ward, A., & Mann, T. (2000). Don’t mind if I do: Disinhibited eating under cognitive load. Journal of Personality and Social Psychology, 78(4), 753-763.
  • When the deliberative “self” is busy…
  • Slides by:
    Russell James III, J.D., Ph.D.
    Asst. Professor, Department of Housing &
    Consumer Economics, University of Georgia
    Please use these slides!
    If you think you might use anything here in a classroom, please CLICK HEREto let me know. Thanks!
    The outline for this behavioral economics
    series is at rjames.myweb.uga.edu/outline.htm