Meet your elephant:More dual-self behavioral economics concepts<br />Dr. Russell James III <br />Texas Tech University<br />
Review<br />At this point, we have a whole host of descriptors for each of our two systems.<br />
Examples so far of dual-self models in behavioral economics<br />Short-term/impulsive <br />Doer<br />Passions<br />Affect...
In fact, we could keep going…<br />“In this paper we provide a new model of consumption-saving decisions… Agents have the ...
And we could make the list longer…<br />Self-control system<br />Automatic system<br />Short-term/impulsive <br />Doer<br ...
We could even switch to philosophy…<br />“I divided each soul into three: two horses and a charioteer… the right-hand hors...
… or religion<br />“For the sinful nature desires what is contrary to the Spirit, and the Spirit what is contrary to the s...
Or we could look at biology<br />“A crucial fact is that the human brain is basically a mammalian brain with a larger cort...
Can we see two systems in the brain?<br />Areas of the prefrontal cortex are associated with rational, higher cognitive th...
Watching decision-making happen<br />By making decisions in an fMRI machine, we can see which areas of the brain are activ...
Limbic system reactions<br />Choices between more $ later, less $ sooner.<br />Earliest option: Today<br />Earliest option...
Higher cognitive system reactions<br />Choices between more $ later, less $ sooner.<br />Earliest option: Today<br />Earli...
What about this description from the brain science of addiction & relapse?<br />Does the “go system”/“stop system” model d...
We could try using a long list…<br />When given a big bowl of cookies before lunch, what is the natural reaction of your S...
Let’s use a simple analogy<br />“The image that I came up with … was that I was a rider on the back of an elephant.  I’m h...
Some family history<br />My great uncle Benny Henry with Casey in the Kansas City Zoo (1962).<br />When Casey arrived, Ben...
Some family history<br />Note my long family history of not following instructions…<br />
So, let’s have some fun learning about “elephants” and elephant training…<br />Long-term<br />Patient<br />Planner<br />Im...
Slides by: <br />Russell James III, J.D., Ph.D., CFP®<br />Associate Professor <br />Division of Personal Financial Planni...
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The dual self model of choice in non-economic disciplines

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A discussion of the dual self model of consumer behavior in the context of dual self models found outside of economics

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  • Note: The Kable &amp; Glimcher article in Nature Neuroscience proports to have falsified the hypothesis that the ventral striatum, medial prefrontal cortex, and posterior singulate cortex form a reward system that primarily values immediate reward.  However, their experiment was structured such that (1) there were no choices between two delayed rewards and (2) the immediate reward was always the same and was never presented visually.  Itappearrs that their experimental structure created an endowment effect, i.e., where the immediate $20 was already planned/known/expected/owned in every trial, and thus the only impact on immediate reward would be couched in terms of loss.  In other words, if these systems only cared about immediate reward, it is possible that the activation related to the predicted probability of loss of the endowment.
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  • The dual self model of choice in non-economic disciplines

    1. 1. Meet your elephant:More dual-self behavioral economics concepts<br />Dr. Russell James III <br />Texas Tech University<br />
    2. 2. Review<br />At this point, we have a whole host of descriptors for each of our two systems.<br />
    3. 3. Examples so far of dual-self models in behavioral economics<br />Short-term/impulsive <br />Doer<br />Passions<br />Affective/Visceral<br />Hot state <br />Long-term/patient <br />Planner<br />Impartial spectator<br />Deliberative <br />Cold state <br />Fudenberg & Levine<br />Shefrin & Thaler<br />Adam Smith<br />Loewenstein<br />Bernheim & Rangel; Loewenstein<br />
    4. 4. In fact, we could keep going…<br />“In this paper we provide a new model of consumption-saving decisions… Agents have the ability to invoke <br />Automatic processesthat are susceptible to impulses or temptations, or alternative<br />Control processes which are immune to such temptations.”<br />J. Benhabib (Professor of Economics, NYU) & A. Bisin (Professor of Economics, NYU), 2005, Modeling internal commitment mechanisms and self-control: A neuroeconomics approach to consumption-savings decisions. Games and Economic Behavior, 52, p. 464.<br />
    5. 5. And we could make the list longer…<br />Self-control system<br />Automatic system<br />Short-term/impulsive <br />Doer<br />Passions<br />Affective/Visceral<br />Hot state <br />Long-term/patient <br />Planner<br />Impartial spectator<br />Deliberative <br />Cold state <br />Fudenberg & Levine<br />Shefrin & Thaler<br />Adam Smith<br />Loewenstein<br />Bernheim & Rangel; Loewenstein<br />
    6. 6. We could even switch to philosophy…<br />“I divided each soul into three: two horses and a charioteer… the right-hand horse… is a lover of honor and modesty and temperance… The other is a crooked lumbering animal … companion to wild boasts and indecency.”<br />-Plato, Phaedrus<br />
    7. 7. … or religion<br />“For the sinful nature desires what is contrary to the Spirit, and the Spirit what is contrary to the sinful nature. They are in conflict with each other, so that you do not do what you want.”<br />– Paul’s letter to the Galatians<br />Popular Jewish theologian Dennis Prager writes, “When God declares in Genesis, ‘Let us make man in our image,’ the us may be understood to be God and the animals… There is a place for our animal nature, and there is a place for our divine nature.”<br />
    8. 8. Or we could look at biology<br />“A crucial fact is that the human brain is basically a mammalian brain with a larger cortex. This means human behavior will generally be a compromise between… animal emotions and instincts, and… human deliberation and foresight.”<br />C. Camerer (Cal Tech), G. Loewenstein (Carnegie-Mellon), D. Prelic (MIT), 2004, Neuroeconomics: Why economics needs brains. Scandinavian Journal of Economics, 106(3), 555-579.<br />
    9. 9. Can we see two systems in the brain?<br />Areas of the prefrontal cortex are associated with rational, higher cognitive thought.<br />The more central limbic system is the immediate reward system (“dopaminergic”).<br />
    10. 10. Watching decision-making happen<br />By making decisions in an fMRI machine, we can see which areas of the brain are activated.<br />BOLD signal indicates blood usage in the area.<br />
    11. 11. Limbic system reactions<br />Choices between more $ later, less $ sooner.<br />Earliest option: Today<br />Earliest option: 2 Weeks <br />Earliest option: 1 month <br />S. McClure (Princeton), D. Laibson (Harvard), G. Loewenstein (Carnegie Mellon), J. Cohen (Princeton), 2004, Separate neural systems value immediate and delayed monetary rewards. Science, 306, 503-507.<br />
    12. 12. Higher cognitive system reactions<br />Choices between more $ later, less $ sooner.<br />Earliest option: Today<br />Earliest option: 2 Weeks <br />Earliest option: 1 month <br />S. McClure (Princeton), D. Laibson (Harvard), G. Loewenstein (Carnegie Mellon), J. Cohen (Princeton), 2004, Separate neural systems value immediate and delayed monetary rewards. Science, 306, 503-507.<br />
    13. 13. What about this description from the brain science of addiction & relapse?<br />Does the “go system”/“stop system” model described by Dr. Childress (U. Pennsylvania School of Medicine) correspond to the previous dual-self models?<br />Addiction segment<br />http://www.hbo.com/addiction/thefilm/centerpiece/614_segment_3.html<br />Beginning at title screen “The science of relapse” and run for 3:27. Or DVD HBO “Addiction” Series at 21:04– 24:31<br />
    14. 14. We could try using a long list…<br />When given a big bowl of cookies before lunch, what is the natural reaction of your Short-term/ Impulsive/ Doer/ Passions/ Affective/ Visceral/ Hot state/ Core mammalian/ Limbic/ Go/ Automatic system?<br />
    15. 15. Let’s use a simple analogy<br />“The image that I came up with … was that I was a rider on the back of an elephant. I’m holding the reins in my hands, and by pulling one way or the other I can tell the elephant to turn, to stop, or to go. I can direct things, but only when the elephant doesn’t have desires of his own. When the elephant really wants to do something, I’m no match for him.”<br />Dr. Jonathan Haidt, (University of Virginia), The Happiness Hypothesis, 2006, p. 4, Basic Books: New York.<br />
    16. 16. Some family history<br />My great uncle Benny Henry with Casey in the Kansas City Zoo (1962).<br />When Casey arrived, Benny was instructed to care for him, but not to attempt training him, as African elephants were then considered not safe for training.<br />
    17. 17. Some family history<br />Note my long family history of not following instructions…<br />
    18. 18. So, let’s have some fun learning about “elephants” and elephant training…<br />Long-term<br />Patient<br />Planner<br />Impartial spectator<br />Deliberative <br />Cold state <br />Short-term<br />Impulsive <br />Doer<br />Passions<br />Affective/Visceral<br />Hot state <br />
    19. 19. Slides by: <br />Russell James III, J.D., Ph.D., CFP®<br />Associate Professor <br />Division of Personal Financial Planning <br />Texas Tech University<br />russell.james@ttu.edu<br />Please use these slides! <br />If you think you might use anything here in a classroom, please CLICK HEREto let me know. Thanks!<br />The outline for this behavioral economics series is at <br />http://www.slideshare.net/rnja8c/outline-for-behavioral-economics-course-component <br />

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