Dr. Michael Gutter discusses the effects of bias in this 2 hour webinar on heuristics, anchoring and narrowing choice presented on behalf of the Military Families Learning Network's Personal Finance Team.
Heuristics, bias and critical thinking in testing distributionMatt Mansell
This was a day long workshop I gave at the NZTester 2015 conference. Looking at psychology and cognitive science research and how to apply that to testing.
Behavioral economics overview presentation at TGASKurt Nelson, PhD
The following was the presentation that I gave at the TGAS conference in Texas this spring. Highlighting some of the behavioral science principles that can be used to help improve your incentives and sales operations.
Psychological determinants of human judgment & decision makingReading Room
Professor Peter Ayton is deputy dean of Social Science at City University London and one of the foremost leaders in the realms of decision theory which is very relevant to our experiences online and of course in wider communications. Peter talks about our judgements and how rational thought (or rather lack there of!) comes into play. Plus there is a little bit about how compromise effects which cheese burger we decide to order!
Behavioural Economics content slideshow. Designed for the Economic A level qualification. Can be used in revision and in class.
Subtopics:
Alternative Views of Consumer Behaviour
Behavioural Biases
Nudges
Slides Jeff Otto recently used in his discussion w/ mentees of The Product Mentor.
The Product Mentor is a program designed to pair Product Mentors and Mentees from around the World, across all industries, from start-up to enterprise, guided by the fundamental goals…Better Decisions. Better Products. Better Product People.
Throughout the program, each mentor leads a conversation in an area of their expertise that is live streamed and available to both mentee and the broader product community.
http://TheProductMentor.com
Heuristics, bias and critical thinking in testing distributionMatt Mansell
This was a day long workshop I gave at the NZTester 2015 conference. Looking at psychology and cognitive science research and how to apply that to testing.
Behavioral economics overview presentation at TGASKurt Nelson, PhD
The following was the presentation that I gave at the TGAS conference in Texas this spring. Highlighting some of the behavioral science principles that can be used to help improve your incentives and sales operations.
Psychological determinants of human judgment & decision makingReading Room
Professor Peter Ayton is deputy dean of Social Science at City University London and one of the foremost leaders in the realms of decision theory which is very relevant to our experiences online and of course in wider communications. Peter talks about our judgements and how rational thought (or rather lack there of!) comes into play. Plus there is a little bit about how compromise effects which cheese burger we decide to order!
Behavioural Economics content slideshow. Designed for the Economic A level qualification. Can be used in revision and in class.
Subtopics:
Alternative Views of Consumer Behaviour
Behavioural Biases
Nudges
Slides Jeff Otto recently used in his discussion w/ mentees of The Product Mentor.
The Product Mentor is a program designed to pair Product Mentors and Mentees from around the World, across all industries, from start-up to enterprise, guided by the fundamental goals…Better Decisions. Better Products. Better Product People.
Throughout the program, each mentor leads a conversation in an area of their expertise that is live streamed and available to both mentee and the broader product community.
http://TheProductMentor.com
Behavioural economics is the talk of the research town and whilst the desire exists to apply the principles, many a puzzled client has asked just how we incorporate it within insight projects.
This is a short paper written by Jan Worsley, Reserach Director at SPA Future Thinking, applying behavioural economics to research.
For more information contact Jan on +44(0)1865 336 400 or jan.worsley@spafuturethinking.com
Webinar: Using Behavioral Economics to Identify What Motivates Shopper BehaviorRevTrax
Behavioral economics, the intersection of psychology and economics, is broadly gaining ground in the business world. Shoppers often make irrational decisions based on messaging brands can control.
Neil Gandhi, VP of Data Science at RevTrax, and Jura Liaukonyte, SM.A., Ph.D, Professor at Cornell University, recently discussed proven behavioral economic methodologies and how they can be applied to digital tests to uncover the most effective shopper motivators. These learnings can be tied to specific audience segments and applied at scale to increase shopper engagement online and in-store, making national, shopper and trade promotions more impactful and cost-effective.
The webinar is included as the last slide in this presentation (also at https://youtu.be/35CbJRUz1Cs ). Watch the webinar and reference the slides to learn how marketers can leverage behavioral economics to identify triggers that drive shopper behavior along the path to purchase. You will:
- Learn what behavioral economics is and why it is important.
- Understand how behavioral economics is used in the business world.
- Walk through an actual case study on how brands can use behavioral economics to influence a shopper's path to purchase across audiences and channels.
Visit http://revtrax.com/insights to learn how RevTrax can help you combine customer-level data and behavioral economics methodology to test, optimize, and measure your digital promotions and marketing investments.
Why behavioural economics in b2b marketing will change what you do and how you do it. Insight into how the use of buyer psychology is changing how businesses can influence buyers and prospects throughout the buyer journey. For more information or to talk Behavioural Economics in business-to-business marketing email info@earnest-agency.com
How to convince your boss to use insights and strategies from Behavioral Econ...beworks
Behavioral Economics has revolutionized our understanding of decision making.
We now know that humans are far from perfectly rational. Instead, there are psychological biases that strongly influence people’s choices.
The result is a more accurate prediction of human behavior, which can facilitate desirable business outcomes.
Once you understand the drivers of behavior, you can change behavior.
“Impact of Behavioral Biases on Investors Decision Making: Male Vs Female”IOSR Journals
This study aims to investigate the influence of behavioral biases on investment decisions made by students and employees. This objective was achieved by administering a questionnaire and collecting empirical data from graduate & post graduate students and employees about their own perceptions of biases. Questionnaire was distributed among the sample of hundred students/employees from which 45% were students and 55% were employees. Two statistical techniques were used to analyze collected data. Correlation was used to analyze the relationship of overconfidence bias with illusion of control bias, familiarity bias, loss aversion bias and confirmation bias. Chi-square was used to determine the significant difference between the responses of male and female about overconfidence bias. Results of this study reports weak negative correlation between overconfidence bias and other behavioral bias discussed in the study. This study concludes there is no significant difference between the responses of male and female decision making regarding overconfidence bias.
This lecture talks about the importance of evidence in scientific, business, and innovation research. It lists down important examples to carry this process in perspective of the problem statement.
Cognitive Biases and Effects You Should Know AboutKevlin Henney
Presented at NDC 2011 in Oslo (8th June 2011)
Video available at http://www.everytalk.tv/talks/678-NDC-Cognitive-Biases-and-Effects-You-Should-Know-About
In software development, developers, architects and managers often like to think of themselves as rational and clear thinking, not prone to the chaotic and contradictory thinking they see at home, in politics or in the world of business. Although it is possible to get further from the truth than this, it is not likely.
Those involved in software development are just as human as people in other walks of life, and are just as subject to the cognitive biases and effects that skew, truncate and bypass clear thinking. The effects on rationality affect everything from testing to estimation, from programming to project delivery. It is easier to see and react to these effects in yourself and others when you know what some of them are.
Hello Everyone,
A big thank you for all the interest in this study guide. It was originally created as a fun introduction that took the Cognitive Bias wiki and tried to make it easier to memorize.
However, the authors of the wiki article have expressed some concern over the accuracy of certain entries. The document was taken down until that could be corrected.
But, people started asking that I release a new version with a warning. In response, a new "Beta version" of the document has been uploaded with a very strong warning label up front and improved citations. I make it clear that all the text is based on an evolving wiki page and that some of the cognitive biases in there might be incorrect wiki entries. My hope is that this will continue to get people interested in pitching in to help fix the Cognitive Bias wiki pages. :) When the wiki is in a good place, I will take the document out of Beta, and will remove the warning label.
If you are a cognitive expert, join “Operation Fix The Cognitive Bias Wiki!” Add your suggestion to the conversation here: http://en.wikipedia.org/wiki/Talk:List_of_cognitive_biases
Thanks for your interest!
Eric
P.S. . The images have been updated for better remixing and sharing rights. Rather than using permission based images, now all the images are public domain or free non-commercial use by anyone.
Behavioural economics is the talk of the research town and whilst the desire exists to apply the principles, many a puzzled client has asked just how we incorporate it within insight projects.
This is a short paper written by Jan Worsley, Reserach Director at SPA Future Thinking, applying behavioural economics to research.
For more information contact Jan on +44(0)1865 336 400 or jan.worsley@spafuturethinking.com
Webinar: Using Behavioral Economics to Identify What Motivates Shopper BehaviorRevTrax
Behavioral economics, the intersection of psychology and economics, is broadly gaining ground in the business world. Shoppers often make irrational decisions based on messaging brands can control.
Neil Gandhi, VP of Data Science at RevTrax, and Jura Liaukonyte, SM.A., Ph.D, Professor at Cornell University, recently discussed proven behavioral economic methodologies and how they can be applied to digital tests to uncover the most effective shopper motivators. These learnings can be tied to specific audience segments and applied at scale to increase shopper engagement online and in-store, making national, shopper and trade promotions more impactful and cost-effective.
The webinar is included as the last slide in this presentation (also at https://youtu.be/35CbJRUz1Cs ). Watch the webinar and reference the slides to learn how marketers can leverage behavioral economics to identify triggers that drive shopper behavior along the path to purchase. You will:
- Learn what behavioral economics is and why it is important.
- Understand how behavioral economics is used in the business world.
- Walk through an actual case study on how brands can use behavioral economics to influence a shopper's path to purchase across audiences and channels.
Visit http://revtrax.com/insights to learn how RevTrax can help you combine customer-level data and behavioral economics methodology to test, optimize, and measure your digital promotions and marketing investments.
Why behavioural economics in b2b marketing will change what you do and how you do it. Insight into how the use of buyer psychology is changing how businesses can influence buyers and prospects throughout the buyer journey. For more information or to talk Behavioural Economics in business-to-business marketing email info@earnest-agency.com
How to convince your boss to use insights and strategies from Behavioral Econ...beworks
Behavioral Economics has revolutionized our understanding of decision making.
We now know that humans are far from perfectly rational. Instead, there are psychological biases that strongly influence people’s choices.
The result is a more accurate prediction of human behavior, which can facilitate desirable business outcomes.
Once you understand the drivers of behavior, you can change behavior.
“Impact of Behavioral Biases on Investors Decision Making: Male Vs Female”IOSR Journals
This study aims to investigate the influence of behavioral biases on investment decisions made by students and employees. This objective was achieved by administering a questionnaire and collecting empirical data from graduate & post graduate students and employees about their own perceptions of biases. Questionnaire was distributed among the sample of hundred students/employees from which 45% were students and 55% were employees. Two statistical techniques were used to analyze collected data. Correlation was used to analyze the relationship of overconfidence bias with illusion of control bias, familiarity bias, loss aversion bias and confirmation bias. Chi-square was used to determine the significant difference between the responses of male and female about overconfidence bias. Results of this study reports weak negative correlation between overconfidence bias and other behavioral bias discussed in the study. This study concludes there is no significant difference between the responses of male and female decision making regarding overconfidence bias.
This lecture talks about the importance of evidence in scientific, business, and innovation research. It lists down important examples to carry this process in perspective of the problem statement.
Cognitive Biases and Effects You Should Know AboutKevlin Henney
Presented at NDC 2011 in Oslo (8th June 2011)
Video available at http://www.everytalk.tv/talks/678-NDC-Cognitive-Biases-and-Effects-You-Should-Know-About
In software development, developers, architects and managers often like to think of themselves as rational and clear thinking, not prone to the chaotic and contradictory thinking they see at home, in politics or in the world of business. Although it is possible to get further from the truth than this, it is not likely.
Those involved in software development are just as human as people in other walks of life, and are just as subject to the cognitive biases and effects that skew, truncate and bypass clear thinking. The effects on rationality affect everything from testing to estimation, from programming to project delivery. It is easier to see and react to these effects in yourself and others when you know what some of them are.
Hello Everyone,
A big thank you for all the interest in this study guide. It was originally created as a fun introduction that took the Cognitive Bias wiki and tried to make it easier to memorize.
However, the authors of the wiki article have expressed some concern over the accuracy of certain entries. The document was taken down until that could be corrected.
But, people started asking that I release a new version with a warning. In response, a new "Beta version" of the document has been uploaded with a very strong warning label up front and improved citations. I make it clear that all the text is based on an evolving wiki page and that some of the cognitive biases in there might be incorrect wiki entries. My hope is that this will continue to get people interested in pitching in to help fix the Cognitive Bias wiki pages. :) When the wiki is in a good place, I will take the document out of Beta, and will remove the warning label.
If you are a cognitive expert, join “Operation Fix The Cognitive Bias Wiki!” Add your suggestion to the conversation here: http://en.wikipedia.org/wiki/Talk:List_of_cognitive_biases
Thanks for your interest!
Eric
P.S. . The images have been updated for better remixing and sharing rights. Rather than using permission based images, now all the images are public domain or free non-commercial use by anyone.
This is a companion module that I use to help students understand the nature of priming and spread activation. The 'sample schema' created in this presentation was created using Inspiration.com software. This module can be viewed as a narrated movie off my website for the course:
http://courses.ncsu.edu/edp304/lec/002/
Cliffs Notes from the Journal of Financial Planning & Counseling milfamln
Many financial practitioners do not take the time to read research journals, let alone apply the findings of personal finance studies to their work. This 90-minute webinar will address this concern head on. It will begin with participants sharing some of the most memorable personal finance research studies that they recall and specific ways that they have put research findings into practice with clients or students. It will then present a summary of research findings on a wide variety of personal finance topics including saving, investing, credit, cash flow management, purchase of a home, planning for retirement, and managing money in retirement. The source of the webinar content will be studies published in the Journal of Financial Counseling and Planning during the past decade. Even more importantly than the research summaries, however, will be the discussion of actionable implications for financial practitioners; i.e., the “so what?” of published studies. Every study that is mentioned in the webinar will be presented in “split screen” format with one side of each slide briefly describing a study and the other listing specific implications for practitioners. The webinar will conclude with a consolidated list of action steps and online resources. Participant interaction will include answering some of the same questions that researchers have posed in their published studies.
The Measurement of Trust and Subjective Well-being: OECD Guidelines and pract...StatsCommunications
Third webinar of the series: Measuring people's perceptions, evaluations and experiences, 29 September 2020, More information at: http://www.oecd.org/statistics/lac-well-being-metrics.htm
Behavioural economics in Financial Services: Perspectives and Prospects Eversheds Sutherland
Behavioural Economics: The power of predictable irrationality – 6th May 2014
Behavioural economics looks set to become an intrinsic part of the Financial Conduct Authority’s approach to regulation. This seminar outlines presentations from Nottingham University Business School and Eversheds LLP to explore:
• What behavioural economics can tell us about consumer decision making in financial markets;
• The scope that the FCA envisage behavioural economics will have in improving the regulation of financial conduct; and
• The implications for your business.
ME290Global Engineering Professional SeminarGlobalizat.docxendawalling
ME290
Global Engineering Professional Seminar
Globalization, Cultural Difference and
Collaborating Across Cultural Boundaries
Lecture-1
Globalization, Cultural Difference and
Collaborating Across Cultural Boundaries
Globalization the process by which
businesses or other organizations
develop international influence or
start operating on an international
scale.
Cultures
• Culture is the dominant set of behaviors, values,
beliefs, and thinking patterns we learn as we grow and
develop in our social groups.
In all but one of the following countries it is expected that
you bring a gift to a business meeting. In which country is it
not expected?
A. China B. Czech Republic
C. Japan D. Denmark
The correct answer is D. Denmark
Which of the following is associated with dead and should
not be given as a gift in the Chinese culture?
A. Clocks B. Straw sandals
C. Handkerchief D. Crane
The answer is - All of the above!
Typical Dimensions of Culture
Tree Model of CULTURE
Surface Culture
Deep Culture
Language
Dress
Art & Music
Food
Gestures Formality
Gender Roles
Religion
Holidays
Personal Space
Communication & Learning Styles
Time
Methods of Decision Making
Relationships
Attitudes
Work Ethic
Negotiating Styles
Values
Cultural Differences
Some main indicators of cultural differences are:
•Behavioral patterns: appearance vs. reality
•Non-verbal behavior: Gestures, signs, mimics
•Distance behavior: personal space vs. closeness
Behavioral Pattern
•If we don’t know anything about other cultures, we
tend to use stereotypes as our knowledge base –
Is this a right approach?
•What are stereotypes?
•Negative labeling of a certain group or culture
based on the actions and/or appearances of a
few individuals.
Non-Verbal Behavior
• Understood as the process of communication through
sending and receiving wordless messages.
• Language is not the only source of communication;
there are other means, including:
• Gestures and touch
• Body language or posture, facial expression and eye contact
• Object communication such as clothing, hairstyles or even
architecture and symbols
• Problems and conflicts can occur when expressing
gestures or facial expressions in other cultures –
messages can often be misinterpreted.
Distance Behavior
• The right personal distance when conducting business
shows respect and acceptance.
• Too much distance gives the impression of dislike and
discomfort.
• Too little will make the person draw back.
Diversity & Inclusion
Diversity refers to differences (such as age, gender,
ethnicity physical appearance, thought styles, religion,
nationality, socio-economic status, belief systems etc.)
Inclusion refers to the creation of opportunities and the
elimination of barriers that allow all people to
participate in and contribute to ideation, planning,
projects, programs, processes, teams, organizations,
social activities, fun or any other opportunity that hel.
ME290Global Engineering Professional SeminarGlobalizat.docxjessiehampson
ME290
Global Engineering Professional Seminar
Globalization, Cultural Difference and
Collaborating Across Cultural Boundaries
Lecture-1
Globalization, Cultural Difference and
Collaborating Across Cultural Boundaries
Globalization the process by which
businesses or other organizations
develop international influence or
start operating on an international
scale.
Cultures
• Culture is the dominant set of behaviors, values,
beliefs, and thinking patterns we learn as we grow and
develop in our social groups.
In all but one of the following countries it is expected that
you bring a gift to a business meeting. In which country is it
not expected?
A. China B. Czech Republic
C. Japan D. Denmark
The correct answer is D. Denmark
Which of the following is associated with dead and should
not be given as a gift in the Chinese culture?
A. Clocks B. Straw sandals
C. Handkerchief D. Crane
The answer is - All of the above!
Typical Dimensions of Culture
Tree Model of CULTURE
Surface Culture
Deep Culture
Language
Dress
Art & Music
Food
Gestures Formality
Gender Roles
Religion
Holidays
Personal Space
Communication & Learning Styles
Time
Methods of Decision Making
Relationships
Attitudes
Work Ethic
Negotiating Styles
Values
Cultural Differences
Some main indicators of cultural differences are:
•Behavioral patterns: appearance vs. reality
•Non-verbal behavior: Gestures, signs, mimics
•Distance behavior: personal space vs. closeness
Behavioral Pattern
•If we don’t know anything about other cultures, we
tend to use stereotypes as our knowledge base –
Is this a right approach?
•What are stereotypes?
•Negative labeling of a certain group or culture
based on the actions and/or appearances of a
few individuals.
Non-Verbal Behavior
• Understood as the process of communication through
sending and receiving wordless messages.
• Language is not the only source of communication;
there are other means, including:
• Gestures and touch
• Body language or posture, facial expression and eye contact
• Object communication such as clothing, hairstyles or even
architecture and symbols
• Problems and conflicts can occur when expressing
gestures or facial expressions in other cultures –
messages can often be misinterpreted.
Distance Behavior
• The right personal distance when conducting business
shows respect and acceptance.
• Too much distance gives the impression of dislike and
discomfort.
• Too little will make the person draw back.
Diversity & Inclusion
Diversity refers to differences (such as age, gender,
ethnicity physical appearance, thought styles, religion,
nationality, socio-economic status, belief systems etc.)
Inclusion refers to the creation of opportunities and the
elimination of barriers that allow all people to
participate in and contribute to ideation, planning,
projects, programs, processes, teams, organizations,
social activities, fun or any other opportunity that hel.
Assumptions in I/O Psych to be tested: A blue print for progressing the disci...OPRA Psychology Group
OPRA is a proud team of organisational psychologists. Our acronym stands for Occupational Psychology Research Associates.
Being true to our field, we admit both the strengths and limitations of our discipline. The following presentation, from 2007, discusses some of the common half truths that are permeated within our field.
Only by understanding the limitations of psychology will its true benefit to business be realized. This remains the goal of the OPRA Group.
Warrior Wellness: Mental Health and Women in the U.S. Militarymilfamln
Women play a pivotal role in military operations, and their experiences and responses may differ from their male counterparts. This webinar looks at how mental health manifests differently for women, in particular women in the military.
Women in the Military: Special Contributions and Unique Challengesmilfamln
Women have made and continue to make special contributions to the military, however they also face unique challenges as service members. This webinar discusses those contributions as well as some of the challenges they face.
Focusing on Co-parenting: Strengthening Diverse Military Family Systemsmilfamln
Join us to explore how the Military Family Readiness System can strengthen diverse families with a focus on co-parenting knowledge and skills. Best practices and research based strategies will be described and applied to military family systems and transitions.
Family Systems Trends and Transitions: What They Mean For Military Familiesmilfamln
Families are changing in response to large global trends. Military families are experiencing the same transitions which may be compounded by military service. Demographic changes will be discussed and the implications on family systems. In this webinar, participants share views of these changes, both personally and professionally.
Promoting Successful Home-to-School Transitions for Military Families with Yo...milfamln
This webinar will focus on promoting positive transitions from home to school and from school to school (e.g., during a move) for young children and their families. The presenters will identify important transitions that occur during early childhood including moving from home to school or school to school and discuss what research indicates regarding how these transitions play a role in children’s socioemotional and cognitive development. The challenges that exist within these transitions will be identified.
Presenters will describe and promote participant discussion of a range of research-based strategies for military families and caregivers/teachers to promote effective home-to-school/school-to-school transitions, strategies that promote positive socioemotional or cognitive development prior to, during, and after a transition. These will include how to connect with schools/teachers from a distance, moving, creating routines within transitions. The presentation will include a question and answer session immediately following.
Home Is Where Your Heart Is | Kids Serve Too!milfamln
Representative(s) from the Sesame Street Workshop will address potential child concerns and developmentally appropriate responses to relocation transitions, explore resources that caregivers can use when addressing these concerns, and provide tips in navigating the resources related to this topic on the Sesame Street for Military Families website.
This event is hosted by the Family Transitions concentration area of the Military Families Learning Network.
PCS Series: Research and Tools for Supporting Military Transitionsmilfamln
An overview of common issues military families face during a Permanent Change of Station (PCS). The first half of this webinar will look at the 2018 RAND Report, “Enhancing Family Stability During a Permanent Change of Station.” The second half of the webinar will focus on the tools available to military service providers through Military OneSource, such as Plan my Move, and other Military OneSource moving resources that can support families throughout a PCS.
This is the 3rd webinar in a 3-part Permanent Change of Station series focused on the issues military families face during a PCS.
SlideShare - Sesame Street Overview on Military Resources milfamln
In this 60-minute webinar, representative(s) from the Sesame Street Workshop will introduce the Sesame Street for Military Families website as well as explore resources that can be utilized in training, outreach efforts, family conversations, and community events. They will also discuss activities that promote child and family self-expression.
Up and Away: Building Child Language, Social Interactions, and Preliteracy S...milfamln
This webinar will focus on strategies to help children use more complex sentences and vocabulary with their caregivers and peers. Children learn through daily routines and play, but as they grow and explore early education settings, their social worlds expand. Opportunities abound for children to learn as they take turns peeking at the classroom guinea pig, pretend to be police officers on a chase, and read books with a favorite caregiver. We will cover strategies to support growth in language, social communication, and early literacy skills by engaging children in meaningful, everyday activities in early care settings.
Objectives:
1. Name three strategies to help support a child’s growing ability to combine words
2. Describe the importance of social interactions during the preschool years and how to support turn-taking and other early social skills
3. Learn three early literacy strategies to use in supporting young children’s readiness for school
Overindulgence In Parenting: How Much Is Too Much?milfamln
Overindulgence is an issue many people face in our society as the research and subsequent literature has shown us. While society tells us we need more on a regular basis, parents and children alike are struggling to understand how much is enough and adults who were given too much as children often feel the effects.
What is overindulgence?
Three ways parents overindulge
Tools to reduce overindulgence (The Test of Four)
Online course offerings
Employment Resources for Military Familiesmilfamln
Webinar attendees working with military service members will leave the webinar knowing where to find resources, partnering organizations, and support when working with military spouses seeking educational or career opportunities.
Opportunities & Possibilities: Posttraumatic Growth in Research & Practice milfamln
In this presentation, Richard Tedeschi, Ph.D. will discuss the theoretical model and research basis of posttraumatic growth, the process by which trauma survivors often find valuable changes in how they live life in the aftermath of trauma. He will outline a framework for therapeutic interventions that facilitate posttraumatic growth through a way of relating called expert companionship. This approach to practice incorporates a broad view of what constitutes trauma, including many experiences that are not typically considered traumatic in our current diagnostic system, but which are traumatic to people because they challenge core beliefs about oneself, other people, the future, and the kind of world in which we live. The attention paid to possibilities for transformation of individuals and their relationships does not preclude working on typical symptoms of trauma, but recognizes that symptoms are better understood, tolerated, and reduced when traumatic suffering can have meaning and purpose.
Coconut oil is all the rage these days to benefit your health. It has been rumored to help with heart disease, thyroid problems, slow aging, and protect against illnesses such as Alzheimer’s, arthritis, diabetes and even weight loss. But what is the truth about coconut oil? Tune into this webinar to learn fact from fiction about this popular oil.
Learning Objectives
The participant will be able to discuss the composition of coconut oil and the metabolism of its triglycerides.
The participant will be able to explain the science behind the purported benefits of coconut oil for weight loss and blood lipid levels.
The participant will be able to assist clients in understanding the inclusion of coconut oil in the context of a healthy dietary pattern.
Small Talk: Strategies to Support Child Communication Before Words Emergemilfamln
Previous webinars in this series have covered child communication development through the preschool years. In this session Drs. Mollie Romano and Juliann Woods will discuss what families, early care and education providers, and early interventionists can do to help a child learn to communicate and talk. A focus will be placed on evidence-based strategies to support communication leading to words and how caregivers can embed these strategies in everyday activities - from walking to the bus stop to pick up an older sister to Face-timing with Mom or Dad while during deployment. The presenters will present a variety of responsive intervention strategies including interactive book sharing to support child communication and emergent literacy.
Objectives:
1. Describe the importance of responding to child communication as a strategy
2. Discover at least three ways to create opportunities for children to communicate during everyday routines
3. Learn how to coach families to embed strategies during their daily routines and activities
From Communication to Conversations: Expanding Language Development in the E...milfamln
Children’s language use grows dramatically throughout the toddler and preschool years. Words and phrases expand daily and children begin to form sentences that go beyond sharing their preferences. Their speech sounds continue to develop and include both predictable, and sometimes adorable, error patterns. Pre-literacy skills also emerge during this developmental window and lay the foundation for academic success as children approach elementary school. In this webinar, the presenters will discuss decontextualized language, early developing morphemes, timelines for phonological processes, and preliteracy achievements during the preschool years as well as when to worry that a child’s speech and language doesn’t seem to be progressing as expected.
Entrepreneurial Opportunities for Military Familiesmilfamln
This 90-minute webinar will examine the resources and programs offered by the Small Business Administration that can benefit military service members and spouses transitioning from the military into business-owning ventures. Jaime Wood from the Small Business Administration will give an overview of the programs offered nationally by the SBA to support entrepreneurial efforts of veterans and military spouses, including the Boots to Business initiative, programs offered by the Office of Veteran's Business Development, the Veteran Women Igniting the Spirit of Entrepreneurship (V-Wise), and Entrepreneurial Development programs for service disabled veterans.
Watch recording and learn more: https://learn.extension.org/events/3265
Getting to Know You: Early Communication Development from Birth to Three Yearsmilfamln
Infants share their needs and interests, as well as learn from social interactions within their everyday routines and activities. Recognizing children’s early communication signals is key to supporting their future development. Children learn about language and how it is used in their environment even prior to understanding and using words themselves. Join us as we explore the importance of early communication development and the initial stages of language expansion. We will share milestones that identify typical and atypical development along with resources which provide a deeper exploration of this topic.
Objectives:
*Identify at least 12 early developing gestures that are used by young children to share and gather information
*Describe early sound development milestones and identify red flags for atypical speech sound development
*Provide strategies for explaining how vocabulary and word combinations develop to families
*Discuss similarities and differences in communication development for Dual Language Learners
Income Tax Tips for PFMs Working with Military Familiesmilfamln
This is a free webinar hosted by the Personal Finance concentration area of the Military Families Learning Network.
This 90-minute webinar will address updates to tax changes that affect military families and service members. Barbara O’Neill will discuss tax basics and common tax errors during the first half hour of this interactive webinar. In the second half Taylor Spangler of University of Florida Extension will talk about the specific tax issues of concern to military families, as well as provide military specific resources for tax help and support. Carol Kando-Pineda of the Federal Trade Commission will close the session with an update on the resources available through identitytheft.gov. Find more info: https://learn.extension.org/events/3191
The Blended Retirement System Launch: Questions & Answers milfamln
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Welcome to the
Military Families Learning Network Webinar
Heuristics, Anchoring & Financial
Management
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.
2. This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.
Research and evidenced-based
professional development
through engaged online communities.
eXtension.org/militaryfamilies
Welcome to the
Military Families Learning Network
4. Connect with the Personal
Finance Team
» Facebook: PersonalFinance4PFMs
» Twitter: #MFLNPF
5. Personal Finance Twitter Cohort
A 2-week learning experience beginning June 9 presented by the
MFLN Personal Finance team and the Network Literacy
Community of Practice.
• Become a part of a community of learners that will form and
build your online network.
• Engage in conversations within the Twitter community
centered around your interests.
• Learn from guides that help new users maximize their Twitter
experience.
• For more information and to register:
https://twittercohort.wordpress.com/
7. Dr. Michael Gutter
Dr. Michael Gutter is an Assistant Professor and Financial
Management State Specialist for the Department of Family,
Youth, and Community Sciences, in the Institute for Food and
Agricultural at the University of Florida. Dr. Gutter is also the
Principle Investigator for the Military Families Learning
Network’s Personal Finance Community of Practice. Dr. Gutter
is the current Vice President of the Florida Jumpstart Coalition
and serves on the editorial boards for the Journal of Consumer
Affairs, Journal of Consumer Education, and the Journal of
Financial Counseling and Planning. Dr. Gutter’s outreach
projects include Managing in Tough Times, Florida Saves, Get
Checking, and the Master Money Mentor. His projects focus on
enabling access to resources and services as well as improving
people’s knowledge and understanding about family resource
management. These projects have had funding from the
Consumer Federation of America and Bank of America.
10. Thinking About How Our
Mind Works
• GPA Example
– http://youtu.be/KyM3d4gQGhM
Mammalian
Einstein-ian
11. Interesting Idea
• So how do we view ourselves?
• Our status?
• What we have?
• Depends on what others have around us…
• http://youtu.be/_ERQEVdIinc
12. Are we predictably irrational?
• It is not surprising that we are not always
perfectly rational
• But are our departures from perfect
rationality completely random?
• Or are these departures predictable?
• If we can find predictable patterns of
irrationality in human behavior, then we
can improve economic theory
13. Motivations and Objectives
• The two main motivations for behavioral economics concern
apparent weaknesses in standard economic theory:
– People sometimes make choices that are difficult to explain with
standard economic theory
– Standard economic theory can lead to seemingly unreasonable
conclusions about consumer welfare
• Behavioral economics grew out of research in psychology
• The objective is to modify, supplement, and enrich
economic theory by adding insights from psychology
– Suggesting that people care about things standard theory typically
ignores, like fairness or status
– Allowing for the possibility of mistakes
13-13
14. Methods
• Behavioral economics uses many of the same
tools and frameworks as standard economics
– Assumes individuals have well-defined objectives,
that objectives and actions are connected, and
actions affect well-being
– Relies on mathematical models
– Subjects theories to careful empirical testing
• Important difference is use of experiments
using human subjects
• Behavioral economists tend to use
experimental data to test their theories rather
than drawing data from the real world
13-14
15. A Representativeness Example
• Consider the following description:
“Steve is very shy and withdrawn, invariably
helpful, but with little interest in people, or
in the world of reality. A meek and tidy
soul, he has a need for order and structure,
and a passion for detail.”
• Is Steve a farmer, a librarian, a physician, an
airline pilot, or a salesman?
16. Rules of Thumb/Heuristics
• Thinking through every alternative for
complex economic decisions is difficult
• May rely on simple rules of thumb that
have served well in the past
• Popular rules may be choices that are
nearly optimal, using one is not necessarily
a mistake
• Allow judgment and decision making in
cases where specific and accurate solutions
are either unknown or unknowable
13-16
17. Rules of Thumb/Heuristics
• Example: saving
– In economic models finding the best rate of
savings involves complex calculations
– In practice people seem to follow rules of thumb
such as 10% of income
– These rules appear to ignore factors that theory
says should be important, such as expected
future income
• Availability, anchoring and adjustment, and
representativeness are frequently
considered “metaheuristics” since they
engender many specific effects
18. Three Major Human Probability-Assessment
Heuristics/Biases
(Tversky and Kahneman, 1974)
• Representativeness
– The more object X is similar to class Y, the more likely
we think X belongs to Y
• Availability
– The easier it is to consider instances of class Y, the
more frequent we think it is
• Anchoring
– Initial estimated values affect the final estimates, even
after considerable adjustments
19. The Representativeness
Heuristic
• We often judge whether object X belongs to class Y by how
representative X is of class Y
• For example, people order the potential occupations by
probability and by similarity in exactly the same way
• The problem is that similarity ignores multiple biases
20. Representative Bias (1):
Insensitivity to Prior
Probabilities
• The base rate of outcomes should be a major factor in
estimating their frequency
• However, people often ignore it (e.g., there are more
farmers than librarians)
– E.g., the lawyers vs. engineers experiment:
• Reversing the proportions (0.7, 0.3) in the group had no effect on
estimating a person’s profession, given a description
• Giving worthless evidence caused the subjects to ignore the odds
and estimate the probability as 0.5
– Thus, prior probabilities of diseases are often ignored when
the patient seems to fit a rare-disease description
21. Representative Bias (2):
Insensitivity to Sample Size
• The size of a sample withdrawn from a population should
greatly affect the likelihood of obtaining certain results in
it
• People, however, ignore sample size and only use the
superficial similarity measures
• For example, people ignore the fact that larger samples
are less likely to deviate from the mean than smaller
samples
22. Representative Bias (3):
Misconception of Chance
• People expect random sequences to be “representatively
random” even locally
– E.g., they consider a coin-toss run of HTHTTH to be more likely than
HHHTTT or HHHHTH
• The Gambler’s Fallacy
– After a run of reds in a roulette, black will make the overall run more
representative (chance as a self-correcting process??)
• Even experienced research psychologists believe in a law of
small numbers (small samples are representative of the
population they are drawn from)
23. Representative Bias (4):
Insensitivity to Predictability
• People predict future performance mainly by similarity of
description to future results
• For example, predicting future performance as a teacher
based on a single practice lesson
– Evaluation percentiles (of the quality of the lesson) were
identical to predicted percentiles of 5-year future
standings as teachers
24. The Availability Heuristic
• The frequency of a class or event is often
assessed by the ease with which instances
of it can be brought to mind
• The problem is that this mental availability
might be affected by factors other than the
frequency of the class
25. Availability Biases (1):
Ease of Retrievability
• Classes whose instances are more easily retrievable
will seem larger
– For example, judging if a list of names had more
men or women depends on the relative
frequency of famous names
• Salience affects “retrievability”
– E.g., watching a car accident increases subjective
assessment of traffic accidents
26. The Anchoring and Adjustment Heuristic
• People often estimate by adjusting an
initial value until a final value is reached
• Initial values might be due to the problem
presentation or due to partial
computations
• Adjustments are typically insufficient and
are biased towards initial values, the
anchor
27. Anchoring and Adjustment Biases (1): Insufficient
Adjustment
• Anchoring may occur due to incomplete calculation, such
as estimating by two high-school student groups
– the expression 8x7x6x5x4x3x2x1 (median answer: 512)
– with the expression 1x2x3x4x5x6x7x8 (median answer: 2250)
• Anchoring occurs even with outrageously extreme
anchors (Quattrone et al., 1984)
• Anchoring occurs even when experts (real-estate agents)
estimate real-estate prices (Northcraft and Neale, 1987)
28. Anchoring and Adjustment Biases (2): Evaluation of
Conjunctive and Disjunctive Events
• People tend to overestimate the
probability of conjunctive events
(e.g., success of a plan that requires
success of multiple steps)
• People underestimate the probability
of disjunctive events (e.g. the
Birthday Paradox)
• In both cases there is insufficient
adjustment from the probability of an
individual event
Probability that at least two
people in N share a
birthday
Hint think of the # of possible
pairing not people
30. Anchoring
• 55 subjects were shown a series of six common products with
average retail price of $70
• For each product, the experiment had three steps: Each participant
was asked
– his/her SSN
– whether he/she would buy the product at a price equal to the
last 2 digits of SSN
– The maximum he/she would be willing to pay
31.
32. Incoherent Choices:
Anchoring• Anchoring occurs when someone’s choices are linked to
prominent but irrelevant information
• Suggests that some choices are arbitrary and can’t reflect
meaningful preferences
• Example: experiment showing subjects’ willingness to pay for
various goods was closely related to the last two digits of their
social security number, by suggestion
– Skeptics note that subjects had little experience purchasing the goods in
the experiment
– Might have been less sensitive to suggestion if used familiar products
• Significance of anchoring effects for many economic choices
remains unclear
13-32
33. Changing the Anchor:
Getting in Line Behind Yourself
• Why does someone pay so much for
Starbuck’s Coffee?
• http://youtu.be/FaO3aGmuNFc
• Can we lower the anchor?
35. Thinking About Coffee
• Have marketers shifted how we think about
coffee and our price point
• To what extent can we filter external
influences?
36. Anchoring
Source: Dan Ariely, Predictably Irrational: Chapter 2 Supply and
Demand video at
http://www.youtube.com/watch?v=FaO3aGmuNFc&feature=
youtu.be
The process of seeding a thought in a person’s
mind and having that thought influence their
later actions.
37. Anchoring
• Is the height of the tallest redwood tree
more or less than 1,200 feet?
• What is your best guess about the height of
the tallest redwood?
Source: Daniel Kahneman, “Thinking, Fast and Slow”
38. Results of Redwood
Experiment
• Is the height of the tallest redwood tree
more or less than 1,200 feet?
– Mean answer: 844 feet
• Is the height of the tallest redwood tree
more or less than 180 feet?
– Mean answer: 282 feet
• Anchoring Index = ratio between
differences
• Anchoring index = 0 for people able to
ignore anchor
39. Results of Redwood
Experiment
• height more or less than 1,200 feet?
– Mean answer: 844 feet
• height more or less than 180 feet?
– Mean answer: 282 feet
• Anchoring index = 844-282 / 1200 – 180
= 55%
• Anchoring index = 0% for people able to
ignore anchor and 100% controlled by it
40. Anchoring
• Is the average price of a German car in the
US more or less than $100,000?
• What type of cars does this bring to mind?
Source: Daniel Kahneman
http://youtu.be/HefjkqKCVpo
41. Real- Estate Experiment
• Real-estate agents asked to assess the
value of a house actually on the market
• Visited house
• Given booklets about house that include ap
price
– ½ of agents saw booklets w/price higher
than actual listed price
– ½ saw price that was lower than listed
price
Source: Daniel Kahneman, “Thinking, Fast and Slow”
42. Real-estate Experiment
• Viewed house & booklet
• Gave opinion about what they thought was
a reasonable buying price and selling price
• Also asked what factors influenced their
opinion
– Said listing price did not influence
43. Real-Estate Experiment Results
• Anchoring index for real-estate
professionals was 41%
• Anchoring index for business school
students was found to be 48%
44. Negotiation and Anchoring
• Sellers point of view – anchor your thinking to a higher price
• Price presented
• Focus attention and search memory for arguments against the
anchor
45. Incoherent Choices:
Anchoring
• Anchoring occurs when someone’s choices are linked to
prominent but irrelevant information
• Suggests that some choices are arbitrary and can’t reflect
meaningful preferences
Source: Dr. Michael Gutter, Behavioral Economics, PowerPoint
46. Incoherent Choices:
Anchoring
• Example:
Experiment showing subjects’ willingness
to pay for various goods was closely related
to the last two digits of their social security
number, by suggestion
– Skeptics note that subjects had little experience
purchasing the goods in the experiment
– Might have been less sensitive to suggestion if
used familiar products
Source: Dr. Michael Gutter, Behavioral Economics, PowerPoint
47. Anchoring
• Significance of anchoring effects for many
economic choices remains unclear
• What do you think?
48. Endowment Effect
• Half the participants were given mugs available at the campus bookstore
for $6
• The other half were allowed to examine the mugs
• Each student who had a mug was asked to name the lowest sale price
• Each student who did not have a mug was asked to name the highest
purchase price
• Supply and demand curves were constructed and the equilibrium price
was obtained
• Trade followed
• There were four rounds of this
49.
50. Bias Toward the Status Quo:
Endowment Effect
• The endowment effect is people’s tendency to value
something more highly when they own it than when
they don’t
• Example: experiment in which median owner value
for mugs was roughly twice the median non-owner
valuation
• Some economists think this reflects something
fundamental about the nature of preferences
• Incorporating the endowment effect into standard
theory implies an indifference curve kinked at the
consumer’s initial consumption bundle
– Smooth changes in price yield abrupt changes in
consumption
13-50
51. A Special Type of Bias: Framing
• Risky prospects can be framed in different ways- as
gains or as losses
• Changing the description of a prospect should not
change decisions, but it does, in a way predicted by
Tversky and Kahneman’s (1979) Prospect Theory
• In Prospect Theory, the negative effect of a loss is
larger than the positive effect of a gain
• Framing a prospect as a loss rather than a gain, by
changing the reference point, changes the decision by
changing the evaluation of the same prospect
• May resolve a number of puzzles related to risky
decisions
53. Default effect: retirement
• Prior to April 1, 1998, the default option was nonparticipation in the
retirement plan
• After April 1, 1998, all employees were by default enrolled in a plan
that invested 3% of salary in money market mutual funds
• Only the default option changed
54.
55. Bias Toward the Status Quo:
Default Effect
• When confronted with many alternatives, people
sometimes avoid making a choice and end up with
the option that is assigned as a default
• Example: Experiment showing that more subjects
kept $1.50 participation fee rather than trading it
for a more valuable prize when the list of prizes to
choose from was lengthened
• Possible explanation is that psychological costs of
decision-making rise as number of alternatives rises,
increasing number of people who accept the default
• Retirement saving example illustrates the default
effect when the stakes are high
• OPT OUT strategy
13-55
56. Lets Explore A Subscription
• http://youtu.be/xOhb4LwAaJk
57. Choice Architecture: Narrow
Framing
• Narrow framing is the tendency to group items
into categories and, when making choices, to
consider only other items in the same category
• Can lead to behavior that is hard to justify
objectively
• Examples:
– Far more people are willing to pay $10 to see a
play after losing $10 entering a theater vs. losing
the ticket on the way in
– Calculator and jacket example, decisions about
whether to drive 20 minutes to save $5
• These choices may be mistakes or may reflect
the consumers’ true preferences
13-57
59. Narrow Framing
• Q1: Imagine you have decided to see a play
where admission is $10. As you enter the
theatre you discover that you have lost a
$10 bill. Would you still buy a ticket to see
the play?
• Q2: Imagine you have bought a $10 ticket
to see a play. As you enter the theatre you
discover that you have lost the ticket.
Would you buy a new ticket to see the
play?
61. Narrow Framing
• Q1: Imagine you are about to buy a jacket for
$125 and a calculator for $15. The calculator
salesman informs you that a store 20 minutes
away offers the same calculator for $10. Would
you make the trip to the other store?
• Q2: Imagine you are about to buy a jacket for
$15 and a calculator for $125. The calculator
salesman informs you that a store 20 minutes
away offers the same calculator for $120.
Would you make the trip to the other store?
63. Framing Experiment (I)
• Imagine the US is preparing for the
outbreak of an Asian disease, expected to
kill 600 people (N = 152 subjects):
– If program A is adopted, 200 people will
be saved
– If program B is adopted, there is one
third probability that 600 people will be
saved and two thirds probability that no
people will be saved
64. Framing Experiment (I)
• Imagine the US is preparing for the
outbreak of an Asian disease, expected to
kill 600 people (N = 152 subjects):
– If program A is adopted, 200 people will
be saved (72% preference)
– If program B is adopted, there is one
third probability that 600 people will be
saved and two thirds probability that no
people will be saved (28%
preference)
65. Framing Experiment (II)
• Imagine the US is preparing for the
outbreak of an Asian disease, expected to
kill 600 people (N = 155 subjects):
– If program C is adopted, 400 people will
die
– If program D is adopted, there is one
third probability that nobody will die
and two thirds probability that 600
people will die
66. Framing Experiment (II)
• Imagine the US is preparing for the
outbreak of an Asian disease, expected to
kill 600 people (N = 155 subjects):
– If program C is adopted, 400 people will
die (22% preference)
– If program D is adopted, there is one
third probability that nobody will die
and two thirds probability that 600
people will die (78% preference)
67. What Choices Do we Give?
• How can our programs work with this?
– Encourage default savings rates?
– Provide ranges for people to select using
narrow choice
– If we want to increase savings by
workers, we could ask employers to ...
enroll them automatically [in a 401k
plan] unless they specifically choose
otherwise.
68. – If we want to increase the supply of transplant
organs in the United States, we could presume
that people want to donate, rather than treating
non-donation as the default. ...
– If we want to increase charitable giving, we
might give people the opportunity to join a ...
plan, in which some percentage of their future
wage increases are automatically given to
charities...
– If we want to respond to the recent problems in
[credit markets], we might design disclosure
policies that ensure consumers can see exactly
what they are paying and make easy
comparisons among the possible options.
69. Subscription Choice
• Dan Ariely demonstration
• Economist.com subscription choices:
1. 1 year online access - $59.00
2. 1 year print subscription - $125
3. 1 year online & print - $125
70. Subscription Choice
• Example demonstrated by Dan Ariely
• Experiment with MIT students asked
what they would choose
Economist.com subscription choices:
1. 1 year online access - $59.00. 16%
2. 1 year print subscription - $125. 0%
3. 1 year online & print - $125. 84%
74. Product Placement
• An in-store experiment was performed to
investigate the effects of shelf placement
(high, middle, low) on consumers'
purchases of potato chips.
• Placement of potato chips on the middle
shelf was associated with the highest
percentage of purchases.
Source: Valdimar Sigurdsson, Hugi Saevarsson, and Gordon Foxall,
J Appl Behav Anal. 2009 Fall; 42(3): 741–745. doi: 10.1901/jaba.2009.42-741
75.
76. Influence of Emotional Arousal
• People have 2 sides
– Emotional side
– Unemotional side
• Effects decision making
• Appeal to side making decisions
Source: Dr. Dan Ariely
http://www.youtube.com/watch?v=mFMDgW0wDeI
77. Why Free is Not Free
• “Why Free is Dangerous”
• http://www.youtube.com/watch?v=TlXjdW
0xQco
78. Credit Card Choice
• Card X
• 9% APR
• $100 annual fee
• Card Y
• 14% APR
• $0 annual fee
What do you think?
79. Free
• Examples:
– Free Banking Services,
• Free checking, free online services
– Credit Cards with points and rewards
• Are they free for everybody?
• Who pays?
80. Choices Involving Time
• Many behavioral economists see standard
theory of decisions involving time as too
restrictive, it rules out patterns of behavior that
are observed in practice
• For example, theory rules out these three
observed behaviors
– Preferences over a set of alternatives available at a
future date are dynamically inconsistent if the
preferences change as the date approaches
– The sunk cost fallacy is the belief that, if you paid
more for something, it must be more valuable to
you
– Projection bias is the tendency to evaluate future
consequences based on current tastes and needs
13-80
81. The Problem of Dynamic
Inconsistency
• Thought to reflect a bias toward immediate
gratification, know as present bias
– A person with present bias often suffers from
lapses of self-control
• Laboratory experiments have documented the
existence of present bias
• Precommitment is useful in situations in which
people don’t trust themselves to follow
through on their intentions
• Precommitment is a choice that removes
future options
– Example: A student who wants to avoid driving
while intoxicated hands his car keys to a friend
before joining a party
13-81
82. The Problem of Dynamic
Inconsistency
• People often
waste
expensive
gym
memberships
– The LIU gym
plan for
faculty
83. We should ignore sunk costs
but often do not
• Uncomfortable shoes
• Bad movie rentals
• Season ticket discounts lead to lower initial attendance
84. Projection bias in forecasting
future tastes and needs
• Hungry shoppers tend to buy more than sated
shoppers when shopping for the week ahead
– We often remind people to not shop when
they are hungry.
– Do not shop for other things when you
need immediately (when possible to plan
ahead)
• People tend to underestimate their adaptability
to change
– Giving up some spending to save or pay
more to debt
• Giving up cable, etc.
85. • How does this affect planning for the
future?
• SMART Goals that are longer term?
86. Prospect Theory Revisited:
Trouble Assessing Probabilities
• People tend to make specific errors in assessing probabilities
• Hot-hand fallacy is the belief that once an event has occurred
several times in a row it is more likely to repeat
– Arises when people can easily invent explanations for streaks, e.g.,
basketball
13-86
87. • Gambler’s fallacy is the belief that once an event
has occurred it is less likely to repeat
– Arises when people can’t easily invent explanations
for streaks, e.g., state lotteries
• Both fallacies have important implications for
economic behavior, e.g., clearly relevant in context
of investing
• Overconfidence causes people to:
– Overstate the likelihood of favorable events
– Understate the uncertainty involved
89. Gambler’s fallacy
• A study of nearly 1800 daily drawings
between 1988 and 1992 in a New Jersey
lottery showed that after a number came
up a winner, bettors tended to avoid it
• Do we see this bias in investors?
– Many investor’s chase returns…
90. Overconfidence
• In one study of US students with an average
age of 22, 82% ranked their driving ability
among the top 30% of their age group
– Well I was a great drive at 16…
• In the manufacturing sector, more than
60% of new entrants exit within five years;
nearly 80% exit within ten years
– Yet people start businesses…
92. Preferences Toward Risk
• Two puzzles involving observed behavior and
risk preferences
• Low probability events:
– Experimental subjects exhibit aversion to risk in
gambles with moderate odds
– However, some subjects appear risk loving in
gambles with very high payoffs with very low
probabilities
• Aversion to very small risks:
– Many people also appear reluctant to take even
very tiny shares of certain gambles that have
positive expected payoffs
– Implies a level of risk aversion so high it is
impossible to explain the typical person’s
willingness to take larger financial risks
13-92
93. Pick one:
• Option A: Win $2,500
• Option B: Win $5,000 with 1/2 probability
94. Now Pick
• Option C: Win $5
• Option D: Win $5,000 with 1/1000
probability
95. Low probability events grab all
the attention
• Option A: Win $2,500
• Option B: Win $5,000 with 1/2 probability
• Most choose Option A over B, suggesting risk-
averse preferences
• Option C: Win $5
• Option D: Win $5,000 with 1/1000 probability
• A sizable majority picks Option D over C, which
is puzzling because the choice suggests risk-
loving preferences
96. Extreme risk aversion
• Option A: Win $1,010 with 50% probability
and lose $1,000 with 50% probability
• Option B: Win $10.10 with 50% probability
and lose $10.00 with 50% probability
97. Extreme risk aversion
• Option A: Win $1,010 with 50% probability
and lose $1,000 with 50% probability
• Most people refuse this gamble
• Option B: Win $10.10 with 50% probability
and lose $10.00 with 50% probability
• Most people refuse this gamble too,
suggesting extreme risk aversion
98. Choices Involving Strategy
• Some of game theory’s apparent
failures may be attributable to faulty
assumptions about people’s
preferences
– May not be due to fundamental problems
with the theory itself
• Many applications assume that people
are motivated only by self-interest
• Players sometimes make decisions that
seem contrary to their own interests
13-98
99. Voluntary Contribution Games
• In a voluntary contribution game:
– Each member of a group makes a contribution to a common pool
– Each player’s contribution benefits everyone
13-99
100. • Creates a conflict between individual
interests and collective interests
• Like a multi-player version of the Prisoners’
Dilemma
• Game theory predicts the behavior of
experienced subjects reasonably well
• For two-stage voluntary contribution game,
predictions based on standard game theory
are far off
• Assumptions about players’ preferences
may be incorrect
101. Importance of Social Motives:
The Dictator Game
• In the dictator game:
– The dictator divides a fixed prize
between himself and the recipient
– The recipient is a passive participant
– Usually no direct contact during the
game
– Strictly speaking, not really a game!
13-
101
102. • Most studies find significant generosity, a
sizable fraction of subjects divides the prize
equally
• Illustrates the importance of social motives:
altruism, fairness, status
103. Importance of Social Motives:
The Ultimatum Game
• In the ultimatum game:
– The proposer offers to give the recipient some
share of a fixed prize
– The recipient then decides whether to accept or
reject the proposal
– If she accepts, the pie is divided as specified; if
she rejects, both players receive nothing
13-
103
104. • Theory says the proposer will offer a tiny
fraction of the prize; the recipient will
accept
• Studies show that many subjects reject very
low offers; the threat of rejection produces
larger offers
• In social situations, emotions such as anger
and indignation influence economic
decisions
105. Importance of Social Motives:
The Trust Game
• In the trust game:
– The trustor decides how much money to invest
– The trustee divides up the principal and earnings
13-
105
106. • If players have no motives other than monetary
gain, theory says that trustees will be untrustworthy
and trustors will forgo potentially profitable
investments
• Studies show that
– Trustors invested about half of their funds
– Trustees varied widely in their choices
– Overall, trustors received about $0.95 in return for
every dollar invested
• Many (but not all) people do feel obligated to justify
the trust shown in them by others, thus many are
willing to extend trust
• This game helps us understand why business
conducted on handshakes and verbal agreements
works
107. Why is Saving So Difficult?
• We focus on what we give up?
• We are not really wired to focus on the future
– takes energy to do so
• Money is abstract
– Having more in retirement by investing?
– But money today money tomorrow is
confusing choice for people
– Critical to present values in purchasing
power or real terms
– Talk to people in terms of annuities
– http://youtu.be/-Cw4PiCB8X8
108. Example
• Instead of saying one needs 350,000 in
savings?
– Present as annuity
– If you save XYZ you can have ABC in
retirement income
• PV 350,000, FV = 0, N = 20, I/Yr = 5
• PMT = $28K per year
• Want more income? Save more…
109. Smart Couponing
• Are you familiar with prices?
• Comparison shop
• Shop with a list
• What is the goal?
– Try new products?
– Save money?
110. Couponing
• Does buying more save you money?
• Coupons
– Usually for non-generic, non-staples
111. Financial Habits
• What do you spend money on?
• How much is allocated for different
expenses?
• Where do you buy?
• When do you go shopping?
• What effect do your purchases have on
your goals?
112. Marketing to Your Personality
• Marketers study our habits
• Market to our perceived needs
• They also create needs and wants
114. Before Spending
• Why am I making this purchase?
– Is there more than one reason?
• How will it effect me in the short & long
term?
• What will I be getting & what will I be giving
up?
115. Before Shopping
• Comparison shop
– Online
– big ticket items
• Keep track of what you spend
• Be aware of your surroundings & marketing
influences
– Brick & Mortar
• Design & Ambience
– Online
117. Sources:
• Dan Ariely, Predictably Irrational, Videos on
You Tube
• Daniel Kahneman, Thinking, Fast & Slow,
2011
• Valdimar Sigurdsson, Hugi Saevarsson, and
Gordon Foxall,
J Appl Behav Anal. 2009 Fall; 42(3): 741–
745. doi: 10.1901/jaba.2009.42-741
118. What is the problem with
free?
• When free is dangerous…
– http://youtu.be/TlXjdW0xQco
119. Additional Issues
• Influence of Arousal
• http://youtu.be/MuTP1XJWKmA
• Cost of Social Norms
• http://youtu.be/AIqtbPKjf6Q
120. Some Additional Cool Videos
• http://danariely.com/videos/#TOC24
• Are We In Control of Our Decisions
– http://youtu.be/9X68dm92HVI
• The IKEA Effect
– http://youtu.be/VQ_CncrR-uU
• Paying More For Less
– http://youtu.be/vIS-OLgA8p4
121. Next Virtual Learning Event
Webinar
The Culture of Personal Finance
• June 5, 11 a.m. – 1 p.m. ET
• Speaker: Dr. Barbara O’Neill
• 2 AFC CEUs available
• More information:
https://learn.extension.org/events/1556#.U4S6F
a1dXrU
122. Military Families Learning Network
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.
Family Development
Military Caregiving
Personal Finance
Network Literacy
Find all upcoming and recorded webinars
covering:
http://www.extension.org/62581