We used correlation and spectral analyses to investigate the cognitive structures and processes producing biased judgments. We used 5 different sets of driving problems to exemplify problems that trigger biases, specifically: (1) underestimation of the impact of occasional slow speeds on mean speed judgments, (2) overestimation of braking capacity after a speed increase, (3) the time saving bias (overestimation of the time saved by increasing a high speed further, and underestimation of time saved when increasing a low speed), (4) underestimation of increase of fatal accident risk when speed is increased, and (5) underestimation of the increase of stopping distance when speed is increased. The results verified the predicted biases. A correlation analysis found no strong links between biases; only accident risk and stopping distance biases were correlated significantly. Spectral analysis of judgments was used to identify different decision rules. Most participants were consistent in their use of a single rule within a problem set with the same bias. The participants used difference, average, weighed average and ratio rules, all producing biased judgments. Among the rules, difference rules were used most frequently across the different biases. We found no personal consistency in the rules used across problem sets. The complexity of rules varied across problem sets for most participants.

In many sports contests, the equilibrium requires players to randomize across repeated rounds, i.e., exhibit no temporal predictability. Such sports data present a window into the (in)efficiency of random sequence generation in a natural competitive environment, where the decision makers (tennis players) are both highly experienced and incentivized compared to laboratory studies. I resolve a long-standing debate about whether professional players’ tennis serve directions are serially independent (Hsu, Huang & Tang, 2007) or not (Walker & Wooders, 2001) using a new dataset that is two orders of magnitude larger than those studies. I examine both between- and within-player determinants of the degree of serial (in)dependence. Evidence of the existence of significant serial dependence across serves is presented, even among players ranked Number 1 in the world. Furthermore, significant heterogeneity was found with respect to the strength of serial dependence and also its sign. A novel finding is that Number 1 and Number 2 ranked players tend to under-alternate on average, whereas in line with previous findings, the lower-ranked the players, the greater their tendency to over-alternate. Within-player analyses show that high-ranked players do not condition their randomization behavior on their opponent’s ranking. However, the under-alternation of top players would be consistent with a best-response to beliefs that the population of opponents over-alternates on average. Finally, the degree of observed serial dependence is not systematically related to other match variables proxying for match difficulty, fatigue, and psychological pressure.

True and Error Theory (TET) provides a method to separate the variability of behavior into components due to changing true policy and to random error. TET is a testable theory that can serve as a statistical model, allowing one to evaluate substantive theories as nested, special cases. TET is more accurate descriptively and has theoretical advantages over previous approaches. This paper presents a freely available computer program in R that can be used to fit and evaluate both TET and substantive theories that are special cases of it. The program performs Monte Carlo simulations to generate distributions of test statistics and bootstrapping to provide confidence intervals on parameter estimates. Use of the program is illustrated by a reanalysis of previously published data testing whether what appeared to be violations of Expected Utility (EU) theory (Allais paradoxes) by previous methods might actually be consistent with EU theory.

Backward magical contagion describes instances in which individuals (sources) express discomfort or pleasure when something connected to them (medium; e.g., hair, a diary) falls into the possession of a negatively- or positively-perceived individual (recipient). The reaction seems illogical, since it is made clear that the source will never experience the object again, and the psychological effect appears to reverse the standard forward model of causality. Backward magical contagion was originally believed to be a belief held only within traditional cultures. Two studies examined negative backward contagion in adult Americans in online surveys. Study 1 indicated that backward contagion effects occur commonly, particularly when a recipient knows of the medium’s source. Study 2 showed that backward contagion effects tend to be neutralized when the recipient burns the object, as opposed to just possessing it or discarding it. Ironically, in traditional cultures, burning is a particularly potent cause of backward contagion.

In considering moral dilemmas, people often judge the acceptability of exchanging individuals’ interests, rights, and even lives. Here we investigate the related, but often overlooked, question of how people decide who to sacrifice in a moral dilemma. In three experiments (total N = 558), we provide evidence that these decisions often depend on the feeling that certain people are fungible and interchangeable with one another, and that one factor that leads people to be viewed this way is shared nationality. In Experiments 1 and 2, participants read vignettes in which three individuals’ lives could be saved by sacrificing another person. When the individuals were characterized by their nationalities, participants chose to save the three endangered people by sacrificing someone who shared their nationality, rather than sacrificing someone from a different nationality. Participants do not show similar preferences, though, when individuals were characterized by their age or month of birth. In Experiment 3, we replicated the effect of nationality on participant’s decisions about who to sacrifice, and also found that they did not show a comparable preference in a closely matched vignette in which lives were not exchanged. This suggests that the effect of nationality on decisions of who to sacrifice may be specific to judgments about exchanges of lives.

We are regularly told about people at various locations around the globe, both near and far, who are in distress or in dire need. In the present research, we examined how the prospective donor’s psychological distance from a given victim may interact with the victim’s identification to determine the donor’s willingness to accede to requests for donations to help the victim in question. In three studies, we measured willingness to donate (Studies 1 & 2) and actual donations (Study 3) to identified or unidentified victims, while measuring (Study 1) or manipulating (Studies 2 & 3) the psychological distance between prospective donors and the recipients. Results indicate that increasing the psychological distance between prospective donors and victims decreases willingness to help — but only when the victims are unidentified, not when they are identified. This suggests that victim’s identification mitigates the effect of distance on donor’s willingness to help.

In this paper I investigate the impact of numerological superstitions and discounts’ effect on the buyers’ behavior in the apartment market using actual sales data. Based on the dataset from Moscow primary real estate market, which includes 40 buildings, we test the apartments buyers’ demand on lucky 7th floor and unlucky 13th floor in comparison to neighboring floors and its response to developers’ discount policy for the apartments on the 13th floor. Results of the random-effects model for the preference towards 7th floor show that that “good luck” effect is present at the 90% confidence interval. Results of the mixed-effects model for the preference towards the 13th floor’s apartments show that in case of discount moderation, the “bad luck” effect of the 13th floor is mitigated, while in case of “no discount” buildings we find the clear negative effect of the 13th floor.

Risk behavior can be capricious and may vary from month to month. We study 62 clients of a private bank in Northern Italy. The individuals are of special interest for several reasons. As active traders, they manage the value-at-risk (VaR) of a portion of their wealth portfolios. In addition, they act alone, i.e., without input from a financial adviser. Based on VaR-statistics, we find that, in general, the subjects become more risk-averse after suffering losses and more risk-seeking after experiencing gains. The monthly gains and losses that alter investor risk behavior represent true changes in wealth but are “on paper” only, i.e., not immediately realized. Our results allow several interpretations, but they are not at odds with a house money effect, or the possibility that overconfident investors trade on illusions. Rapidly shifting risk behavior in fast response to unstable circumstances weakens individual risk tolerance as a deep parameter and key construct of finance theory.

When faced with a decision, people collect information to help them decide. Though it may seem unnecessary, people often continue to search for information about alternatives after they have already chosen an option, even if this choice is irreversible (e.g., checking out other cars after just purchasing one). While previous post-decision search studies focused on “one-shot” decisions and highlighted its irrational aspects, here we explore the possible benefits of post-decision search in the long run. We use a simple search task in which participants repeatedly decide whether to select the current alternative or continue to search for a better alternative. In a preliminary study we find that participants indeed conduct post-decision search even in unique environments, where information about forgone options cannot be used in future choices. In the main studies exposure to post-decision information was manipulated directly in unique environments, and was found to lead to better performance. The source of the observed improvement was further investigated with an explicit strategy elicitation methodology. We find that following exposure to post-decision information, people collect more data before generating thresholds. Thus, although post-decision search in unique environments might appear redundant, our results suggest it can help decision makers to modify their strategy and improve their future choices.