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Warwick Business School
The Fictional Self: Implications for Theories of Decision MakingNick Chater
Behavioural Science Group
Warwick Business School
OVERVIEW
1. THE FICTIONAL SELF
2. THE ILLUSION OF DEPTH
3. WHY BEHAVIOUR IS (SOMEWHAT) COHERENT
4. IMPLICATIONS
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1. THE FICTIONAL SELF
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The claim
We infer our own inner life from our words and actions, just as we infer those of a third personA popular viewpoint in many areas of social
psychology and philosophy Corollary 1: We do not have any direct access to
“inner” beliefs, desires etc... Corollary 2: Indeed, there are no such beliefs
and desires (illusion of depth)
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Inferring our own beliefs 1 Festinger and Carlsmith, 1963
1. People do a boring task 2. Then paid $1 or $20 to persuade others to do it
○ People paid more find it more aversive; less likely to do it again, etc.
Why did I do this? “If I was only paid $1, it can’t have been too bad”
○ (Daryl Bem self-perception interpretation, not quite Festinger’s)
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Inferring our own beliefs 2 Reber & Schwarz 1999
“fluency” of reading (!) affects plausibility of a statement○ Osarno is a town in Chile○ Osarno is a town in Chile
But effect is cancelled when people have an alternative explanation (poor photocopier)
Alter and Oppenheimer 2006IPOs with ‘fluent’ names do substantially better
(though effect washes out) RDO vs KAR
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Inferring our own beliefs 3 (Schwarz et al)
Generate 3 reasons why... Happy with decision, like partner
○ 3 is easy; high ‘fluency’ infer strong commitment high self-report on happiness with decision, partner, etc.
Generate 6 reasons why...Happy with decision, like partner
○ 6 is hard; low ‘fluency’ infer weak commitment lower self-report on happiness with decision, partner, etc.
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Inferring our own emotions 1 Schachter and Singer (1962)
Epinephrine or placebo injections○ Raising (or not) arousal
informed (or not) about side-effectsPut with euphoric or angry ‘stooges’
Higher arousal participants are more euphoric/angry
When people can ‘explain away’ arousal, effect much reduced
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Inferring our own emotions 2 Dutton and Aron (1974)
Male/female interviewers ofmale bridge-crossers
low vs high bridgeInterviewers give phone number“further explanation” of studyMore calls to female interviewersfor high bridge
Arousal (caused by high bridge) misattributed as caused by attractiveness
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Inferring our own preferences 1 Johansson, Hall et al.,
Science False feedback on
choicesnot noticedrationalization givenlater preferences
changedAnd it works with jam
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Inferring our own preferences 2
Can people stably determine preferences between pains and money?
Or do they have little idea what is a “reasonable” trade-off?
BDM auction with small electric shocks
Vlaev, Seymour, Dolan & Chater, Psych Science, 2009
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You receive 40p
You will receive a shock
Select price to avoid 15 further shocks
0p 20p 40p
Market price is determined randomly
0p
20p
10p30p
You offered 14p
Market price was 4p
Sale authorisedSale price = 4p
time
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Pain magnitudes were presented in pairs in three blocks of ten trials
Two “endowment” conditions£0.40 per trial£0.80 per trial
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0
5
10
15
20
25
30
35
Low-Medium Medium-High Low-High
Pri
ce O
ffe
red
Context Condition
Endowment = 40 pence
HighMediumLow
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0
10
20
30
40
50
60
70
Low-Medium Medium-High Low-High
Pri
ce O
ffe
red
Context Condition
Endowment = 80 pence
HighMediumLow
• People double their offers, when they have double the money...• Value of pain changes by x2 within minutes!
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In a slogan:
We are fictional characters of our own creation
i.e., the body isn’t fictional; but the ‘character’ is!
Daily life (and decision making) is a bit like improvisational acting ○ “What would X do now?”
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2. THE ILLUSION OF DEPTH
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Where does a rocket take off?
Triangulation will solve it; and the more measurements, the more error can be reduced
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Where does a rainbow touch down?
Triangulation won’t work... And the problem is not eliminating noise!
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Rainbows, like beliefs and values have the illusion of depth
But different ‘bearings’ don’t convergeBecause they are improvised on the flyNot products of stable, (if somewhat hidden,
motives)
Different methods of elicitation will yield irrenconcilable “bearings”
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Reason-based choice (Shafir et al)
Expensive, but exciting holidayvs.
Cheap, but dull holiday
Bali Bournmouth
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Which holiday would you choose?
Bali Bournmouth
Reason: “It’s exciting!”
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Which holiday would you reject?
Bali Bournmouth
Reason: “It’s too expensive!”
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3. WHY BEHAVIOUR IS (SOMEWHAT) COHERENT
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But behaviour is by no means wholly incoherent Rationality constraints Rules (moral or other) Herding and self-
herding (what do I/we normally do?)
Hierarchies of goals Prices (multiplicative
additive)
What does my character do next?
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Rationality constraints
£1 + £1 + £1 + £1 is not really preferred to £20 - £15 (despite prospect theory)
We don’t always break a diet when passing the fridge (despite temporal discounting)
We don’t actually fall for Dutch books
Rational choice theory helps capture qualitative patterns of reasoning that govern the ‘stories’ we create about ourselves (or others)
Rationality constraints on “story generation” are a (partial and local) stabilizing force
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Prices
Decision by arguments (cf Loomes): Comfortable vs uncomfortable seatingCost £X vs £Y strength of ‘argument’ driven by ratio
X:Y○ Duration tends to be forgotten about
How much would you pay for 1 h of sitting (more) comfortably?
Or 4h 50m of sitting (more) comfortably?
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EVERYTHING IS RELATIVE...
2nd class: £164.10Business: £325.10
Second: £108.30First: £229.90
How much would you pay for 1 h of sitting (more) comfortably?
Or 4h 50m of sitting (more) comfortably?
London to Edinburgh, return
In each case, double the basic price: comparison in action
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By being able to ‘unbundle’ enforces additivity (and thus more stability) Bundled -> multiplicative
House size and locationCar quality + stereo systemDoubling of all wine prices
in a restaurantTaking a percentage of sale
in auctions, house sales, mergers
Same good: but will happily pay wildly different amounts
UnbundledComputer hardware +
softwareUnlicensed restaurant;
bring your own drinksThe supermarket, rather
than the restaurant.
Same good, same price (but not via same utility)
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4. IMPLICATIONS
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IMPLICATION 1: THE POWER OF THE STATUS QUO
Current house prices soon seem ‘normal’ Wage increases rapidly ‘fade out’ as contributors to happiness; And
even lottery wins Tax and other cost changes have much less long-term impact on
behaviour than is typically expected Levels of risk are viewed relatively: sub-prime lending, complex
instruments etc judged against each other
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IMPLICATION 2: THE POWER OF THE HERD
No absolute anchors Comparison against other’s beliefs and behaviors Risk-takers will be relatively risk seeking, w.r.t., peer group
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IMPLICATION 3UNANCHORED PRICES
“value” “price”
PEOPLE KNOW THE PRICE OF EVERYTHING, BUT THE VALUE OF NOTHING
• People can’t “know” their values
• So they must partly infer them from market prices
• Allowing feedback loops between values and prices
• The origin of booms and crashes?