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Behavioral Economics Reading List: Replication Failures & Critical Views

Behavioral Economics Reading List: Replication Failures & Critical Views

This resource will be continuously updated as new papers are discovered and published.

No evidence for nudging after adjusting for publication bias

“Thaler and Sunstein’s “nudge” (1) has spawned a revolution in behavioral science research. Despite its popularity, the “nudge approach” has been criticized for having a “limited evidence base” (e.g., ref. 2). Mertens et al. (3) seek to address that limitation with a timely and comprehensive metaanalysis. Mertens et al.’s headline finding is that “choice architecture [nudging] is an effective and widely applicable behavior change tool” (p. 8). We propose their finding of “moderate publication bias” (p. 1) is the real headline; when this publication bias is appropriately corrected for, no evidence for the effectiveness of nudges remains (Fig. 1).”

RCTs to Scale: Comprehensive Evidence from Two Nudge Units

“We compare these trials to a separate sample of nudge trials published in academic journals from two recent meta-analyses. In papers published in academic journals, the average impact of a nudge is very large – an 8.7 percentage point take-up increase over the control. In the Nudge Unit trials, the average impact is still sizable and highly statistically significant, but smaller at 1.4 percentage points. We show that a large share of the gap is accounted for by publication bias, exacerbated by low statistical power, in the sample of published papers…”

Acceptable losses: the debatable origins of loss aversion

“It is often claimed that negative events carry a larger weight than positive events. Loss aversion is the manifestation of this argument in monetary outcomes. In this review, we examine early studies of the utility function of gains and losses, and in particular the original evidence for loss aversion reported by Kahneman and Tversky (Econometrica 47:263-291, 1979). We suggest that loss aversion proponents have over-interpreted these findings. Specifically, the early studies of utility functions have shown that while very large losses are overweighted, smaller losses are often not. In addition, the findings of some of these studies have been systematically misrepresented to reflect loss aversion, though they did not find it. These findings shed light both on the inability of modern studies to reproduce loss aversion as well as a second literature arguing strongly for it.”

The Loss of Loss Aversion: Will It Loom Larger Than Its Gain?

“Loss aversion, the principle that losses loom larger than gains, is among the most widely accepted ideas in the social sciences. The first part of this article introduces and discusses the construct of loss aversion. The second part of this article reviews evidence in support of loss aversion. The upshot of this review is that current evidence does not support that losses, on balance, tend to be any more impactful than gains. The third part of this article aims to address the question of why acceptance of loss aversion as a general principle remains pervasive and persistent among social scientists, including consumer psychologists, despite evidence to the contrary. This analysis aims to connect the persistence of a belief in loss aversion to more general ideas about belief acceptance and persistence in science. The final part of the article discusses how a more contextualized perspective of the relative impact of losses versus gains can open new areas of inquiry that are squarely in the domain of consumer psychology.”

Loss aversion fails to replicate in the coronavirus pandemic: Evidence from an online experiment

“Loss aversion is a foundational bias and is a natural choice for interventions encouraging compliance during COVID-19. We compare the effectiveness of loss and gain messages and find no difference in the intention to comply with guidance or lockdown beliefs.”

Revise the Belief in Loss Aversion

“The applications from Prospect theory have been phenomenal and the theory is arguably one of the most influential ideas in the whole of social sciences (Camerer, 2005). There is no contention about Prospect Theory being a key insight that significantly influenced intellectual development in economics and psychology. Nevertheless, it is time to take a critical look (Gal and Rucker, 2018) in at least two folds: (i) what is loss aversion? and (ii) how confident are we about its empirical evidence?”

The entitlement effect in the ultimatum game – does it even exist?

“Since the seminal paper of Hoffman et al. (1994), an entitlement effect is believed to exist in the Ultimatum Game, in the sense that proposers who have earned their role (as opposed to having it randomly allocated) offer a smaller share of the pie to their matched responder. The entitlement effect is at the core of experimental Public Choice – not just because it concerns the topics of bargaining and negotiations, but also because it relates to the question about under which circumstances actors behave more rational. We conduct three experiments, two in the laboratory and one online, with more than 1,250 participants. Our original motivation was to study gender differences, but ultimately we could not replicate the entitlement effect in the Ultimatum Game in any of our three experiments. Potential reasons for why the replication attempts fail are discussed.”

Impatience and Savoring vs. Dread: Asymmetries in Anticipation Explain Consumer Time Preferences for Positive vs. Negative Events

“For positive experiences (e.g., when to eat a snack), consumers generally prefer to have them immediately, and for negative experiences (e.g., when to pay a bill), consumers often prefer to delay. Yet, across three studies (plus twelve supplemental studies) we find that anticipatory feelings push in the opposite direction, and do so differently for positive vs. negative events, leading to different time preferences: The desire for immediate positives is stronger than the desire to delay negatives. For negative events, anticipatory utility is strongly negative, reducing the desire to delay bad things (i.e., consumers want to “get it over with” to minimize the psychological discomfort), but for positive events, overall anticipatory utility is weakly positive, and therefore does little to reduce consumers’ desire to expedite good things. This anticipatory asymmetry happens because when consumers think about a future positive event, they both enjoy imagining it (savoring) while simultaneously disliking the feeling of waiting for it (impatience), but when consumers think about a negative event, they both dislike imagining it (dread) and dislike the feeling of waiting for it. We demonstrate the managerial implications of these findings in a pair of field studies using online advertisements for retirement planning.”