This paper investigates opinion dynamics and social influence in directed communication networks. We study the properties of a generalized boundedly rational model of opinion formation in which individuals aggregate the information they receive by using weights that are a function of their neighbors’ indegree. We then present an experiment designed to test the predictions of the model. We find that both Bayesian updating and boundedly rational updating à la DeMarzo et al. (2003) are rejected by the data. Consistent with our theoretical predictions, the social influence of an agent is positively and significantly affected by the number of individuals she listens to. When forming their opinions, agents do take into account the structure of the communication network, although in a sub-optimal way.
|Keywords:||Social Networks, Learning, Social In uence, Bounded Rationality|
|JEL:||D85 D83 A14 L14 Z13|
Shleifer, Andrei. 2012. “Psychologists at the Gate: A Review of Daniel Kahneman’s Thinking, Fast and Slow." Journal of Economic Literature, 50(4): 1080-91. link to AEAWeb;
==Notes by yinung==
這篇文章回顧 Daniel Kahneman 的書 “Thinking, Fast and Slow”
… because the book mentions few economic applications, I will describe some of the economic research that has been substantially infuenced by this work.
作者認為 Kahneman and Tversky 影響最大者在於 財務學 (或稱行為財務) … this work. My feeling is that the most profound infuence of Kahneman and Tversky’s work on economics has been in fnance, on what has now become the field of behavioral finance…
…two common objections to the introduction of psychology into economics,…
… economists should focus on “first order things”rather than quirks （quirk 這個字原意是）.
1. 反例1，人們花太多錢在保險，只為了很小的可能損失 (這可不是特殊現象)，
individuals pay large multiples of actuarially fair value to buy insurance against small losses, as well as to reduce their deductibles (Sydnor 2010).
2. 反例2，廣告 （？？還沒看懂）
the standard economic view that persuasion is conveyance of information seems to run into a rather basic problem that advertising is typically emotional, associative, and misleading— yet nonetheless effective (Bertrand et al. 2010; DellaVigna and Gentzkow 2010; Mullainathan, Schwartzstein, and Shleifer 2008).
3. 反例3，財務理論說，投資者應選 low-cast index fund, 但事實上大部份人卻是選 high-cost actively managed funds
B. 市場力量可消除心理因素對價格和分配之影響 （價格和效率）
… market forces eliminate the influence of psychological factors on prices and allocations.
1. 反例，Real-world arbitrage is costly and risky, and hence limited, … Dozens of empirical studies confirm that, even in markets with relatively inexpensive arbitrage, identical, or nearly identical, securities trade at different prices. With costlier arbitrage, pricing is even less efficient.
2. 市場參與者大多不理性，即是有專家之協助 （專家的動機通常值得懷疑，見(Chalmers and Reuter 2012; Gennaioli,
Shleifer, and Vishny 2012)）
Market forces often work to strengthen, rather than to eliminate, the influence of psychology.
List 研究棒球卡交易，發現專家沒有 endowment effects, 支持了此一觀點。
兩個思考體系 （two systems)
System 1: 直覺、自動、非意識性、容易 （intuitive, automatic, unconscious, and effortles）；快速反應，透過聯想、組合
System 2: 具意識性、緩慢、受控制 …但不容易 （conscious, slow, controlled, deliberate, effortful, statistical, suspicious, and lazy (costly to use)）；這是經濟學家認為的思考
Heuristics and Biases
Anchoring effects: 對未知的問題，容易受到前置性的影響 （擲俄羅斯輪盤，看到數字後，猜非洲國家佔聯合國之比例…, 看到輪盤數字小者猜小， 看到數字大者猜大)
… respondents receive all the information they need, but nonetheless do not use it correctly.
人類注意和聯想到的資訊，並非皆是在最佳決策中所需要的… 系統 1 的思考是自動反應，而非最佳化： 選擇性認知與記憶之決策行為（highly selective perception and memory … before we make decisions and choice)
… the fundamental feature of System 1 is that what our attention is drawn to, what we focus on, and what we recall is not always what is most necessary or needed for optimal decision making.
The publication of Daniel Kahneman’s book, Thinking, Fast and Slow, is a major intellectual event. The book summarizes, but also integrates, the research that Kahneman has done over the past forty years, beginning with his path-breaking work with the late Amos Tversky. The broad theme of this research is that human beings are intuitive thinkers and that human intuition is imperfect, with the result that judgments and choices often deviate substantially from the predictions of normative statistical and economic models. In this review, I discuss some broad ideas and themes of the book, describe some economic applications, and suggest future directions for research that the book points to, especially in decision theory. (JEL A12, D03, D80, D87)
有關 prospect theory
- Barberis, Nicholas. Forthcoming. “Thirty Years of Prospect Theory in Economics.” Journal of Economic Perspectives.
- Bordalo, Pedro, Nicola Gennaioli, and Andrei Shleifer. 2012b. “Salience in Experimental Tests of the Endowment Effect.” American Economic Review 102 (3): 47–52.
- Bordalo, Pedro, Nicola Gennaioli, and Andrei Shleifer. 2012c. “Salience Theory of Choice Under Risk.” Quarterly Journal of Economics 127 (3): 1243–85.
- Hart, Oliver, and John Moore. 2008. “Contracts as Reference Points.” Quarterly Journal of Economics 123 (1): 1–48.
- Koszegi, Botond, and Matthew Rabin. 2006. “A Model of Reference-Dependent Preferences.” Quarterly Journal of Economics 121 (4): 1133–65.
- *List, John A. 2003. “Does Market Experience Eliminate Market Anomalies?” Quarterly Journal of Economics 118 (1): 41–71.
- Pope, Devin G., and Maurice E. Schweitzer. 2011. “Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes.” American Economic Review 101 (1): 129–57.
- Barberis, Nicholas, and Ming Huang. 2008. “Stocks as Lotteries: The Implications of Probability Weighting for Security Prices.” American Economic Review 98 (5): 2066–2100.
- Barberis, Nicholas, Andrei Shleifer, and Robert W. Vishny. 1998. “A Model of Investor Sentiment.” Journal of Financial Economics 49 (3): 307–43.
- Benartzi, Shlomo, and Richard H. Thaler. 1995. “Myopic Loss Aversion and the Equity Premium Puzzle.” Quarterly Journal of Economics 110 (1): 73–92.
- De Bondt, Werner F. M., and Richard H. Thaler. 1985. “Does the Stock Market Overreact?” Journal of Finance 40 (3): 793–805.
- Frazzini, Andrea, and Owen A. Lamont. 2008. “Dumb Money: Mutual Fund Flows and the Cross-Section of Stock Returns.” Journal of Financial Economics 88 (2): 299–322.
- Lakonishok, Josef, Andrei Shleifer, and Robert W. Vishny. 1994. “Contrarian Investment, Extrapolation, and Risk.” Journal of Finance 49 (5): 1541–78.
- Sydnor, Justin. 2010. “(Over)insuring Modest Risks.” American Economic Journal: Applied Economics 2 (4): 177–99.
- Gennaioli, Nicola, and Andrei Shleifer. 2010. “What Comes to Mind.” Quarterly Journal of Economics 125 (4): 1399–1433.
- House money effects
Thaler, Richard H., and Eric J. Johnson. 1990. “Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice.” Management Science 36 (6): 643–60.
Tversky, Amos, and Daniel Kahneman. 1981. “The Framing of Decisions and the Psychology of Choice.” Science 211 (4481): 453–58.
This study explores ordering effects and response strategies in repeated binary discrete choice experiments (DCE). Mechanism design theory and empirical evidence suggest that repeated choice tasks per respondent introduce strategic behavior. We find evidence that the order in which choice sets are presented to respondents may provide strategic opportunities that affect choice decisions (âstrategic responseâ). The findings propose that the âstrategic responseâ does not follow strong cost-minimization but other strategies such as weak cost-minimization or good deal/ bad deal heuristics. Evidence further suggests that participants, as they answer more choice questions, not only make more accurate choices (âinstitutional learningâ) but may also become increasingly aware of and learn to take advantage of the order in which choice sets are presented to them (âstrategic learningâ).
|Keywords:||discrete choice experiments, incentive compatibility, mixed logit models, ordering effects, repeated binary choice task, response strategies, Environmental Economics and Policy,|
We introduce a rational choice theory that allows for many forms of imperfect perception, including failures of memory, selective attention, and adherence to simplifying rules of thumb. Despite its generality, the theory has strong, simple, and intuitive implications for standard choice data and for more enriched choice data. The central assumption is rational expectations: decision makers understand the relationship between their perceptions, however limited they may be, and the (stochastic) consequences of their available choices. Our theory separately identifies two distinct “framing" effects: standard effects involving the layout of the prizes (e.g. order in a list) and novel effects relating to the information content of the environment (e.g. how likely is the first in the list to be the best). Simple experimental tests both affirm the basic model and confirm the existence of information-based framing effects.