Another Field Experiment

4 February 2011 at 3:23 pm 6 comments

| Lasse Lien |

As previously pointed out, field experiments are rare. Here is another. This one is on the quality of decision making. I guess the authors’ finding that men are more consistent (i.e. rational) decision makers than women will raise an eyebrow or two. I don’t know about other male O&M readers, but I am definitely taking home a copy to show my wife.

Who Is (More) Rational?
Syngjoo Choi, Shachar Kariv, Wieland Müller, and Dan Silvermany

Revealed preference theory offers a criterion for decision-making quality: if decisions are high quality then there exists a utility function that the choices maximize. We conduct a large-scale field experiment that enables us to test subjects’ choices for consistency with utility maximization and to combine the experimental data with a wide range of individual socioeconomic information for the subjects. There is considerable heterogeneity in subjects’ consistency scores: high-income and high-education subjects display greater levels of consistency than low-income and low-education subjects, men are more consistent than women, and young subjects are more consistent than older subjects. We also find that consistency with utility maximization is strongly related to wealth: a standard deviation increase in the consistency score is associated with 15-19 percent more wealth. This result conditions on socioeconomic variables including current income, education, and family structure, and is little changed when we add controls for past income, risk tolerance and the results of a standard personality test used by psychologists.

Entry filed under: - Lien -, Papers. Tags: .

WSJ on Conglomerates The Performative Effects of Social Constructionist Professors in Business Schools

6 Comments Add your own

  • 1. David Hoopes  |  4 February 2011 at 5:00 pm

    Good luck with that Lasse. That might be a questionable decision.

  • 2. Lasse  |  4 February 2011 at 5:11 pm

    Hmm. I guess you’re right David. I hope my poor decision-making on the decision to take the paper home doesn’t refute the paper. I am not only male, but quite young and well educated too, so I am not supposed to make such stupid calls.

  • 3. David Hoopes  |  5 February 2011 at 12:03 am

    ha ha ha. education doesn’t have much correlation with common sense.

  • 4. Lasse  |  5 February 2011 at 2:35 am

    I’m not sure their design quite gets my category: the consistently irrational.

  • 5. Nijma  |  6 February 2011 at 9:35 pm

    So, consistency is the hobgoblin of what, again?

  • 6. Michael E. Marotta  |  8 February 2011 at 11:08 am

    I read through the orignal paper a couple of times. It underscored the inherent limitations in mathematical sociology. Allow me to suggest that ,b> explanations validate data.

    Consider that two groups with high consistency are the wealthy and the young. But the young are not wealthy. Similarly, two groups with weaker consistency are the older and the poorer. But older people tend to be wealthier, though they often show up as poorer exactly because they have wealth (paid off homes – primary and secondary – paid off vehicles, and investment portfolios etc.) .

    Consistency relates to wealth because achieving success over time requires defining a long-term goal and managing its course. Poor people vaciliate and never stick to anything.

    The young are headstrong and “ideailistic” whereas age brings wisdom and the ability to adapt to changing situations.

    For an extreme example of that, two law enforcement theorists report that older Asian men are best at handling severe events such as 9/11 and Hurricane Katrina, whereas those who suffer Post Traumatic Stress Disorder (or who claim to in a society that rewards self-defined victims) are unmarried couples in their 30s. (See “Stress and Psychological Effects” Bernard H. Levin and Joseph A. Schafer
    http://www.policefuturists.org/pdf/207.Vol3.Mass.Casualty.Events.final.21mr07.pdf.) It is not that older Asian men are “consistent” but that they are centered — which may be a far more subtle and consequential kind of consistency.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Authors

Nicolai J. Foss | home | posts
Peter G. Klein | home | posts
Richard Langlois | home | posts
Lasse B. Lien | home | posts

Guests

Former Guests | posts

Networking

Recent Posts

Categories

Feeds

Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).

Follow

Get every new post delivered to your Inbox.

Join 263 other followers