Exposure, Experience, and Expertise: Why Personal Histories Matter in Economics

2021 ◽  
Author(s):  
Ulrike Malmendier
Keyword(s):  
Decision Making ◽  
Neural Plasticity ◽  
Future Research ◽  
Individual Level ◽  
Neural Connections ◽  
Economic Decision Making ◽  
Wide Range ◽  
Personal Experiences ◽  
Experience Effects ◽  
Past Experiences

Abstract Personal experiences of economic outcomes, from global financial crises to individual-level job losses, can shape individual beliefs, risk attitudes, and choices for years to come. A growing literature on experience effects shows that individuals act as if past outcomes that they experienced were overly likely to occur again, even if they are fully informed about the actual likelihood. This reaction to past experiences is long-lasting though it decays over time as individuals accumulate new experiences. Modern brain science helps understand these processes. Evidence on neural plasticity reveals that personal experiences and learning alter the strength of neural connections and fine-tune the brain structure to those past experiences (“use-dependent brain”). I show that experience effects help understand belief formation and decision-making in a wide range of economic applications, including inflation, home purchases, mortgage choices, and consumption expenditures. I argue that experience-based learning is broadly applicable to economic decision-making and discuss topics for future research in education, health, race, and gender economics.

scholarly journals A survey of methods for evaluating mini-publics

2021 ◽  
Author(s):  
Takeuchi Ayano
Keyword(s):  
Decision Making ◽  
Academic Research ◽  
Future Research ◽  
The Political ◽  
Decision Making Process ◽  
Sufficient Information ◽  
Practical Case ◽  
Political Decision ◽  
Wide Range ◽  
Political Decision Making

AbstractPublic participation has become increasingly necessary to connect a wide range of knowledge and various values to agenda setting, decision-making and policymaking. In this context, deliberative democratic concepts, especially “mini-publics,” are gaining attention. Generally, mini-publics are conducted with randomly selected lay citizens who provide sufficient information to deliberate on issues and form final recommendations. Evaluations are conducted by practitioner researchers and independent researchers, but the results are not standardized. In this study, a systematic review of existing research regarding practices and outcomes of mini-publics was conducted. To analyze 29 papers, the evaluation methodologies were divided into 4 categories of a matrix between the evaluator and evaluated data. The evaluated cases mainly focused on the following two points: (1) how to maintain deliberation quality, and (2) the feasibility of mini-publics. To create a new path to the political decision-making process through mini-publics, it must be demonstrated that mini-publics can contribute to the decision-making process and good-quality deliberations are of concern to policy-makers and experts. Mini-publics are feasible if they can contribute to the political decision-making process and practitioners can evaluate and understand the advantages of mini-publics for each case. For future research, it is important to combine practical case studies and academic research, because few studies have been evaluated by independent researchers.

scholarly journals Machine Learning in Neuroimaging: A New Approach to Understand Acupuncture for Neuroplasticity

2020 ◽  
Vol 2020 ◽  
pp. 1-14
Author(s):  
Tao Yin ◽  
Peihong Ma ◽  
Zilei Tian ◽  
Kunnan Xie ◽  
Zhaoxuan He ◽  
...  
Keyword(s):  
Machine Learning ◽  
Neural Plasticity ◽  
Experimental Studies ◽  
Future Research ◽  
New Approach ◽  
Individual Level ◽  
Acupuncture Research ◽  
The Individual ◽  
Neuroimaging Techniques

The effects of acupuncture facilitating neural plasticity for treating diseases have been identified by clinical and experimental studies. In the last two decades, the application of neuroimaging techniques in acupuncture research provided visualized evidence for acupuncture promoting neuroplasticity. Recently, the integration of machine learning (ML) and neuroimaging techniques becomes a focus in neuroscience and brings a new and promising approach to understand the facilitation of acupuncture on neuroplasticity at the individual level. This review is aimed at providing an overview of this rapidly growing field by introducing the commonly used ML algorithms in neuroimaging studies briefly and analyzing the characteristics of the acupuncture studies based on ML and neuroimaging, so as to provide references for future research.

Behavioral Corporate Finance: The Life Cycle of a CEO Career

2020 ◽  
Author(s):  
Marius Guenzel ◽  
Ulrike Malmendier
Keyword(s):  
Decision Making ◽  
Corporate Finance ◽  
Low Frequency ◽  
Chief Executive ◽  
Market Discipline ◽  
Decision Makers ◽  
Future Research ◽  
Experience Effects ◽  
Behavioral Corporate Finance ◽  
Selection Mechanisms

One of the fastest-growing areas of finance research is the study of managerial biases and their implications for firm outcomes. Since the mid-2000s, this strand of behavioral corporate finance has provided theoretical and empirical evidence on the influence of biases in the corporate realm, such as overconfidence, experience effects, and the sunk-cost fallacy. The field has been a leading force in dismantling the argument that traditional economic mechanisms—selection, learning, and market discipline—would suffice to uphold the rational-manager paradigm. Instead, the evidence reveals that behavioral forces exert a significant influence at every stage of a chief executive officer’s (CEO’s) career. First, at the appointment stage, selection does not impede the promotion of behavioral managers. Instead, competitive environments oftentimes promote their advancement, even under value-maximizing selection mechanisms. Second, while at the helm of the company, learning opportunities are limited, since many managerial decisions occur at low frequency, and their causal effects are clouded by self-attribution bias and difficult to disentangle from those of concurrent events. Third, at the dismissal stage, market discipline does not ensure the firing of biased decision-makers as board members themselves are subject to biases in their evaluation of CEOs. By documenting how biases affect even the most educated and influential decision-makers, such as CEOs, the field has generated important insights into the hard-wiring of biases. Biases do not simply stem from a lack of education, nor are they restricted to low-ability agents. Instead, biases are significant elements of human decision-making at the highest levels of organizations. An important question for future research is how to limit, in each CEO career phase, the adverse effects of managerial biases. Potential approaches include refining selection mechanisms, designing and implementing corporate repairs, and reshaping corporate governance to account not only for incentive misalignments, but also for biased decision-making.

Review of Family Financial Decision Making: Suggestions for Future Research and Implications for Financial Education

2017 ◽  
Vol 28 (2) ◽  
pp. 253-267 ◽  
Author(s):  
Jinhee Kim ◽  
Michael S. Gutter ◽  
Taylor Spangler
Keyword(s):  
Decision Making ◽  
Decision Process ◽  
Family System ◽  
Financial Education ◽  
Future Research ◽  
Financial Decisions ◽  
Individual Level ◽  
Financial Decision Making ◽  
Financial Decision ◽  
The Individual

This article reviews the theories and literature in intrahousehold financial decisions, spousal partners and financial decision making, family system and financial decision process, children, and financial decisions. The article draws conclusions from the literature review and discusses directions for future research and educational programs. Most financial education and counseling takes place at the individual level, whereas financial decisions take place at household and intrahousehold levels. Family members, spouses/partners, children, and others play a key role in individuals’ financial decisions. The article proposes the key programmatic implications for financial professionals and educators that need to be integrated into financial education and counseling. Understanding the unique dynamics of family financial decision making would help create effective educational and counseling strategies for the whole families.

scholarly journals Unconscious influences on decision making: A critical review

2014 ◽  
Vol 37 (1) ◽  
pp. 1-19 ◽  
Author(s):  
Ben R. Newell ◽  
David R. Shanks
Keyword(s):  
Decision Making ◽  
Social Behavior ◽  
Behavioral Economics ◽  
Cognitive Neuroscience ◽  
Critical Review ◽  
Explanatory Power ◽  
Future Research ◽  
Wide Range ◽  
Cognitive Unconscious

AbstractTo what extent do we know our own minds when making decisions? Variants of this question have preoccupied researchers in a wide range of domains, from mainstream experimental psychology (cognition, perception, social behavior) to cognitive neuroscience and behavioral economics. A pervasive view places a heavy explanatory burden on an intelligent cognitive unconscious, with many theories assigning causally effective roles to unconscious influences. This article presents a novel framework for evaluating these claims and reviews evidence from three major bodies of research in which unconscious factors have been studied: multiple-cue judgment, deliberation without attention, and decisions under uncertainty. Studies of priming (subliminal and primes-to-behavior) and the role of awareness in movement and perception (e.g., timing of willed actions, blindsight) are also given brief consideration. The review highlights that inadequate procedures for assessing awareness, failures to consider artifactual explanations of “landmark” results, and a tendency to uncritically accept conclusions that fit with our intuitions have all contributed to unconscious influences being ascribed inflated and erroneous explanatory power in theories of decision making. The review concludes by recommending that future research should focus on tasks in which participants' attention is diverted away from the experimenter's hypothesis, rather than the highly reflective tasks that are currently often employed.

Experimental Designs in the Study of Offender Decision Making

2017 ◽  
Author(s):  
Jeffrey A. Bouffard ◽  
Nicole Niebuhr
Keyword(s):  
Decision Making ◽  
Real World ◽  
Risk Perceptions ◽  
Experimental Designs ◽  
Future Research ◽  
Research Setting ◽  
Individual Level

Research on offender decision making has utilized experimental designs and has often coupled these strong designs with the use of hypothetical vignettes that describe specific offending circumstances for the would-be offender to consider. In some cases, these studies have experimentally manipulated situational elements of the imagined setting. In others, researchers have experimentally manipulated the context in which the participants make the decision. Other researchers have utilized randomized designs with behavioral analogues within the research setting. This research has found that various situational and individual-level factors influence the content and process of offender decision making in important ways. Future research should further explore how offenders form risk perceptions and how these influences may interact with one another, and it should continue to refine these methods to more closely approximate real-world settings.

scholarly journals Optimization in Decision Making in Infrastructure Asset Management: A Review

2019 ◽  
Vol 9 (7) ◽  
pp. 1380 ◽  
Author(s):  
Lin Chen ◽  
Qiang Bai
Keyword(s):  
Decision Making ◽  
Asset Management ◽  
Optimization Methods ◽  
Future Research ◽  
Application Process ◽  
Management Decisions ◽  
Comprehensive Knowledge ◽  
Wide Range ◽  
Selection Of ◽  
Infrastructure Asset Management

Infrastructure assets, serving everyone’s daily life, are an essential foundation of any society. Their management faces a wide range of challenges. Hence optimization methods are increasingly applied to assist making management decisions in infrastructure asset management (IAM). A large number of articles apply a broad range of optimization methods in their decision making (DM) and achieve great results. However, they mainly focus on individual methods and a comprehensive knowledge, given the broad range of optimization methods, is hardly discussed. Hence it is valuable to analyze and graphically present the existing knowledge on this subject. This paper, based on a total of 337 articles, provides an overall review of the applications of optimization when making management decisions in IAM, with the intension of enhancing the optimization application and method selection and guiding the future research in this field. More specifically, this paper introduces the application process of optimization when assisting DM in IAM, summarizes the previous application research, and discusses the popular optimization methods applied in DM in IAM. According to the literature review, this paper confirms optimization can effectively assist DM in IAM and a wide range of optimization methods are applicable to assist a variety of DM problems. The recommendations on the applications and selection of optimization methods in the context of IAM are also made to facilitate the applications.

Experience Effects in Finance: Foundations, Applications, and Future Directions

2021 ◽  
Vol 25 (5) ◽  
pp. 1339-1363
Author(s):  
Ulrike Malmendier
Keyword(s):  
Stock Market ◽  
Future Research ◽  
International Capital ◽  
Future Directions ◽  
Recency Effects ◽  
Experience Based Learning ◽  
Experience Effects ◽  
Trade Dynamics ◽  
Past Experiences ◽  
Stock Market Investment

Abstract This article establishes four key findings of the growing literature on experience effects in finance: (i) the long-lasting imprint of past experiences on beliefs and risk taking; (ii) recency effects; (iii) the domain-specificity of experience effects; and (iv) imperviousness to information that is not experience-based. I first discuss the neuroscientific foundations of experience-based learning and sketch a simple model of its role in the stock market based on Malmendier et al. (2020a, b). I then distill the empirical findings on experience effects in stock-market investment, trade dynamics, and international capital flows, highlighting these four key features. Finally, I contrast models of belief formation that rely on “learned information” with models accounting for the neuroscience evidence on synaptic tagging and memory formation, and provide directions for future research.

scholarly journals DECISION QUALITY IN COMPLEX PRODUCT DEVELOPMENT: REFLECTIONS ON A CASE STUDY

2021 ◽  
Vol 1 ◽  
pp. 861-870
Author(s):  
Ghadir Siyam ◽  
Mariely Salgueiro ◽  
John Kennedy
Keyword(s):  
Decision Making ◽  
Oil And Gas ◽  
Dynamic Environment ◽  
Decision Quality ◽  
Future Research ◽  
Decision Making Process ◽  
Dependency Structure ◽  
Complex Projects ◽  
Wide Range ◽  
Dependency Structure Matrix

AbstractConceptual design projects are increasingly known as an intense decision-making process. Much of the decision-making is comparing the degree of preference between choices. In the complex projects of the upstream business of oil and gas, good decisions are crucial for success. Decisions are typically made within a dynamic environment, wide range of uncertainty, and have to account for the asset life cycle. This paper reflects on the application of the decision quality framework with a focus on decision modelling. Using an industrial example, a systematic approach to visualise and improve decision making process is proposed. The approach applies a Dependency Structure Matrix (DSM) and Decision Quality frameworks and identified opportunities for future research.

scholarly journals Top Management Teams

2021 ◽  
pp. 355-368
Author(s):  
Margarethe F. Wiersema ◽  
Joshua S. Hernsberger
Keyword(s):  
Decision Making ◽  
Top Management Teams ◽  
Strategic Decision ◽  
Strategic Decision Making ◽  
Future Research ◽  
Top Management ◽  
State Of Research ◽  
Executive Teams ◽  
Past Experiences ◽  
And Behavior

Scholarly interest in the firm’s top management is an important research topic given their influence on strategic decision-making and firm outcomes, as well as increased media attention and activist investor scrutiny of the firm’s executives. The past experiences, knowledge, and skills of the firm’s top management team (TMT) represent the stock of the firm’s strategic human capital, which, along with their social capital and cognitive perspectives, influences strategic decision-making. This chapter provides a brief overview of the current state of research on TMTs and addresses limitations of this research before proposing an agenda for future research. The intent is to suggest avenues of scholarly inquiry to better understand how the firm’s TMT, through its interactions, attributes, and behavior, influences strategic decision-making. In doing so, the chapter could serve to encourage future research that will provide practical insight on how companies and boards can have more effective executive teams.

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