Competition and Price Transparency in the Market for Lemons: Experimental Evidence

In markets with asymmetric information, where equilibria are often inefficient, bargaining can help promote welfare. We design an experiment to examine the impact of competition and price transparency in such settings. Consistent with the theoretical predictions, we find that competition promotes efficiency if bargainers cannot observe each other’s price offers. Contrary to the predictions, however, the efficiency-enhancing effect of competition persists even when offers are observable. We explore different behavioral explanations for the absence of a detrimental effect of price transparency. Remarkably, implementing the strategy method improves subjects’ conditional reasoning, delivering the predicted loss in efficiency when offers are observable. (JEL C78, D82, L15)

The Eyes Chico, They Never Lie – Using Eye-Tracking to Examine Faking on the Conditional Reasoning Test for Aggression

To better understand the process of responding to the Conditional Reasoning Test for Aggression (CRT-A) and its implication for the test's use in personnel selection, we conducted two lab studies in which we compared test scores and eye movements of participants responding honestly and faking the test. Study 1 results showed that, although participants might try to respond differently to the CRT-A while faking, it remains an indirect and unfakeable measure as long as the test's purpose is undisclosed. Study 2 showed that revealing the true purpose of the CRT-A diminishes the test's indirect nature so the test becomes fakeable, solving it requires less attention and participants direct their eyes more to response alternatives congruent with the presentational demands.

New Paradigm Psychology of Conditional Reasoning and Its Philosophical Sources

There is a new Bayesian, or probabilistic, paradigm in the psychology of reasoning, with new psychological accounts of the indicative conditional of natural language and of conditional reasoning. Dorothy Edgington has had a major impact on this new paradigm, through her views on inference from uncertain premises, the relation between the probability of the indicative conditional, P(if p then q), and the conditional probability, P(q|p), and the use of the Ramsey test to evaluate conditionals. Accounts are given in this chapter of the psychological experiments in the new paradigm that confirm empirical hypotheses inspired by her work and other philosophical sources.

Children Only 3 Years Old Can Succeed at Conditional “If, Then” Reasoning, Much Earlier Than Anyone Had Thought Possible

That conditional, if-then reasoning does not emerge until 4–5 years has long been accepted. Here we show that children barely 3 years old can do conditional reasoning. All that was needed was a superficial change to the stimuli: When color was a property of the shapes (line drawings of a star and truck) rather than of the background (as in all past conditional discrimination [CD] testing), 3-year-olds could succeed. Three-year-olds do not seem to use color to inform them which shape is correct unless color is a property of the shapes themselves. While CD requires integrating color and shape information, the dimensional change card sort (DCCS) task requires keeping those dimension cognitively separate – inhibiting attention to one (e.g., shape) when sorting by the other (e.g., color). For DCCS, a superficial change to the stimuli that is the inverse of what helps on CD enables 3-year-olds to succeed when normally they do not until ∼4⁤12 years. As we and others have previously shown, 3-year-olds can succeed at DCCS when color is a property of the background (e.g., a white truck on a red background), instead of a property of the stimulus (e.g., a red truck on a white background, as in standard DCCS). Our findings on CD and DCCS suggest that scaffolding preschoolers’ emerging conceptual skills by changing the way stimuli look (perceptual bootstrapping) enables 3-year-olds to demonstrate reasoning abilities long thought beyond their grasp. Evidently, children of 3 years have difficulty mentally separating dimensions (e.g., color and shape) of the same object and difficulty mentally integrating dimensions not part of the same object. Our present CD findings plus our earlier DCCS findings provide strong evidence against prominent cognitive complexity, conditional reasoning, and graded memory theories for why 3-year-olds fail these two tasks. The ways we have traditionally queried children may have obscured the budding reasoning competencies present at 3 years of age.

Conditional Reasoning Part I

Three types of conditional are distinguished: the material conditional, indicative conditional, and subjunctive/counterfactual conditional. The apparent difference in truth conditions of each is suggestive of different psychological procedures used in the evaluation of each. The psychology of the material conditional is then examined. Despite procedures in formal logic that are suggestive of sui generis imaginative states (e.g., “assuming” a proposition for conditional proof, or for reductio), we need not countenance the use of such states within the psychological procedures used to carry out the inferences. Further, work in psychology has long suggested that humans do not, as a rule, reason in accordance with normative standards appropriate to the material conditional. A popular alternative proposal in psychology is that conditional reasoning involves the use of mental models (Johnson-Laird & Byrne, 2002). The use of mental models is shown to be consistent with conditional reasoning involving only sequences of beliefs.

Conditional Reasoning Part II

The influential idea that the Ramsey test provides a proper analysis of the psychological means by which we evaluate indicative and subjunctive conditionals is explained. Several recent views have implicated sui generis imaginative states in the psychological implementation of the Ramsey test. The comparative relevance of the Ramsey test to indicative and subjunctive conditionals is explained. It is then argued that one can accept the basic insight afforded by the Ramsey test without concluding that sui generis imaginative states are used in conditional reasoning. A simpler, more parsimonious approach involves only beliefs. Anyone who could have used sui generis imaginative states to arrive at a belief in a new conditional via the Ramsey test could have, with equal warrant, inferred the conditional from their standing beliefs. Finally, it is shown how the imaginings that occur in response to philosophical thought experiments can in fact be sequences of beliefs.

From Discursive Practice to Logic? Remarks on Logical Expressivism

This paper investigates Robert Brandom's programme of logical expressivism and in the processattempts to clarify his use of the term practice, by means of a comparison with the works of sociologistand anthropologist Pierre Bourdieu. The key claim of logical expressivisim is the ideathat logical terms serve to make explicit the inferential relations between statements which alreadyhold implicitly in a discursive practice that lacks such terms in its vocabulary. Along with this, itis claimed that the formal validity of an argument is derivative on so-called material inference, inthat an inference is taken to be logically valid only if it is a materially good inference and cannotbe made into a bad inference by substituting nonlogical for nonlogical vocabulary in its premisesand conclusion. We note that no systematic account of logical validity employing this substitutionalmethod has been offered to date; rather, proposals by e.g. Lance and Kremer, Piwek, Kibbleand Brandom himself have followed the more conventional path of developing a formally definedsystem which is informally associated with natural language examples. We suggest a number of refinementsto Brandom’s account of conditionals and of validity, supported by analysis of linguisticexamples including material from the SNLI and MultiNLI corpora and a review of relevant literature.The analysis suggests that Brandom’s expressivist programme faces formidable challengesonce exposed to a wide range of linguistic data, and may not in fact be realisable owing to thepervasive context-dependence of linguistic expressions, including 'logical' vocabulary. A furtherclaim of this paper is that a purely assertional practice may not provide an adequate basis for conditionalreasoning, but that a more promising route is provided by the introduction of imperatives,as in so-called "pseudo-imperatives" such as "Get individuals to invest their time and the fundingwill follow". We conclude the resulting dialogical analysis of conditional reasoning is faithful toBrandom's Sellarsian intuition of linguistic practice as a game of giving and asking for reasons, andconjecture that language is best analysed not as a system of rules but as a Wittgensteinian repertoireof evolving micro-practices.