THE SABE NEWSLETTER
THE SOCIETY FOR THE
ADVANCEMENT OF BEHAVIORAL ECONOMICS
Statement
of Purpose
SABE is an association of scholars who
are committed to rigorous economic analysis and are interested in learning how
other disciplines – for example, psychology, sociology, anthropology, history,
political science, and biology - further our understanding of economic
behavior. An important function of SABE is to serve as a forum for research
which may not find either comprehension or acceptance in conventional economics
societies. SABE also aims at facilitating communication between economists and
scholars trained in related disciplines.
Vol. 13,
No. 1
Spring 2005
Editor: Simon James
School of Business and
Economics, University of Exeter, Streatham Court,
Exeter, EX4 4PU, United
Kingdom
Contributions for the next
issue are very welcome – email: S.R.James@ex.ac.uk
The
Role of the Adaptive Unconscious in
Economic Decision-Making by Shlomo Maital 2
SABE
Poster Session at the ASSA Meetings January 2005 4
IAREP 2005 Conference in Prague 4
SABE/IAREP
2006 Conference in Paris 5
SABE
2007 Conference 5
Call for Papers on Understanding the Behavior of the Firm 5
Call
for Papers for the Allied Social Science Association Meetings 6
Call for Papers: Behavioral Economics, Business Decision-Making
and Applied Policy 7
The
Journal of Socio-Economics 7
Books of Interest 8
SABE
Officers and Board 10
The Newsletter and Mailing List
10
The Role of the Adaptive Unconscious in
Economic Decision-Making
by Shlomo
Maital
Allo? Sam, CEO of Global Widgets, this is me, your gut, speaking. Your gut, your gut! Pick up the phone. Please!
Why don't you pick up? Ok, I'm leaving a voice message -- for the tenth
time. Sam! The guy you're about to
hire? Chuck? Don't hire him! I know, I know, he's got
loads of experience, a Harvard MBA, highly recommended..smart as a whip! But don't hire him. He's not a team
player. He'll ruin your senior
management team. He'll step all over
you. You know I'm telling the truth!
Why don't you listen? Sam -- pick
up the damn phone!....
Malcolm
Gladwell has a message for decision-makers.
Trust your gut.
Who
is he, and what does he mean?
Malcolm Gladwell understands nothing about global management or
behavioral economics, yet has written a very interesting and important book
about them. It is called "Blink:
The Power of Thinking Without Thinking".[1] His message is this:
Our
snap judgments and first impressions can be educated and controlled. Often they
are far better than our systematic decisions based on encyclopedic data.
Each of us has what psychologists call an
"adaptive unconscious". This
is the unconscious part of our brain that works like the Fire Department --
alert while we sleep, always on guard, processing information and sending us
warnings. Great decision-makers know
when and how to listen to it. Mediocre
ones never do.
Gladwell's book contains a wealth of evidence, based on interviews with
researchers. He describes intuitive
decision-making as Thin-Slice Decisions -- the ability to deduce, like Sherlock
Holmes, a major conclusion from tiny fragments of evidence, just as forensic
experts track a criminal from a few molecules of DNA. Often, he shows, we make far worse
decisions by collecting more and more data.
This
is not a book about snap judgments.
Those of us who are management educators work very hard to train global
managers to build systematic informed and disciplined decisions. It is about how the unconscious part of
our mind knows things the conscious brain does not -- and how to consult with
it, and listen to it.
Rather than recite the evidence, I choose to present one short case
study, taken from Blink, about a
manager who listened to his A.U., against fierce opposition, and
succeeded.
Case Study: The Aeron Chair
(Herman Miller)
An industrial designer named Bill Stumpf designed a radically new office
chair for furniture maker Herman Miller.
He called it the Aeron. Stumpf
made the most ergonomically correct chair ever conceived. The seat pan and the back of the Aeron chair
move independently, because otherwise undue stress is placed on our backs. The arms are fully adjustable. There is support for our shoulders - the top
of the chair is wider than the bottom.
It had a wire frame, and --it
looked weird.
The chair was tested for comfort. It scored 4.75 on a scale of 1 to 10. "Chair of Death", joked Herman Miller managers. Everyone thought it was a monstrosity. After changes, the comfort score rose to 8. But when people were asked if they liked how it looked, it scored below zero. So they put together a focus group of facility managers and ergonomic experts. They all said it would never sell to corporate clients. Dump it, they said.
Aeron project manager Bill Dowell had a hunch and went ahead
anyway. The chair attracted attention
from the cutting-edge of the design community. It won awards. In Silicon Valley it became a cult
object. It was cool. It appeared in films and on TV. By the end of the 1990s, Herman Miller
realized that it had on its hands the best-selling chair in the history of the
company. What seemed ugly had become
beautiful -- and had changed the rules of the game for office chairs.
--------------------------------------------------------------------------
Action
Learning: Do You Listen to Your A.U.?
1.
List on a piece of paper the last three important decisions you made. 2. For each, state whether your 'gut
feeling' played a role -- and if it did, how important? Did your 'gut feeling' match what the data
told you, or did it contradict them?
3. State whether each decision
turned out to be right, wrong, or in between.
In
general: What do you do, when your 'gut
feeling' goes directly against expert opinion and data?
____________________________________________________
Another successful SABE poster session
took place during the ASSA meetings on January 8 sponsored by the Industrial
Relations Research Association. The session was organized by Morris Altman,
Department of Economics, University of Saskatchewan and the chair was John
Tomer, Department of Economics and Finance, Manhattan College
The
participants were:
Reconstructing
of Buddhist Economics of Empress Wu Tse T’ien (625 702)
By: Glen
Alexandrin, Economics Department, Villanova University, Retired
Effort Discretion
and Economic Agency: Transforming Economic Theory and Public Policy
By: Morris
Altman, Department of Economics, University of Saskatchewan
Thirty Five
Years and 100 Research Papers Later. Empirical Evidence on X-Efficiency
Theory."
By: Roger Frantz,
Economics Department, San Diego State University
Will I Be a
Welfare Mother When I Grow Up? A Theory of Women’s Welfare Dependency,
Marriage, and Labor Supply
By Shoshana
Grossbard, Department of Economics, San Diego State University
Behavioral
Economic Studies of Suicide
By Bijou Yang
Lester, Department of Economics and International Business, Drexel University,
Philadelphia,
Impact of
Different Imitation Risks on Entry Modes by Multinational Firms
By: Thitima
Puttitanun, Department of Economics, San Diego State University
Price and
friends: is there relationship?
By: Natalia
Ovchinnikova, Department of Economics, University of Nebraska-Lincoln
Why We Need a
Commitment Approach to Environmental Policy
By: Thomas R.
Sadler and John F. Tomer, Department of Economics and Finance, Manhattan
College.
IAREP
2005 Conference in Prague
This conference ‘Absurdity in the Economy’ will take place in Prague, Czech Republic between 21st and 24th September 2005. Abstracts should have reached the National Organizer by May 1, 2005. The latest details are available at: http://iarep2005.unas.cz/
SABE/IAREP
2006 Conference in Paris
The Conference will be held on July 5-8,
2006, which is the beginning of the summer vacation period in France and
usually one of the best times of the year to visit Paris. All sessions will
take place on the premises of the Panthéon and Sorbonne, in the heart of the
‘Quartier Latin’. Louis Lévy-Garboua
will be in charge of the organization of this Conference in association
with Christine Roland-Lévy for IAREP, under the auspices of the University of
Paris I and the University of Paris V.
Call
for Papers on Understanding the Behavior of the Firm
for a special issue of the Journal of
Socio-Economics
Topics of interest include but are not limited to the following:
Editor of special issue: John F. Tomer,
Co-Editor, Journal of Socio-Economics (Elsevier)
Professor of Economics, Department of
Economics & Finance
Manhattan College, Riverdale, NY 10471
518 273-1851 (h); 718 862-7462 (o); jtomer@juno.com
Mail:
5 Grand View Ave., Troy, NY 12180
USA
Call
for Papers for the Allied Social Science Association Meetings
Boston,
January 6-8, 2006
The Society for the Advancement of
Behavioral Economics (SABE) will hold a poster session in conjunction with the
ASSA annual meetings in Boston, Saturday, January 7 (afternoon), 2006, Park
Plaza Hotel, in association with the Labor and Employment Relations
Association-LERA (formerly the Industrial Relations Research Association—IRRA)
58th Annual Meeting. You
are invited to submit a proposal for a
poster-paper to be presented in this session.
LERA will publish information on this
SABE session including the names of all SABE Poster participants in both the
on-line and hardcopy versions of its program.
LERA’s website address is: www.lera.uiuc.edu.
This year we also invite posters for new books in print or in press as well the
traditional type posters dealing with ones research.
Poster sessions encourage interaction
between presenters and the viewers. Posters can portray succinctly and
visually, either a model, theory, or an empirical study, and invite viewers to
discuss the paper with the presenter.
The SABE tradition is to allocate about 5
minutes to each poster presenter of a regular paper to discuss her or his work
as all presenters and other participants tour the SABE posters. Posters of
books, on the other hand, will simply be
on display. Below are instructions on how to prepare a poster.
If you've attended poster sessions before
(such as SABE's poster session at the ASSA meetings in Atlanta, New Orleans,
Chicago, New York, Boston, San Diego, and Washington, D.C., etc.), you know how
effective they can be. If you've never attended one—we invite you to try your
hand at
preparing one. We look forward to seeing
you, either as a presenter or viewer, in Washington.
Please send a brief proposal to Professor
Morris Altman: email: Altman@sask.usask.ca
Preparing a Poster
Posters are mounted on poster boards. The
space available for SABE's posters permits about 10 poster-papers to be
mounted. Specific instructions:
1. Prepare 4-5 pages on ordinary
letter-sized paper (8.5" x 11"). The written or graphic material
should fit inside a box measuring 5" x 6" (11.5cm x 15 cm).
2. Enlarge each page on 11" x
17" paper. For example, if you enlarge each page 41% twice, you get an
11" x 17" page twice the size of the original. If you use 12-point
print in your original, then after enlargement your print will be 24 point--big
enough to read easily, even
from a distance.
3. After enlargement, your poster-paper
should comprise 4-5 pages, each 11' x 17'. Each page should be numbered so that
they can be arranged in logical order on a Poster Board.
Page One: Title, Author(s), and a short
Abstract
Page Two: Main Results (perhaps as a
"bullet" list)
Pages Three and Four: Tables, Figures,
and/or Verbal Description of the Model.
Page Five: References
Call
for papers: ‘Behavioral Economics,
Business Decision-Making
and
Applied Policy’
Nathan Berg is guest editing a special
issue of Global Economics and Business Review on ‘Behavioral Economics,
Business Decision-Making and Applied Policy’.
The deadline is March, 2006 but he is encouraging interested authors to
submit ASAP to begin the review process. His email address is:
nberg@utdallas.edu
Journal of Socio-Economics
The mission of the Journal of
Socio-Economics is to promote interdisciplinary dialogue about economic
processes, institutions and policies. The core disciplines of interest to the
journal are those belonging to the social sciences. But other sciences and the
humanities are relevant and welcome. Biology, history and philosophy are of
particular interest. The journal is interested in pure theory, empirical
studies, policy analyses and literature reviews. The JSE is a widely distributed, peer
reviewed journal with a long historical association with SABE. For further
information see:
http://www.elsevier.com/homepage/sae/econworld/econbase/soceco/frame.htm
Books
of Interest
Paul J. Albanese, The Personality Continuum
and Consumer Behavior,Westport, CT:
Greenwood Publishing Group, 2002.
Morris Altman, Human Agency and Material Welfare: Revisions in Microeconomics and
their
Implications for Public Policy,
Boston, Dordtrecht, London: Kluwer Academic Publishers,
1996.
Morris Altman, Worker Satisfaction and Economic
Performance: Microfoundations of Success
and Failure.
Armonk, NY: M.E. Sharpe, 2001.
Gerrit Antonides, Psychology in Economics and Business, Dordrecht: Kluwer, 1991.
Samuel Cameron, The Economics of Sin:
Rational Choice or No Choice At All? Northampton,
MA: Elgar, 2002.
Young Back Choi, Paradigms and Conventions: Uncertainty, Decision Making and
Entrepreneurship,
Ann Arbor: University of Michigan Press, 1993.
Gerald A. Cory, Jr. The Reciprocal
Modular Brain in Economics and Politics, Kluwer Academic/Plenum Publishing,
1999.
Gerald A. Cory, The Consilient Brain:
The Bioneurological Basis of Economics, Society, and Politics. Kluwer Academic/Plenum
Publishing, 2004.
Richard Cyert and James G. March, A Behavioral Theory of the Firm, 2nd
ed. Cambridge, Mass:
Blackwell Business, 1992.
Peter E. Earl, Behavioral Economics, Edward Elgar Publishing, 1998.
Nancy Folbre, Economics and Family
Values, New York: The New Press, 2001.
Roger Frantz Two Minds.
Intuition and Analysis in the History of Economic Thought, Springer
(Kluwer), 2004.
Roger
S. Frantz, Hardinger Singh and James Gerber, eds, Behavioral Decision Making:
Handbook of Behavioral Economics, Greenwich: JAI Press, 1991.
Gerd
Gigerenzer and Reinhard Selten (eds.) Bounded Rationality: The Adaptive
Toolbox,
Cambridge, MA: The MIT Press, 2002.
David
George, Preference Pollution: How Markets Create the Desires We Dislike,
Ann Arbor:
University of Michigan Press, 2001.
Shoshana
Grossbard-Shechtman, On the Economics of
Marriage: A Theory of Marriage, Labor,
and Divorce. Boulder, Calorado: Westview Press, 1992.
Simon
James, ed., Taxation: Critical Perspectives on the World Economy. Four volumes,
London and New York, Routledge, 2002.
Simon
James and Christopher Nobes, The
Economics of Taxation, Principles, Policy and
Practice,
7th ed., revised, Prentice Hall, 2004.
Bill
Jordon, Simon James, Helen Kay and Marcus Redley, Trapped in Poverty: Labour Market
Decisions in Low Income Households. London: Routledge, 1992.
Bill
Jordan, Marcus Redley and Simon James, Putting
the Family First: Selves, Decisions
and
Citizenship,
University College London Press, 1994.
Margaret
Lamb, et al. (eds.) Taxation: An Interdisciplinary Approach to
Research, Oxford
University Press, 2005.
Tony
Lawson, Economics and Reality, London
and New York, Routledge, 1997.
Stephen
E.G. Lea, Paul Webley and Brian M. Young, eds., New Directions in Economic
Psychology: Theory,
Experiment and Application. United Kingdom: Edward Elgar Publishing,
1992.
David Lester & Bijou Yang, The Economy and Suicide: Economic
Perspectives on Suicide,
Commack, NY: Nova Science Publishers, 1997.
David Lester & Bijou Yang, Suicide
and Homicide in the 20th Century: Changes Over Time,
Commack, NY: Nova Science Publishers, 1998.
Alan
Lewis, Paul Webley and Adrian Furnham, The
New Economic Mind: The Social
Psychology of Economic Behaviour.
New York and London: Prentice Hall, 1995.
Shlomo
Maital and Sharon Maital, eds., Economics
and Psychology. United Kingdom:
Edward
Elgar Publishing, 1993.
Shlomo
Maital, Executive Economics: Ten
Essential Tools for Managers. New York: The Free
Press, 1994.
Roger
McCain, A Framework for Cognitive
Economics, New York: Praeger, 1992.
Hersh
Shefrin, Beyond Greed and Fear;
Understanding Behavioral Finance and the Psychology
of Investing,
Boston: Harvard Business School Press, 2000.
Robert
J. Shiller, Irrational Exuberance. With
a New Preface by the Author, Princeton University
Press, 2001.
Andrei
Schleifer, Inefficient Markets: An
Introduction to Behavioral Finance, Oxford University
Press, 2000.
A.
Allan Schmid, Conflict and Co-operation: Institutional and Behavioral
Economics, Blackwell, 2004.
Hugh
Schwartz, Rationality Gone Awry? Decision
Making Inconsistent with Economic and
Financial Theory,
Praeger, 2000.
Herbert
A. Simon, Administrative Behavior: A Study of Decision-Making Processes in
Administrative Organizations, The Free Press, 1997.
Richard
H. Thaler, ed., Advances in Behavioral
Finance, New York: Russell Sage Foundation,
1993.
John
F. Tomer, Organizational Capital: The
Path to Higher Productivity and Well-Being. New
York, Praeger, 1987.
John
F. Tomer The Human Firm: A Socio-Economic
Analysis of Its Behavior and Potential in a
New Economic Age,
New York: Routledge, 1999.
Karl-Erik
Warneryd, The Psychology of Saving: A
Study on Economic Psychology, Edward
Elgar, 1999.
Karl–Erik
Warneryd, Stock Market Psychology: How
People Value and Trade Stocks, Edward
Elgar, 2001.
SABE
Officers and Board
Morris Altman, University of
Saskatchewan, Canada, President.
Shlomo Maital, President Elect.
Gary Lynne, University of Nebraska,
Secretary.
Bijou Yang-Lester, Drexel University,
Treasurer
Simon James, University of Exeter, UK,
Editor, SABE Newsletter.
Gerrit Antonides, Wageningen University,
The Netherlands.
Roger Frantz, San Diego State University.
Flora Gill, University of Sydney, Australia
Shoshana Grossbard-Shechtman, San Diego
State University
Ewa Gucwa-Lesny, University of Warsaw,
Poland.
Louis Lévy-Garboua, University of Paris I
(Pantheon-Sorbonne), France.
Peter Lunt, University College, London.
Charlotte Phelps, Temple University.
Mark Pingle, University of Nevada, Reno.
Douglas Rebne, New York University.
Kevin Sontheimer, University of
Pittsburgh
John Tomer, Manhattan College.
If you have a change of email or regular
mail address please e-mail Nancy Rekart at
nrekart@unl.edu or send her a note – to Nancy Rekart, Office Supervisor,
102 Filley Hall, University of Nebraska-Lincoln, NE 68583-0922, USA.
[1] Malcolm Gladwell. Blink: The Power of Thinking Without Thinking. Little Brown, Boston: 2005. 277 pages.