Are New York City cab drivers bad optimizers?

  Do NYC cab drivers quit too early when it rains? Students of judgment and decision making (aka behavioral economics) are familiar with the idea that cab drivers work until they hit an income target and then quit, ignoring opportunities to make more money on especially profitable days, such as when it rains. They probably get the idea from hearing people talk about the paper Labor Supply of New York City Cabdrivers: One Day at a Time. We say “hearing people talk about the paper” because that paper does not say that cab drivers make more money when it rains … Continue reading Are New York City cab drivers bad optimizers?

Metacognition matters

People Show “Blind Insight” Into Decision Making Performance People can gauge the accuracy of their decisions, even if their decision making performance itself is no better than chance, according to a new study published in Psychological Science, a journal of the Association for Psychological Science. This is a photo of a light bulb appearing above a woman’s head.In the study, people who showed chance-level decision making still reported greater confidence about decisions that turned out to be accurate and less confidence about decisions that turned out to be inaccurate. The findings suggest that the participants must have had some unconscious … Continue reading Metacognition matters

Nudge for texting

Chinese city opens ‘phone lane’ for texting pedestrians In Chongqing, China, with a degree of seriousness that has yet to be determined, the city authorities have designated a 30 metre (100ft) “cellphone lane” for people who use their phones while walking. “First mobile phone sidewalks in China,” declares a notice next to it. In fact, the Chongqing phone lane seems to be almost a direct copy of one that was painted on to 18th Street, Washington DC, in July. The Washington version was created for an experiment into crowd behaviour by the National Geographic TV channel. Which is a clue … Continue reading Nudge for texting

Google Effect vs. Paper Effect

  The “Paper Effect” – Note Something Down And You’re More Likely To Forget It Have you heard about the internet rewiring our brains and eating our memories? In her new book Mind Change, publicity expert Baroness Professor Susan Greenfield claims this is what’s happening. She describes the “Google Effect” where the internet becomes like an external memory bank. She cites research published in 2011 by Betsy Sparrow and colleagues – people who saved facts on a computer were less able to recall those facts later as compared with people who were told the facts would be erased. If we … Continue reading Google Effect vs. Paper Effect

Test your awareness

Fooled By Your Own Brain Attention is, by definition, limited. And that’s usually a good thing. If you’re searching for a lost earring on the floor, you want to ignore anything that’s not small and shiny. When talking to someone at a party, your mind helpfully tunes out all of the other voices prattling on around you. Sometimes, though, our exquisite attentional machinery can give us a warped version of reality. For example, try to figure out the culprit in this fictional murder mystery ….[READ] Continue reading Test your awareness

Why do we tip?

The Economics of Tipping My dinner companion sounded indignant. “It’s a shame we have to tip the waitress,” she said. “The restaurant owner ought to pay the staff enough to live on.” I imagine that is a common attitude among those steeped in our current cultural climate of envy and dislike of economic success — the anti-capitalist mentality, as Mises put it. It’s easy to fall into the trap of thinking that we tip waiters out of sympathy, due to their misfortune of having to work in an industry full of greedy restaurant owners who won’t pay a “living wage.” … Continue reading Why do we tip?

Is money bad?

Money Makes You Less Rational Than You Think Many of us believe that money brings out our calculating sides, inspiring decisions that are motivated by rational self-interest. But new evidence suggests that money does the opposite, leading to druglike mental states and irrational choices that are anything but sound. We get super weird around money, no doubt about it. Friends we thought we knew suddenly turn into different people when it comes time to pay the bill. Families get torn apart when loans aren’t paid back on time. We obsess over nickel-and-dime transactions, but then buy something crazy-expensive for something … Continue reading Is money bad?