Stephanie W. Wang

Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday

We study the effect of financial resources on decision-making. Low-income U.S. households are randomly assigned to receive an online survey before or after payday. The survey collects measures of cognitive function and administers risk and intertemporal choice tasks. The study design generates variation in cash, checking and savings balances, and expenditures. Before-payday participants behave as if they are more present-biased when making intertemporal choices about monetary rewards but not when making intertemporal choices about non-monetary real-effort tasks. Nor do we find before-after differences in risk-taking, the quality of decision-making, the performance in cognitive function tasks, or in heuristic judgments.

What kind of memory supports visual marking

In visual search tasks, if a set of items is presented for 1 s before another set of new items (containing the target) is added, search can be restricted to the new set. The process that eliminates old items from search is visual marking. This study investigates the kind of memory that distinguishes the old items from the new items during search. Using an accuracy paradigm in which perfect marking results in 100% accuracy and lack of marking results in near chance performance, the authors show that search can be restricted to new items not by visual short-term memory (VSTM) of old locations but by a limited capacity and slow-decaying VSTM of new locations and a high capacity and fast-decaying memory for asynchrony.

Does recession reduce global health aid? evidence from 15 high-income countries, 1975-2007

OBJECTIVE To test the hypothesis that economic recessions lead to reduced global development assistance for health (DAH). METHODS Data obtained from the Creditor Reporting System of the Organisation for Economic Co-operation and Development (OECD) for 15 OECD countries were used to model the percentage change (relative difference) in commitments and disbursements for DAH as a function of three measures of economic recession: recessionary year (as a dummy variable with 0 for no recession and 1 for recession), percentage change in per capita gross domestic product and percentage point change in unemployment rate for recessionary cycles from 1975 through 2007. We looked for an association both during the concurrent recessionary year and one and two years later. FINDINGS No statistically significant association was found in the short or long run between measures of economic recession and the amount of official DAH committed or disbursed. CONCLUSION Any important decrease in overall DAH following the current economic recession would have little historical precedent and claims of inevitability would be unjustifiable.

Belief Updating in Sequential Games of Two-Sided Incomplete Information: An Experimental Study of a Crisis Bargaining Model

We investigate theoretically and experimentally the crisis bargaining model, a dynamic game of two-sided incomplete information with player types drawn from a commonly known distribution. Little work has been done to analyze whether and how players update their beliefs in such games.Within the experiment we elicited beliefs from players about their opponents type using a proper scoring rule. We implement two treatments that vary the cost of backing down to the first mover after initial entry, generating sharp comparative static predictions in both beliefs and strategies. We find that players do update their beliefs in the predicted directions after observing some of the action choices. However, we highlight evidence of conservative updating relative to rational expectations.

Shared Visual Attention Reduces Hindsight Bias

Hindsight bias is the tendency to retrospectively think of outcomes as being more foreseeable than they actually were. It is a robust judgment bias and is difficult to correct (or “debias”). In the experiments reported here, we used a visual paradigm in which performers decided whether blurred photos contained humans. Evaluators, who saw the photos unblurred and thus knew whether a human was present, estimated the proportion of participants who guessed whether a human was present. The evaluators exhibited visual hindsight bias in a way that matched earlier data from judgments of historical events surprisingly closely. Using eye tracking, we showed that a higher correlation between the gaze patterns of performers and evaluators (shared attention) is associated with lower hindsight bias. This association was validated by a causal method for debiasing: Showing the gaze patterns of the performers to the evaluators as they viewed the stimuli reduced the extent of hindsight bias.