Lecture 11: maximization and greed

Question 1

maximization

Answer 1

another assumption of economic theory
started with hyper choice

Question 2

Barry Shcwartz

Answer 2

wrote a paper on hyperchoice.
freedom leads to wellbeing and choice leads to freedom, so choice should lead to wellbeing.

Question 3

paradox of choice

Answer 3

more choice can make you unhappy, because you know of all the other things that are out there.

by Berry Schwartz

Question 4

choice overload Iyengar & Lepper (2000)

Answer 4

6 or 24 jams for people to try
- people were more interested in the 24 jams
- but bought more with the 6
people like choice but not choosing

similair study with 6 or 30 chocolates
- both were enjoyable
- choosing from 30 was frustrating
- more satisfied when choosing from 6

Question 5

hyperchoice and deciding

Answer 5

hyperchoice might interfere with decision making like postponing, but also buying more, because there is more.

Question 6

Herbert Simon on maximization

Answer 6

it is too complicated for people to maximize. they are bounded to their cognitive abilities, so they satisfice.

Question 7

satisfycing

Answer 7

choosing the first thing that is good enough. But because you can always switch in the end you will have maximized.

Question 8

maximization scale

Answer 8

• concepts
• items
• filled in by group
• see if they statistically hang together
• compare new measure to existing measures

Question 9

correlations between maximization and other things

Answer 9

• happiness negatively
• satisfaction negatively
• regret positively
• depression positively
• social comparison positively

Question 10

maximizers and satisfycers regret levels in the ultimatum game

Answer 10

with feedback maximizers offer more below 50/50 offers and found the opposite for satisfycers.

idea was that feedback on minimal acceptable offers leads to anticipated regret over high offers, which leads to lower offers. (schwartz thought this would especially be the case for maximizers)

Question 11

Joris Luyendijk

Answer 11

lived among bankers. he says the system is illiciting behavior in people, but also that the system selects certain people

Question 12

axiom of greed/maximization

Answer 12

if A contains more of one good than B, and at least as much as B of all the other goods, A will be preferred over B.

Question 13

Is greed good?

Answer 13

• economic growth and development
• leads to increased employment, wealth and wellbeing
• essential for human well-fare
• facilitates self-preservation; evolutionairy advantages

this was tested
- greedy people had less children, but more sex
- not more money
- were less happy

Question 14

ideas of the little research on greed

Answer 14

• idea was that greed makes marginal utility decrease less (less flat curve). greedy people still want more at a certain point
• delayed gratification is more difficult

Question 15

prototype definition of greed

Answer 15

greed is the experience of desiring to acquire more and the dissatisfaction of never having enough. it is associated with goals of materialism and feelings of envy and it may lead to self-interested behaviour and tunnel vision.

another definition says greed can only be greed if it does harm to others, but prof says you can still be greedy on a desserted island.

Question 16

dispositional greed scale

Answer 16

made this after the prototype definition
pretty normally distributed and had high test-retest reliability

scale had most correlation with materialism, but that was a bad scale

Question 17

who are the greedy?

Answer 17

• The older people are the less greedy (might be cohort effect)
• chinese study found that the richer you grow up the greedier you are, but only if you are an only child (was replicated in Netherlands)
• tiny effect that men are greedier, but other study found that women under 35 are greedier than men

Question 18

greedy behavior

Answer 18

• forest manage dilemma: greedy people harvest more
• dictator game: greedier people take more for themselves
• ultimatum game: proposer would keep more for themselves. greedier people also accepted more.

Question 19

greed in children

Answer 19

• greedier children keep more stickers
• greed scale developed for kids

Question 20

Nibud?

Answer 20

took the 3 most important items from the scale for the nibud and found that dispositional greed was the predictor for everything
- income
- expenses
- savings
- debt

Question 21

important principles for understanding economic behavior

Answer 21

• pursuit of wealth
• aversion to labour

Question 22

Keynes

Answer 22

thought that because of pursuit of wealth and aversion to labour in 2030 we would all be able to live the good life and only work 15 hours per week.

Question 23

why do people chase money their whole life?

Answer 23

• they don’t know when they are going to die
• they think it is nice to leave money

Question 24

overearning paradigm

Answer 24

study with a paradigm where people don’t know when they die, don’t like their work and don’t have children.
- people earned more chocolates than they consumed
- the greedier the people are the more they earn and overearn.

large replication did not find this effect

Question 25

study about aversion to labour

Answer 25

same study as overearning paradigm but had them rate the attractiveness of aspects
everybody hated the white noise, liked music and liked that they could earn chocolate (greedy people even more)
- both times the study was done there was overearning, but a bit less with the rating and it is moderated by greed.