Interaction Effects

When considering the factors affecting brand choice, Ambiguity Aversion could potentially be an important one. Ambiguity aversion refers to the behavior of individuals who show a higher preference for lotteries where the probabilities are known than for those with unknown probabilities. If you carry your own toilet paper to the toilet because you are afraid there might not be any, then you are ambiguity averse (as opposed to risk averse) because you don't know the probability of missing toilet paper.  An interesting study  (MWX, hereafter) argue that ambiguity aversion makes consumers more inclined to choose established brands. They suggest that if people have subjective beliefs of the choice described with precise probabilities and ambiguous probabilities, similar beliefs should arise by a choice between two brands that vary in terms of how people perceive the quality of the brands. They asked participants to choose between the following lotteries: Lottery A: R...

The answer to the question in the title is in the affirmative. Before you begin to question my judgment I should say that I have research to back this claim. In a study, participants were visited at home for a survey. The participants consisted of family dyads, romantic couples, and friendship dyads.  Dyad members knew each other, on average, for 16 years. They were given a booklet containing 30 products with the value of each product being around 20 euros. These products were selected based on some pretesting and were equally attractive to both genders. They were first asked to select 10 products that they would like to receive as a gift and then they were asked to select 10 products that they thought their relative/partner/friend would like to receive. The quality of gift selection was calculated for each participant as the number of gifts they chose, that also appeared on the list of the counterpart. This ranged from 0 to 10. They results of the study finds that women a...

It is well documented that poor people have poor well-being. Children who experience poverty have lower rates of school completion and lower cognitive ability than others. While some theories claim that the lower cognitive ability of the poor is due to lower levels of formal education, others believe that the characteristics of the poor people are at play. A study by Mani, Mullainathan, Shafir and Zhao (2012) takes a different approach and suggest that a sense of scarcity of money leaves the poor with fewer cognitive resources to guide their action. In a lab experiment, they found that when people with lower incomes were induced to think about their daily financial troubles, they performed much worse on subsequent tasks measuring cognitive ability, than those who were not induced to think about financial troubles. For people with higher incomes, however, inducing thoughts of financial scarcity had no effect. While the lab study is fascinating, a quasi-experimenta...

In the Movie Passengers, two passengers on a spaceship, heading to a new planet are in a discussion. The girl asks the guy why he gave up his life on Earth to begin a new life on a new planet. The man replies that he is a mechanic and that on Earth, if anything breaks, people replace it rather than repair it. A life on a new planet would allow him to use his skills to repair things. Indeed, people are increasingly choosing to replace rather than repair. For several products, it is easier and cheaper to replace it than to repair it. While this is true for items ranging from clothes to smartphones, it is still not true for items like cars. Given the high Divorce rates, I'm guessing replacing your spouse is also increasingly becoming a preferred choice. Apparently, in the future, they would be able to replace entire organs with an artificial organ printed using a 3D printer. The first negative consequence of this trend is a falling demand for careers that involve repairs....

Some Indians think that Indians are often late and traffic is usually the  excuse. A G reek  friend of mine says Greek people are known for their tardiness and an unexpected visit from a relative is often the excuse. I find it hard to believe this one but my Russian friend says that Russians are often late because it is bullshit to be early. These are narratives from people who base their opinion based on personal experience, the validity of which cannot be guaranteed. However, there are more rigorous studies that indeed find cross-cultural differences in punctuality.      " Participacion   Ciudadana ", the civic group behind a campaign in Ecuador, reckons that lateness costs Ecuador $724m (or 4.3% of GDP) each year (Cabral & Pacheco-de-Almeida , 2006).  Given the importance of punctuality in every aspect of life, it is important to look at the factors affecting  punctuality and to identify situations that are conducive to punctual ...

This article needs no motivation. The Return Trip Effect, which is the perception that the return trip seems shorter than the initial trip, even though the distance traveled and time spent traveling are identical, is observed by almost everyone I know.  I couldn't explain how this was possible until I recently came across a paper by Van de ven, Van Rijswijk, and Roy (2011), that we shall call VVR henceforth.  The first possible reason for the return trip effect could be that the initial trip deals with an unfamiliar and unpredictable route, whereas the return trip is relatively more familiar and predictable. Research has shown that unfamiliar or unpredictable tasks are often remembered to be longer than familiar or predictable ones. The second reason is motivated by research that suggests that people often underestimate the time required for tasks. If this is the case, then people are likely to underestimate the time of their initial tri...

For the most part of my time in the library, I need to wear a sweater. If I'm in the library for too long, then I sometimes have to wear a jacket above the sweater. I began thinking about why the library is so cold. Another way to think of this is as follows: given that the library is cold, why hasn't it gotten warmer. One reason for this could be, what researchers have christened, "Diffusion of responsibility". In a nutshell, it says that nobody takes responsibility ( telling the librarian that it is too cold) because they think someone else would do it. In the next few lines, you can read the process that goes on in my head and my conversation with a few others. Me to Myself: The library is too cold. Maybe it's just today. Me to Myself: The library is still cold. Maybe I feel cold because I am from the India. Me to Sophie: The library is too cold. Sophie: Yeah even I feel cold. I think a lower temperature is conducive to studying and so they deli...