Bargaining and Psychology Lecture Two:

Preferences, Beliefs, and LiesKeith Chen, Nov 10th 2004

Plan of Action Today: • Last time, talked about Fairness and Salience

• Today, Basic departures from “rational” beliefs and preferences.

• Biased Beliefs:

– Beliefs about you, others, credit and blame– Beliefs about events and values.

• Biased Preferences:

– Framing– Reference points, gains & losses.

• Lies and Deception

Biased Beliefs: • Beliefs about you & others:

• Correspondence Bias / Fundamental Attribution Error.

– People have a tendency to over-attribute the behavior of others to dispositional traits, and ignore situational forces.

• Broad Example of situational importance Genovese 30 min, 38 people

• More Specific Examples:

– Prompted Lectures, SES Des. From last time

Correspondence Bias

Perceivethe situation

Createbehavior

expectation

Perceivethe behavior

Attributethe behavior

Unrealistic Expectations

“Even when the observer is perfectly well aware of the actor’s situation, his or her expectations for behavior in that situation may be unrealistic.”

Incomplete Corrections

“Observers are unwilling or unable to correct the dispositional inferences that they seem to draw with relative spontaneity and ease.”

Value and Risk of BATNA

Low Agreeableness

High Emotional Stability

Low Agreeableness

Low Emotional Stability

High Agreeableness

High Emotional Stability

High Agreeableness

Low Emotional Stability

High Value BATNA

Low Value BATNA

Certain BATNA Risky BATNAMorris,Larrick & Su

Combined with Other Biases

• FAE can be especially dangerous to agreement when:

1. Combined with False Consensus, can produce naïve realism.

2. Tends to create situations in which common information revelation can be BAD,

• Many examples, especially in politics.

Biased Beliefs: • Overconfidence:

– Consistent with False Consensus?– Club West Example.

• Contrast this with false-consensus & naïve-realism effect.

– When Exceptionalism?

• Both examples of Self-Serving Bias.

Biased Belief Formation: • Confirmatory Bias:

– Fuzzy-screen example:– See this in search behavior– Leads to things like hot-hands fallacy– Tends to self-reinforce other biases

• Causes beliefs to diverge:

– Media and the Middle East– Clues as to the source: affirmation and these

biases.

Biased Preferences: • Framing, Reference Points, Gains & Losses

• Reference Point Effects:

– Anchoring– Gains, Losses and Narrow Framing

• Now, when we get back from break:

Lies and the Lying Liars who tell them.

What Makes a Lie?

• Intent important: The will to conceal or mislead crucial

• Notification

– Key that it is not an understood deception– We often give implicit consent

• Concealment

– Produces many of the same clues.

What is not a Lie?

• Secrecy- notification

• Broken promise- if no intent to break

• Failure to remember (an honest one)

• Self-deceit

– Cancer patient example– NASA Challenger example

• Natural liar/natural performer

Techniques of Lying

• Telling a false statement

• Telling the truth falsely

• Telling half truth

• Incorrect inference dodge

Why Lies Fail

• Inadequate Preparation - Consistency

– Liars who don’t plan their line or are unprepared to answer questions are likely to be exposed

– Can become overrehersed– Skillful liars don’t overcorrect (Clifford Irving)

• Emotions

– Hard to express unfelt emotions / conceal true feelings

Common Emotions of Lying

• Fear of being caught

– See this in Lie-detector protocols– Be careful of Othello's error

• Guilt

• Duping Delight

– The pleasure and excitement of “putting one over”

Leakage: Clues & Signs

• Hard to suppress strong emotions: Emblems

– Shows on face, posture, shoulders & hands– Often covered up by actions

• Facial expressions

– Masking smiles: in the eyes– Leaking in eyes and lip.

• Vocal Clues

– Increase in pitch often accompanies lies / strong emotions– Pause speech or slips: when trying to not say something

• Gestures- “Illustrators”

– Liars use fewer (less natural) hand or non-verbal gestures