People misperceive future valuations through projection. These misperceptions matter for intertemporal choice. Experience Helps.
This paper presents experimental and survey evidence that projection--the tendency to project one's current valuations or states onto the future---generates state-dependent behavior that can be attributed to time preferences, and that such state-dependence can be mitigated by experience. In a real-effort experiment, individuals' intertemporal choice is primarily driven by the randomized decision states rather than by time variation. This observed state dependence can be remedied by experiencing the exact states at the aggregate level, but persists for those with a higher projection tendency separately measured by a survey question. These findings help to disentangle the microfoundations of projection bias and present bias based on the presence of experience effects, and provide a rationale for perception- or simulation-based interventions to promote future-oriented behavior in applied settings.
Consumers prefer sellers who support consumers' values. Sellers anticipate this, and they respond by expressing support for these values but only when there are potential gains from trade.
We study consumers' concerns for the ideological values of their market counterparts and the implications of such concerns for the public promotion of values. Using a survey and online and laboratory experiments, we find that consumers are willing to pay premiums to exchange with counterparts who demonstrate support for their values. When sellers anticipate the possibility of market exchange, they exhibit public support for consumers’ values. Our findings challenge notions that market exchange is impersonal, suggest that public value positions can provide a dimension of firm differentiation, and provide evidence that market exchange can influence public support for ideological values.
People are influenced by biased narratives, even when they know the bias and the random assignment of those biased narratives. More information does not always help.
Can people counteract biased narratives with subsequent information? Using an online experiment where counteracting may have the best odds by design, we investigate this question by first randomly assigning subjects to read different narratives that contain the same facts, and then offering them the opportunity to acquire and process balanced arguments. We document three main findings. First, subjects shift their attitudes towards the standpoint of the randomly assigned narrative, knowing that the narrative is slanted and randomly assigned. Second, the opportunity to read additional arguments does not prompt subjects to counteract the persuasion effects of the initial narratives. Third, when evaluating subsequent arguments, participants find arguments aligned with the randomly assigned narrative more convincing. These findings remain qualitatively similar in additional treatments where the balanced arguments are provided two weeks after initial exposure to narratives. Only when we replace these arguments with the exact opposing narratives that subjects do not initially see are they able to fully counteract the effects. Taken together, our results highlight the importance of balanced and complete exposure at the outset in counteracting the influence of biased narratives.