biased memory recall

Asymmetric Memory Recall of Positive and Negative Events in Social Interactions
[Experimental Economics, 2013, Volume 16, Issue 3, pp 248-262]
Previous studies have suggested that negative emotion can enhance memory accuracy. However, they were not conducted in the context of social interactions involving moral sentiments. Based on the present study, we find that in such a context, individuals’ memory recall accuracy depends on the kindness of acts and who performed them, and negative emotion may lower memory accuracy. A victim of an unkind act is more likely to forget than someone who benefited from a kind act. This result supports the hypothesis that individuals may strategically manipulate their memory by forgetting an unpleasant experience. We also find that individuals who committed an unkind act tend to perceive it as less unkind as time moves on. They also tend to believe that a higher percentage of players have also committed the unkind act. Overall, the results support the hypothesis that individuals strategically manipulate their memory and beliefs to maintain self-esteem or feel less guilty.

“Real-life investors’ memory recall bias: A lab-in-the-field experiment” (with Rong Kang)
[Journal of Behavioral and Experimental Finance, Volume 37, 100760]
We conduct a lab-in-the field experiment to investigate the memory recall bias of real-life investors who are asked to recall their best performing stock (BPS) and worst performing stock (WPS). We have four main findings. First, investors are more likely to forget WPS than BPS. The proportion of investors who forget WPS and remember BPS is higher than that of those who forget BPS and remember WPS. Second, less experienced investors are more likely to forget WPS than more experienced investors. Third, present biased investors are more likely to forget WPS. Four, investors who pay more attention to stock prices are more likely to forget WPS. Overall, our findings suggest that investors exhibit motivated memory recall bias.

“Memory Recall Bias of Overconfident and Underconfident Individuals after Feedback” 
Games, 13, no. 3: 41. (Special issue in Economics of Motivated Beliefs)
We experimentally investigate the memory recall bias of overconfident (underconfident) individuals after receiving feedback on their overconfidence (underconfidence). Our study differs from the literature by identifying the recall pattern conditional on subjects’ overconfidence/underconfidence. We obtain the following results. First, overconfident (underconfident) subjects exhibit overconfident (underconfident) recall despite receiving feedback on their overconfidence (underconfidence). Second, awareness of one’s overconfidence or underconfidence does not eliminate memory recall bias. Third, the primacy effect is stronger than the recency effect. Overall, our results suggest that memory recall bias is mainly due to motivated beliefs of sophisticated decision makers rather than naïve decision-making.

LANGUAGE

​How does language affect decision-making in social interactions and decision biases?
​​(Journal of Economic Psychology, 2017, Vol. 61, 15-28)
This paper investigates how communication in a particular language affects decision-making in social interactions and risk preferences. We test two competing hypotheses: the cognitive accessibility hypothesis, and the expectation-based hypothesis. The cognitive accessibility hypothesis argues that communication in a particular language will activate the underlying cultural frame and affect behavior. The expectation-based hypothesis argues that different languages will induce different expectations regarding the choices of others and affect behavior. We test these two hypotheses using an extensive range of behaviors in a set of incentivized experiments with bilingual subjects in Chinese and English. We find that the subjects are more prosocial in strategic interaction games (trust games) when the experiments are conducted in Chinese. However, no treatment effects are observed in the individual choice games on social preference. The results are more in line with the expectation-based hypothesis.

Preference for control, and preference for randomization

Preference towards Control in Risk Taking: Control, No Control, or Randomize?
[Journal of Risk and Uncertainty, August 2011, Volume 43, Issue 1, pp 39-63]
This paper experimentally investigates preference towards different methods of control in risk taking.  Participants are asked to choose between different ways for choosing which numbers to bet on for a gamble. They can choose the numbers themselves (control), let the experimenter choose (no control), or randomize. Classical economic theories predict indifference among the three methods. We found that participants exhibit strict preference for control, preference for no control, and preference for randomization. These preferences are robust as participants are willing to pay a small amount of money to implement their preferred method. Most participants believe that the winning probability under different methods is the same. This result contributes to the literature by clarifying that for most participants who exhibit preference for control, their preference is not due to illusion of control, but by source preference. We also found that preference towards control affects investment amount. Participants invest less in the risky gamble when they are not offered their preferred method.