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.

Intrisic versus extrinsic motivations

“Crowding Out in the Labor Market: A Pro-Social Setting is Necessary”
(with Tanjim Hossain, University of Toronto)
[Management Science, 2014, 60(5), 1148-1160]
Recent studies, mostly from prosocial settings, suggest that monetary rewards may crowd out effort exertion by economic agents. We design a field experiment with data entry workers to investigate the extent of such crowding-out effects in a labor market. Using simple variations in the job description of a task, we induce a natural work setting under the work frame and emphasize social preference under the social frame. We find that crowding out of labor participation critically depends on framing—whereas small monetary rewards reduce the participation rate under the social frame, the participation rate is nondecreasing in the wage rate under the work frame. Moreover, among the workers who participate in the task, those who receive a positive wage perform a considerably higher amount of work than those who are paid zero wage under either frame. Thus, there is weak evidence of crowding out only when the task is explicitly given a prosocial flavor and not under a regular work setting. Furthermore, emphasizing social preference in the labor market in such a way reduces the overall labor supply and seems to have an adverse effect on the quality of work.

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.

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.