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Psychology of Economic Behavior Summary - All articles
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Summary of the articles for the course "The Psychology of Economic Behavior". Exam grade: 8
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Psychology of Economic Behavior – Summary done by SL1. Dispositional Greed (Seutjens, van de Ven, Zeelenberg & Breugelmans)
Abstract
Greed is seen as both productive (a source of ambition; the motor of the economy) and destructive
(undermining social relationships). Study 1 provides evidence for the construct and discriminant
validity of the Dispositional Greed Scale (DGS) in terms of positive correlations with maximization,
self-interest, envy, materialism, and impulsiveness, and negative correlations with self-control and
life satisfaction. Study 2 discriminate validity, finding that the DGS predicts greedy behavioral
tendencies over and above materialism. The DGS predicts economic behavior: greedy people allocate
more money to themselves in dictator games and ultimatum games and take more in a resource
dilemma.
Introduction
-Greed is grounded in the idea that greed is dispositional, and that it differs from other, related,
dispositions.
-Greed motivates to perform better but also has destructive consequences for society. Greed has
been related to acquisition of wealth, and is seen as productive on the one hand, and as harmful to
relationships on the other hand.
>Greed can be good (constructive) and bad (destructive)
>Example: Positive economic outcomes and adverse economic consequences
-Axiom of greed/maximization: If A contains more of one good than B, and at least as much as B of all
other goods, A will be preferred over B.
>Accordingly, people should always want more of a desirable good, and prefer the option
that delivers on this desire.
-Core experience of greed is both the desire to acquire more and the dissatisfaction of never having
enough.
-Greed is also experienced for nonmaterial desires (sex, food, power, etc.)
-Greed is separate from maximizing
>Maximizers: Goal is to make best decision possible.
>Greedy people just want more. Wanting more does not necessarily involve a
rational balancing of costs and benefits.
→ Maximization is desire to acquire the best outcome, whereas greed is desire to
acquire more
-Greed is different from self-interest.
-Self-interest: rational actors care only about their own outcomes and are indifferent
with respect to outcomes of others.
-self-interest is rational, greed does not seem to be a consistently rational drive
>e.g., going in debt to buy desired product
-Greed and envy use different comparisons but both feelings of not being happy with current
state of affairs.
-Greed: compare own situation to an imaginary situation of having more
-Envy: compare situation to that of others who are better off.
>Envy requires two people to occur, whereas greed only requires one.
>Envy: social comparison (wanting what others have); Greed: individualistic (wanting
more than I have now)
, → Both related to being dissatisfied and wanting more.
-Greed and materialism related but not same = greed does not only apply to material goods
→ Greed is distinct motive from maximization, self-interest, envy and materialism
Study 1
-Use of Dispositional Greed Scale (DGS)
-The older you get, the less you score on the DGS (less greedy)
-Correlation between dispositional greed and self-interest, envy, materialism and maximization. But
greed is also distinct from these constructs.
-Greedy people …
>spend money more easily (more spendthrift)
>are generally more impulsive (lower self-control, higher impulsivity)
>have lower well-being (lower self-esteem, lower satisfaction with life)
-have less concern for others
Study 2
-Test how greed and materialism relate to each other.
>Materialism is associated with desire for material goods, whereas greed was also associated with
desire for nonmaterial goods. Greed is a broader concept.
Study 3
-Played the dictator game and predicted that greed results in choices that ensure people of larger
outcomes, even at the expense of others
>The greedier an individual was, the more money they allocated to themselves, thus creating more
unfair offers that left less money for the other person.
Study 4
-Whether and how greed was related to behavior in an ultimatum game.
>Greedy people are more likely to keep more money to themselves and make unfair offers. The
amount of money proposers allocated to themselves was driven by higher greed motivations and
lower fairness motivations.
>Greedy individuals more likely to consider an offer made by proposer too low and reject offer.
>reject out of greed concern and not because it was more unfair.
→Greed operates independently of fairness motives and is purely driven by size of pay-off.
Study 5
-If dispositional greed predicts people’s harvesting behavior in a resource dilemma.
>Greedy people overharvest from common resource (which is bad for the collective)
>Effect of dispositional greed on harvesting completely mediated by motivation of acquisition
(“desire to obtain as much of the resource as possible for oneself”) and not by motivation of
apprehension (“expectation that others will be trying to obtain as much as possible for themselves”).
→ Greedy people more likely to overharvest because of acquisitiveness motivations, rather than
because of the expectancy that others will overharvest.
→Greed is the dissatisfaction of not having enough, combined with the desire to acquire more.
,1. When Choice is Demotivating: Can One Desire Too Much of a Good Thing? (Iyengar & Lepper)
Abstract
People are more likely to purchase jams or chocolates or to undertake optional class essay
assignments when offered a limited array of 6 choices rather than a more extensive array of 24 or 30
choices. They reported greater subsequent satisfaction with their selections and wrote better essays
when their original set of options had been limited.
Introduction
-as both the number of options and the information about options increases, people tend to consider
fewer choices and to process a smaller fraction of the overall information available.
>as complexity of making choices rises, people tend to simplify their decision-making
processes by relying on simple heuristics.
>Increase of percentage of using elimination strategy and decrease of percentage of
information used as number of alternatives increases.
Choice overload hypothesis: Although the provision of extensive choices may sometimes still be seen
as initially desirable, it may also prove unexpectedly demotivating in the end.
Study 1
-Limited (6) vs. extensive (24) selection of jam
>Measuring initial attraction to tasting booth and subsequent purchasing behavior
>More attracted to extensive selection than limited one.
-Variety is more attractive
-Amount of tasting the sampling was the same for both conditions
>More people purchased jam in limited one than extensive one.
→Having more choices is more desirable and intrinsically motivating, but can reduce subsequent
motivation to purchase product because they are overwhelmed.
Study 2
-6 vs. 30 potential essay topics (in educational setting)
>Students assigned to limited-choice condition performed slightly better than those assigned to
extensive-choice condition.
-Same choice selected from limited-choice set can lead to better performance than if same
option is selected from an extensive-choice set
→Extensive choice set more likely to hamper people’s intrinsic motivation.
> Possibility that people use a choice-making heuristic that leads them to feel less committed
to exercising their preferences.
>when people have “too many” options, they strive to end the choice-making ordeal by
finding a choice that is merely satisfactory, rather than optimal. Doing otherwise would
demand more effort than seems justified.
Study 3
Participants made a selection from either a limited array or an extensive array of chocolate.
Subsequently, participants in experimental group sampled the chocolate of their choosing, whereas
participants in control group sampled a chocolate that was chose for them. Participants’ initial
satisfaction with the choosing process, their expectations concerning the choices they had made,
their subsequent satisfaction with their sampled chocolate, and their later purchasing behavior
, served as the four main dependent measures in this study.
>limited choice vs. extensive choice vs. no-choice control condition
-Hypothesis 1: people encountering extensive choices tend to use a satisficing heuristic, whereas
people encountering limited choices tend to use an optimizing heuristic.
-Hypothesis 2: People in extensive choice context feel more responsible for the choices they make.
>Feelings of responsibility may inhibit choosers from exercising their choices, out of fear of
later regret.
>No evidence for hypothesis 1: Both were predictably more confident that their chocolate selection
would satisfy them than that it would be among the best they had ever had.
>Participants did not perceive number of available alternatives to be an important variable in
their expected satisfaction with their choices.
>Both reported using satisficing heuristics.
>Choosing is more enjoyable in extensive choice set, but also felt more difficult and frustrating.
>More satisfaction derived from small choice set.
→ Choosers in extensive choice setting enjoy choice-making process more but also feel more
responsible for the choices, resulting in frustration with the choice-making process and
dissatisfaction with their choice.
>Greater dissatisfaction and regret exhibited by extensive-choice participants may be
the consequence of an initial greater tendency to disengage from the choice-making
process, which later results in chooser’s inability to use the psychological processes
for the enhancement of the attractiveness of their own choices.
-People rather choose money than chocolate in extensive choice condition. In low choice condition,
more people take the chocolate.
→More choices appear desirable but undermine choosers’ subsequent satisfaction and motivation.
1. Maximizing Versus Satisficing: Happiness is a Matter of Choice (Schwartz)
Abstract
Study 1 revealed negative correlations between maximization and happiness, optimism, self-esteem,
and life satisfaction, and positive correlations between maximization and depression, perfectionism,
and regret. Study 2 found maximizers less satisfied than satisficers with consumer decisions, and
more likely to engage in social comparison. Study 3 found maximizers more adversely affected by
upward social comparison. Study 4 found maximizers more sensitive to regret and less satisfied in an
ultimatum bargaining game. The interaction between maximizing and choice is discussed in terms of
regret, adaptation and self-blame.
Introduction
Rational choice theory: Explain preference and choice by assuming that people are rational choosers.
>Accordingly, people compare the options with one another on a single scale of preference,
or value, or utility. And after making the comparisons, people choose so as to maximize their
preferences, or values, or utilities.
→Implausible theory
-Satisficing: People only need to be able to place goods on some scale in terms of the degree of
satisfaction they will afford, and have a threshold of acceptability. A satisficer simply encounters and
evaluates goods until one is encountered that exceeds the acceptability threshold. The scale of
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