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Thoughts on Eric Johnson’s talk

Eric Johnson (a psychologist at the Columbia Business School) spoke today at the Decision Sciences seminar.

A fascinating talk

His topic was “decisions as memory” (maybe i’m getting the exact words wrong here), and the key idea was that, in the process of making a decision, a person queries his or her memory, thinking of good and bad aspects of different decision options. There’s lots of research on memory that covers all sorts of artifacts (for example, when you remember one item, you will be led to similar items). The idea of this research program is that, if memory is a key part of judgment and decision making, then many of the weird (or at least, non-normative) aspects of decision making–which have been studied by Kahneman, Tversky, and others over the years–can maybe be explained at a more cognitively basic level as quirks of how we remember things and how we access these memories.

My comments/questions

I had a bunch of comments on the talk (which will probably be incomprehensible unless you were there, but it’s helpful for me to put them down):

– Many of his examples were consumer purchases (buying a car, paying for a mug, deciding whether to eat dessert at a restaurant). He also said that the sort of tradeoffs people have are “too many things they want to do.” Later on he discussed the choice of which candidate to vote for in an election. I suspect there are big differences between self-focused consumer decisions and other-focused decisions about political preferences.

– Simmilarly, he referred to the “cost to buy that product, make that commute, prefer that policy.” Once again, I see a difference between buying a product (which involves personal costs and benefits) and choosing among policies (no personal costs, and with larger societal effects).

From a psychological perspective, I don’t have a problem with what Johnson was saying. All these decisions might involve accessing memories, so there might be important similarlities in how we think about these questions. But at some level it seems inappropriate to use the language of personal cost and choice to describe policy decisions.

– In discussing people’s willingness to donate organs upon their deaths, he referred to some suggestions that have been made to set up a market for human organs. He said that “a market implies that people have implicit preferences.” I don’t see why he said that. A market is a forum for buying and selling. Why are implicit preferences necessary? Or is he saying that a market would collapse if preferences are not implicit? I don’t understand.

– Also in discussing organ donation, he said that the reason people check off the “I’ll be a donor” box is in anticipation of their future happiness. He also said that “the benefits are the good feeling about being a donor.” When I checked off that box (or however I consented), I thought the benefits are that someone’s live might be saved after I die. Or maybe the benefit is just the aesthetic satisfaction of recycling. I don’t know exactly, but I wouldn’t really say it gave me a good feeling, or that I did it because I thought it would make me happy.

Once again, I’m fascinated by the idea of memory-querying being a key part of decision making. But I’m skeptical of the hedonistic framework being applied so indiscriminately.

– At some point during the talk I was thinking about Dave Krantz’s statement that hard decisions involve tradeoffs–tradeoffs between decision options, and tradeoffs between attributes of any given decision. Johnson’s theory didn’t seem to capture that struggle-in-my-mind that I feel when making a decision. (But, again, the theory has a really cool, unifying explanation of cognitive biases such as “anchoring.”)

– Johnson refes to decisions as “predicitons of future utility.” I don’t understand why he uses the term “utility.” In the decision-analytic literature, I always thought that “utility” is defined as that thing which, when averaged over, describes a set of consistent decisions (as in Neumann’s utility theory, where the very existence of utilities is derived from a set of axioms of consistent preferences). Since Johnson is working outside the “expected utility” framework, I don’t really know what he means when he talks about “utility” (or, for that matter, anticipated future utility).

– In describing a buy-the-mug experiment, he characterized the “endownment effect” by saying: “that’s a disturbing effect for economists.” Perhaps true–I expect Johnson knows more about economists’ views than I do–but if true, I’m disturbed that it’s a disturbing effect. I would think that economists’ main goal would be to describe and understand our commercial behavior, buying and selling, working, poverty and wealth, etc. Learning about the endowment effect should allow them to understand these things better–why would it be disturbing?

– He said something about the virtue of “choice” in retirement plans, which I didn’t quite follow because earlier he had said that people tend to choose the default retirement plan–which would seem to imply that most people don’t want choice in that aspect of their lives (or, at least, that they don’t want choice so badly that they would actually exercise it).

– Johnson is a professor of marketing. Some of the studies he described have the flavor of “subliminal advertising.” For example, changing the background of a web site affected what products people wanted to buy. Now, fundamentally, I don’t see anything wrong with this sort of manipulation–after all, the website has to have some background, so why not set it to get what you want. But at the same time there’s something vaguely creepy about it, no?

– From a political scientist’s perspective, this work reminded me of the studies of issue framing. The research goal would be to connect “framing” with “memory,” I guess.

Johnson et al.’s papers

The papers (by Eric Johnson, Elke Weber, and Daniel Goldstein) underlying the talk are here and here.

P.S. Links don’t work anymore!

One Comment

  1. deb says:

    1. Johnson refes to decisions as "predicitons of future utility." I don't understand why he uses the term "utility."

    Excellent question. Behavioral economists (i.e., decision psychologists like Kahneman, Tversky, Weber & Johnson) make a distinction between DECISION UTILITY which is the old vN&M utility inferred from observed choices and EXPERIENCE UTILITY which is the actual utility of the outcome. The distinction was made in a 1979 paper by Kahneman & Tversky.

    2.In describing a buy-the-mug experiment, he characterized the "endownment effect" by saying: "that's a disturbing effect for economists." Perhaps true–I expect Johnson knows more about economists' views than I do–but if true, I'm disturbed that it's a disturbing effect.

    Excellent point. Economists use as their null hypothesis a blatantly false model. This is rational – it rigs the game so it's easy to publish in economics just by debunking a straw man.

    You are right on the money with your observation that the fact that economists find the (endowment effect, framing effects, preference reversal, behavior in the ultimatum game, etc.) "disturbing" is one (of many) disturbing facts about the dismal so-called scientists.