This review proposes that implicit learning processes are the cognitive substrate of social intuition. This hypothesis is supported by (a) the conceptual correspondence between implicit learning and social intuition (nonverbal communication) and (b) a review of relevant neuropsychological (Huntington's and Parkinson's disease), neuroimaging, neurophysiological, and neuroanatomical data. It is concluded that the caudate and putamen, in the basal ganglia, are central components of both intuition and implicit learning, supporting the proposed relationship. Parallel, but distinct, processes of judgment and action are demonstrated at each of the social, cognitive, and neural levels of analysis. Additionally, explicit attempts to learn a sequence can interfere with implicit learning. The possible relevance of the computations of the basal ganglia to emotional appraisal, automatic evaluation, script processing, and decision making are discussed. These "feelings " have an efficiency of operation which it is impossi-ble for thought to match. Even our most highly intellectualized operations depend upon them as a "fringe " by which to guide our inferential movements. They give us our sense of rightness and wrongness, of what to select and emphasize and follow up, and what

Abstract not found

Economists usually assume that monetary incentives improve performance, and psychologists claim that the opposite may happen. We present and discuss a set of experiments designed to test these contrasting claims. We found that the effect of monetary compensation on performance was not monotonic. In the treatments in which money was offered, a larger amount yielded a higher performance. However, offering money did not always produce an improvement: subjects who were offered monetary incentives performed more poorly than those who were offered no compensation. Several possible interpretations of the results are discussed. I.

The O.J. Simpson “trial of the century ” in the mid-1990s captured the attention of the American populace more than any other public spectacle since the kidnaping of the Lindberg baby in the 1920s. A prominent football player and popular sportscaster was charged with a gruesome double homicide. The attorneys for the prosecution and defense were of various races and genders. The evidence presented on each side was at times amazingly simple, visual, and emotional, and at times was verbal, abstract, and probably incomprehensible to jurors. The witnesses included individuals of diverse styles, demeanors, and credibility. The jurors, the recipients of the messages from these various sources, were themselves a mixed group of people of diverse backgrounds, beliefs, and personal experiences who had to sift through the trial material and arrive at a decision as to whether the defendant had been proven guilty or not. The context in which all of this took place was at times tense and sad, and at times filled with humor and positive feelings. Not surprisingly, no experiment has ever captured the extraordinary complexity inherent in this situation, yet almost all of the variables present in this trial (and many not present) have been examined in the social psychological literature on attitude formation and change. This chapter provides an overview of research on these diverse variables and addresses the processes by which these variables are thought to result in influence. Although it has become a cliché to say that the attitude construct is the most indispensable concept in

doi 10.1287/mksc.1060.0254

Finance Meetings in Cambridge, Massachussetts, and the Public Choice Society meetings in Long Beach, California, for helpful comments, an anonymous electronic bulletin board benefactor and especially Lawrence Glosten for help with a proof. An Economic Approach to the Psychology of Change: Amnesia, Inertia, and Impulsiveness This paper models how imperfect memory affects the optimal continuity of policies. We examine the choices of a player (individual or firm) who observes previous actions but cannot remember the rationale for these actions. In a stable environment, the player optimally responds to memory loss with excess inertia, defined as a higher probability of following old policies than would occur under full recall. In a volatile environment, the player can exhibit excess impulsiveness (i.e., be more prone to follow new information signals). The model provides a memory-loss explanation for some documented psychological

This paper examines the effect of memory loss on the continuity of behavior. We consider a player (individual or #rm) who remembers previous actions but not underlying rationales. In a stable environment, relative to a fullrecall scenario, memory loss increases the probability of following old policies (inertia). In a volatile environment, memory loss can decrease this probability (impulsiveness) . The model provides a memory-loss explanation for some documented psychological biases, implies that inertia and organizational routines should be more important in stable environments than in volatile ones, and provides empirical implications relating memory and environmental variables to economic decisions

theories. I have discovered that theory is so sacred a cow in our discipline that my methodological articles have led more than a few colleagues to conclude that I am generally an opponent of theory. My contribution to this festschrift takes a further tack in describing costs of overemphasis on theory. It will no doubt strengthen the impression that I am against theory. Accordingly, I call attention to a quotation that I strongly endorse. I endorse it because I understand that the only way to relate empirical findings to practical applications is to have a theory that provides the basis for generalizing beyond the laboratory: "There is nothing so practical as a good theory" (Lewin, 1951, p. 20). This chapter builds on a recurring theme in Bill McGuire's methodological works, the description of researchers' strategies in terms of their potential to facilitate or hinder progress. A common property of many long-unresolved theoretical debates in psychology is the flexibility of the competi

Executive Compensation and Investor Clientele Executive compensation has increased dramatically in recent times, but so has trading volume and individual investor access to financial markets. We provide a model where due toalackofsophisticationortonaïveté, possibly arising from high opportunity costs of learning about accounting conventions and financial markets, small investors are unable to decipher true executive compensation accurately. Expected compensation is therefore higher when small investors form a more significant clientele in the market for a firm’s stock. Our model further suggests that increased information asymmetry between large and small traders may deter the entry of small investors and keep executive compensation in check. Technologies that lower the cost of trading facilitate entry of small investors and raise expected compensation. In general, such compensation can be reduced through requirements that increase disclosure transparency. Empirical tests provide support to the key implication of the model that indirect executive compensation is higher in stocks Issues surrounding executive compensation have taken on increased prominence in recent

ABSTRACT—The standard model of labor is one in which individuals trade their time and energy in return for monetary rewards. Building on Fiske’s relational theory (1992), we propose that there are two types of markets that determine relationships between effort and payment: monetary and social. We hypothesize that monetary markets are highly sensitive to the magnitude of compensation, whereas social markets are not. This perspective can shed light on the well-established observation that people sometimes expend more effort in exchange for no payment (a social market) than they expend when they receive low payment (a monetary market). Three experiments support these ideas. The experimental evidence also demonstrates that mixed markets (markets that include aspects of both social and monetary markets) more closely resemble monetary than social markets. People often need help accomplishing tasks such as moving their possessions to a new residence, painting a room, preparing tax returns, and even taking care of their offspring. When we ask for help, we may wonder whom to approach and how best to motivate him or her. Should we ask a professional or a friend? If we ask a friend, should we offer compensation? If so, how much should we offer, and what form of compensation would be most effective? Would cash or token rewards (e.g., personal gifts or chocolates) provide a stronger incentive? Finally, are there interactions between these factors such that different levels of incentives are more or less effective for different forms of compensation? Suppose, for example, that you are about to give birth (or pass a kidney stone) and want someone to be there to support and help you. You are faced with multiple options: You can ask friend A; you can hire a professional doula (a birthing coach); or you can ask friend B, who is also a professional doula. You want someone motivated to give you the best possible support despite Address correspondence to Dan Ariely, MIT, 38 Memorial Dr., E56-