1. Bargaining and Psychology Lecture Two: Preferences, Beliefs, and Lies Keith Chen, Nov 10 th 2004

2. Plan of Action Today: Last time, talked about Fairness and Salience Today, Basic departures from “rational” beliefs and preferences. Biased Beliefs: –Beliefs about you, others, credit and blame –Beliefs about events and values. Biased Preferences: –Framing –Reference points, gains & losses. Lies and Deception

3. Biased Beliefs: Beliefs about you & others: Correspondence Bias / Fundamental Attribution Error. –People have a tendency to over-attribute the behavior of others to dispositional traits, and ignore situational forces. Broad Example of situational importance Genovese 30 min, 38 people More Specific Examples: –Prompted Lectures, SES Des. From last time

4. Correspondence Bias Perceive the situation Create behavior expectation Perceive the behavior Attribute the behavior Unrealistic Expectations “Even when the observer is perfectly well aware of the actor’s situation, his or her expectations for behavior in that situation may be unrealistic.” Incomplete Corrections “Observers are unwilling or unable to correct the dispositional inferences that they seem to draw with relative spontaneity and ease.”

5. Value and Risk of BATNA Low Agreeableness High Emotional Stability Low Agreeableness Low Emotional Stability High Agreeableness High Emotional Stability High Agreeableness Low Emotional Stability High Value BATNA Low Value BATNA Certain BATNARisky BATNA Morris, Larrick & Su

6. Combined with Other Biases FAE can be especially dangerous to agreement when: 1.Combined with False Consensus, can produce naïve realism. 2.Tends to create situations in which common information revelation can be BAD, Many examples, especially in politics.

7. Biased Beliefs: Overconfidence: –Consistent with False Consensus? –Club West Example. Contrast this with false-consensus & naïve- realism effect. –When Exceptionalism? Both examples of Self-Serving Bias.

8. Biased Belief Formation: Confirmatory Bias: –Fuzzy-screen example: –See this in search behavior –Leads to things like hot-hands fallacy –Tends to self-reinforce other biases Causes beliefs to diverge: –Media and the Middle East –Clues as to the source: affirmation and these biases.

9. Biased Preferences: Framing, Reference Points, Gains & Losses Reference Point Effects: –Anchoring –Gains, Losses and Narrow Framing Now, when we get back from break: Lies and the Lying Liars who tell them.

10. What Makes a Lie? Intent important: The will to conceal or mislead crucial Notification –Key that it is not an understood deception –We often give implicit consent Concealment –Produces many of the same clues.

11. What is not a Lie? Secrecy- notification Broken promise- if no intent to break Failure to remember (an honest one) Self-deceit –Cancer patient example –NASA Challenger example Natural liar/natural performer

12. Techniques of Lying Telling a false statement Telling the truth falsely Telling half truth Incorrect inference dodge

13. Why Lies Fail Inadequate Preparation - Consistency –Liars who don’t plan their line or are unprepared to answer questions are likely to be exposed –Can become overrehersed –Skillful liars don’t overcorrect (Clifford Irving) Emotions –Hard to express unfelt emotions / conceal true feelings

14. Common Emotions of Lying Fear of being caught –See this in Lie-detector protocols –Be careful of Othello's error Guilt Duping Delight –The pleasure and excitement of “putting one over”

15. Leakage: Clues & Signs Hard to suppress strong emotions: Emblems –Shows on face, posture, shoulders & hands –Often covered up by actions Facial expressions –Masking smiles: in the eyes –Leaking in eyes and lip. Vocal Clues –Increase in pitch often accompanies lies / strong emotions –Pause speech or slips: when trying to not say something Gestures- “Illustrators” –Liars use fewer (less natural) hand or non-verbal gestures