Results for “"control premium"” 4 found
Cass Sunstein on Twitter directs us to this paper (AEA gate), by David Owens, Zachary Grossman, and Ryan Fackler, entitled “The Control Premium: A Preference for Payoff Autonomy.” The abstract is here:
We document individuals’ willingness to pay to control their own payoff. Experiment participants choose whether to bet on themselves or on a partner answering a quiz question correctly. Given participants’ beliefs, which we elicit separately, expected-money maximizers would bet on themselves in 56.4 percent of the decisions. However, participants actually bet on themselves in 64.9 percent of their opportunities, reflecting an aggregate control premium. The average participant is willing to sacrifice 8 percent to 15 percent of expected asset-earnings to retain control. Thus, agents may incur costs to avoid delegating and studies inferring beliefs from choices may overestimate their results on overconfidence.
There are ungated versions here.
Few movies serve up more social science. Imagine three identical triplets, separated at a young age, and then reared separately in a poor family, in a middle class family, and in a well-off family. I can’t say much more without spoiling it all, but I’ll offer these points: listen closely, don’t take the apparent conclusion at face value, ponder the Pareto principle throughout, read up on “the control premium,” solve for how niche strategies change with the comparative statics (don’t forget Girard), and are they still guinea pigs? Excellent NYC cameos from the 1980s, and see Project Nim once you are done.
Definitely recommended, and I say don’t read any other reviews before going (they are mostly strongly positive).
3. Is this good or bad advice? (“Don’t mention the war!”) And “The University of Colorado’s Board of Regents will consider a proposal to remove the word “liberal” from a description of the university’s academic freedom principles.”
That is what the new Steve Levitt paper looks at and it does seem people stick with their current circumstances too much:
Little is known about whether people make good choices when facing important decisions. This paper reports on a large-scale randomized field experiment in which research subjects having difficulty making a decision flipped a coin to help determine their choice. For important decisions (e.g. quitting a job or ending a relationship), those who make a change (regardless of the outcome of the coin toss) report being substantially happier two months and six months later. This correlation, however, need not reflect a causal impact. To assess causality, I use the outcome of a coin toss. Individuals who are told by the coin toss to make a change are much more likely to make a change and are happier six months later than those who were told by the coin to maintain the status quo. The results of this paper suggest that people may be excessively cautious when facing life-changing choices.
Of course not all coin flips turn out the right way. And furthermore we all know that the control premium is one of the most underrated ideas in economics…