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Mark Fallak

How associative memory shapes belief formation

Belief-based decisions are not only relevant for individual economic outcomes but may also have important effects on the economy as a whole. This is why belief formation is an important area of study for economists. briq has supported pioneering research on this topic, for example through workshops with leading international scholars (see the 2019 report and the program of the 2021 “Beliefs” workshop which took place in early May) and an ERC-supported project led by briq Research Director Florian Zimmermann.

In a video produced by Latest Thinking, Zimmermann explores the role that memory plays in belief formation. In particular, he studies associative recall, the way in which the recall of memory trace is triggered by cues that are mentally associated with that trace.

His experiment involves participants being provided with information (positive and negative) about hypothetical companies. After a time lapse, they are asked to assess the values of these companies. The research shows that respondents consistently overreact to the last piece of information that they receive. It also presents a new experimental paradigm for studying the role that associative recall and other memory imperfections play in the process of belief formation.

Why do some children lie and others don’t?

Reporting private information is a key part of economic decision making. A recent literature has found that many people have a preference for honest reporting, contrary to usual economic assumptions.

In a new working paper, Johannes Abeler, Armin Falk and Fabian Kosse investigate whether preferences for honesty are malleable and what determines them. Experimentally measuring preferences for honesty in a sample of children, the authors find that children from families with higher socio-economic status (SES) are more honest.

Causal effect of the social environment

The study uses data from the briq family panel, an annual survey of 700 families in the Cologne-Bonn region. To assess the causal effect of the social environment, children from low-SES households were randomly enrolled in a year-long mentoring program. The volunteer mentors spend an afternoon per week with the children and engage in interactive social activities such as cooking, playing football, or doing handicraft activities.

The mentoring program thus enriches the social environment of the children and widens their horizon by providing inputs and experiences that are potentially scarce in low-SES families and, at the same time, essential for the development of honesty preferences.

The researchers find that preferences for honesty are indeed malleable and that they can be changed by such an intervention: About four years after the end of the program, mentored children are significantly more honest. The results thus suggest that early-childhood interventions cannot just improve a child’s achievements but also affect their social and moral behavior.

Vaccination as an act of cooperation

Germany’s ongoing failure to organize a swift and efficient COVID-19 vaccine roll-out has dominated media reports in the past weeks. But even if the vaccination campaign were to pick up speed soon, the lack of willingness to get vaccinated among large parts of the population would still stand in the way of herd immunity. In several recent media articles, briq director Armin Falk addresses this problem and discusses possible solutions through the lens of behavioral economics.

As Falk points out, vaccination not only benefits the individual but society as a whole. Each administered shot takes pressure off the health care system, shortens the shutdown of public life, and helps protect members of society who cannot be vaccinated for medical reasons. This is why getting vaccinated is an act of cooperation and solidarity, as Falk explains in an op-ed for DIE ZEIT, Germany’s leading weekly newspaper. “Anti-vaxxers are free-riders of the worst sort,” he was also quoted in the Frankfurter Allgemeine Sonntagszeitung, one of Germany’s major weekend papers.

Since mandatory vaccination, which would be the most effective way to achieve herd immunity, was ruled out for political reasons in Germany as in most other countries, the question is how to achieve voluntary cooperation. From the perspective of behavioral psychology, people’s willingness to cooperate is strongly influenced by the behavior of others. “We need more media reports on positive vaccination experiences and should do more as a society to celebrate those who get vaccinated,” Falk suggests.

Also, individuals are more likely to cooperate the higher the benefits for themselves and society, and the lower the costs of cooperation. This implies that public awareness about the enormous benefits of the vaccine must be raised, while at the same time red tape surrounding the vaccine roll-out must be cut. Possible measures to promote vaccination, according to Falk, could also include paid leave for employees and free shuttle services to vaccination centers. Another solution that has been found effective in the context of organ donation would be a default mechanism that requires people to actively opt out.

Moreover, lab experiments show that cooperative individuals tend to flock together – also by excluding non-cooperative types. Falk therefore welcomes plans to exclude the unvaccinated from using private-sector services, such as air travel or restaurant visits. “After all, it’s not about granting privileges, it’s about giving back fundamental rights and freedoms,” Falk emphasizes in the German business weekly, WirtschaftsWoche.

“Restore fundamental freedoms for the vaccinated immediately”

He dismisses the argument that unequal treatment on the basis of vaccination would be unfair to those who have not had a chance to get vaccinated. “This would make some people better off without making anyone else worse off. Besides, even the unvaccinated would benefit if public life and the economy are revived again,” he told the Kölner Stadt-Anzeiger, the largest newspaper in the Cologne-Bonn region.

In the same interview, Falk also strongly criticizes the German government’s coronavirus response and public information strategy. From a behavioral perspective, “actively raising expectations time and again, only to disappoint them later, is much worse than just failing to deliver. This causes frustration and destroys trust.” Rather than making explicit promises, policymakers must strike a balance between encouragement and creating the credible impression that everyone is absolutely doing their best.

While other countries have ramped up vaccination with hands-on pragmatism, Germany’s efforts have been hampered by a sluggish bureaucracy and complex decision-making bodies stuck in a “mindset and political timidity that is clearly not crisis-proof.” According to Falk, adopting a more pragmatic, innovative and efficient approach to vaccination and rapid testing is the only chance for policymakers to regain trust and keep people compliant with the continuing coronavirus restrictions.

Self-image plays an important role for moral behavior

Several experimental studies have shown that social image concerns play an important role when people make decisions that may be perceived by others as immoral. A new study by Armin Falk, now published in the Journal of Economic Behavior & Organization, shows that individuals not only care about social image, but also about a positive image vis-à-vis themselves.

To study the causal impact of self-image concerns on moral behavior, Falk exposed subjects to a morally-relevant decision context while randomly varying self-image concerns. Participants in the experiment had the option to earn money by inflicting a painful, yet harmless, electric shock on another participant. A randomly selected group of participants saw their own face on the decision screen in a real-time video feed. To ensure that the behavioral effect can be attributed to self-image rather than the video as such, another group saw themselves in a mirror. Two control groups saw either no video at all or a neutral video.

As the figure shows, those who were confronted with their own image on the screen or in the mirror were significantly less likely to inflict pain on others in return for money. In other words, an exogenous increase in the salience of self-image reduces immoral behavior.

In terms of practical implications, Falk suggests that firms, organizations or tax authorities seeking to promote socially responsible behaviors may want to create environments that draw individuals’ attention to themselves when taking decisions.

briq now certified as a carbon-neutral institute

Behavioral aspects and inequality consequences of climate change are an important part of the briq research agenda. In order to also make our own contribution to limiting global warming, we have reduced our carbon footprint and acquired climate certificates to offset our remaining greenhouse gas emissions from buildings, events, and business travel.

Academic research at an internationally oriented institute like briq strongly relies on the scholarly exchange of thoughts and ideas. Current COVID-19 restrictions aside, regular visits by guest researchers and conference participants from all over the world cause CO2 emissions that cannot be fully avoided.

By implementing a number of targeted measures, including the modernization of our heating and lighting, we have been able to substantially reduce briq’s carbon footprint over the past years. For domestic business trips that cannot be substituted by videoconferencing, the preferred mode of transport is the German railway, whose long-distance trains run on green energy. Employees at briq are incentivized to use public transport for the commute to work and will soon have the option to use job bikes as well. Catering for seminars, workshops, and conferences has been switched to vegetarian meals that can be produced with significantly fewer greenhouse gas emissions than meats.

The remaining CO2 emissions stemming from briq’s business activities, as calculated for the year 2019 and certified by TÜV Rheinland, have been offset through investments in climate protection projects supported by the myclimate foundation. In line with our research focus, we have chosen to invest in projects that also contribute to a reduction of economic and social inequality. These include a project in Kenya enabling women through savings groups to afford an efficient cook stove which reduces the demand for firewood, as well as a project in Myanmar that combines mangrove restoration and women empowerment.

“The COVID-19 pandemic has drawn global attention away from the climate crisis even though climate change will likely pose a far greater threat to humankind. Tackling this huge challenge requires a contribution by everyone, no matter how big or small. By achieving carbon neutrality at briq, we hope to set an example for others to follow suit,” says briq Director Armin Falk.

Associative memory and belief formation

In a recent episode of “Behavioural Science Uncovered”, a podcast with a particular focus on the research process, briq Research Director Florian Zimmermann talks about his paper “Associative Memory and Belief Formation,” co-authored with Benjamin Enke and Frederik Schwerter.

Florian Zimmermann

The paper experimentally investigates the idea that people are more likely to recollect items that are cued by current context. This is because (i) people do not constantly have access to their beliefs so they may need to reconstruct prior information from memory; (ii) similar real-world news are often embedded in similar memorable contexts. The paper finds a predictable and quantitatively meaningful role of associative memory in the formation of beliefs.

To learn more about the paper and the origins of the project, but also about Florian’s experience preparing an ERC starting grant application, and what his typical working day looks like, tune in to the podcast at bsuncovered.com!