Towards understanding choice biases

© 2019 Campbell Gregor PryorOur choices can often be biased in systematic ways. In this thesis, we study the cognitive mechanisms driving two prominent choice biases: the endowment effect and the descriptive norm effect. The endowment effect, a tendency to assign higher value to something you own, is typically explained based on loss aversion. A finding that the endowment effect reverses for choices between undesirable options has been taken as evidence against loss aversion. We find that these reversals are driven by people’s expectations and only seem to occur when comparisons between the options are limited. We outline a model of loss aversion that can qualitatively and quantitatively account for these results. The descriptive norm effect, a bias towards popular options, is typically explained based on the fact that descriptive norms offer useful information as to which option is best. We show that descriptive norm effects occur even when the norm is entirely arbitrary and thus offers no useful information. Another prominent explanation of the descriptive norm effect, self categorization theory, can explain the impact of these arbitrary norms. However, this theory predicts that people will avoid conforming to descriptive norms from an outgroup. We find this not to be the case, with participants’ preferences shifting towards outgroup descriptive norms. We discuss how mechanisms from the broader choice bias literature could in principle explain our findings