I’ve just seen [this article on negotiating salary]1. I don’t really care about the article (advice seems sensible enough) but the analogy used misunderstands the classic economic interpretation of the ultimatum game  [zotpressInText item=”{AU5WTEZH}”]. In that game a player is told to split some utility (usually money ~$10), with a partner. IF that partner accepts, then the money is divided as suggested, if they reject then neither party receives any money. The classic interpretation is that players should make low offers, and accept any offer >0 (about which they are ambivalent) because any money is free money. Perhaps inevitably this is not what happens – players tend to offer ~40%, and tend to reject offers of under ~20% fairly consistently. There are ways of manipulating this (including the manipulation in my undergrad dissertation around manipulating an “average offer” anchor) but the general principle holds. Anyway, this got me thinking, I wonder how economic and epistemic psychology relate. For example, we’d be interested in cases where epistemic properties are at play in economic decisions – for example, reviews, policy decisions, etc. where part of the expected utility would be related to judgements regarding one’s knowledge of the situation (and the epistemic-commitments tied up in that knowledge). That interaction might happen in both directions: Epistemic properties impacting on economic decisions, and economic properties impacting on epistemic decisions. An example of the former would be the premiums people place on properties of ‘reviews’ – how much more are you willing to pay if you have information of kind ‘x’ (reputation ranking, comparison to other products, etc.) and how does that vary across populations. On the latter, it’d be particularly interesting to see if economic factors play a role in epistemic decisions; for example, this might be the case in some environmental decisions, in which the economic costs of interventions colour the way in which evidence is interpreted for their necessity. Obvious experiment here is to create a study asking for an assessment of relative risks/weight of evidence/’best supported claims’ around some intervention (as long as it’s non-economic in nature), with two conditions (a) high cost, (b) low cost. On a larger scale I’m also interested in the ‘risk management’ element of the new fee regime (students pay full fee in expectation they reap personal benefit, so should maximise individual utility. Ignores social good of education, etc.etc.) …but that is for another time… Wonder if anyone’s seen anything like this? [zotpress items=”AU5WTEZH” style=”apa” sort=”DESC”]


  1. http://cheekyscientist.com/negotiate-salary/