DP11949 Humans' (incorrect) distrust of reflective decisions

Author(s): Antonio Cabrales, Antonio Espin, Praveen Kujal, Stephen Rassenti
Publication Date: April 2017
Keyword(s): beliefs, dual-process, intuition, reflection, Trust, trustworthiness
Programme Areas: Labour Economics, Public Economics, Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11949

Recent experiments suggest that social behavior may be shaped by the time available for decision making. It is known that fast decision making relies more on intuition whereas slow decision making is affected by reflective processes. Little is known, however, about whether people correctly anticipate the effect of intuition vs. reflection on others' decision making. This is important in everyday situations where anticipating others' behavior is often essential. A good example of this is the extensively studied Trust Game where the trustor, by sending an amount of money to the trustee, runs the risk of being exploited by the trusteee's subsequent action. We use this game to study how trustors' choices are affected by whether trustees are externally forced to respond quickly or slowly. We also examine whether trustors' own tendency to stop and reflect on their intuitions (as measured by the Cognitive Reflection Test) moderates how they anticipate the effect of reflection on the behavior of trustees. We find that the least reflective trustors send less money when trustees are forced to respond "reflectively" rather than "intuitively", but we also argue that this is a wrong choice. In general, no group, including the ones with the largest number of reflective individuals, is good at anticipating the (positive) effect of forced delay on others' trustworthiness.