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A major concern in today’s economic reality is the extent to which a sharing economy, in comparison with a traditional economy, promotes inequality. In the transformation from a traditional to a sharing economy, wage setting is replaced by contract pricing. The switch to contract trading implies that the party who carries out the labor evaluates the transaction from a buyer’s rather than a seller’s perspective. Drawing on psychological research on constructed and reference-dependent preferences, we predicted that the net valuation of work would decrease when the regimen involved contract trading. Three experiments ( N = 1,105) eliciting work valuation under the two regimens confirmed our prediction, thus pointing to a novel factor that increases inequality.

This article presents the first empirical study on whether anchors influence the interpretation of vague legal standards. To test this question, the article presents a series of stylized experiments that measure and compare participants’ interpretation of a vague norm after they were exposed to anchors. Overall, the results suggest that the content of substantive legal rules might be altered by anchors. This effect is documented in numerous legal settings (e.g., torts, corporate, copyright) and across both expert (i.e., experienced lawyers) and nonexpert (i.e., students) populations. Furthermore, the effect is shown to exist both when participants express judgments on a numeric scale and when they make dichotomous judgments that are detached from that scale. Based on these findings, the article revisits several long-standing legal debates and reevaluates their conclusions.

Significance Competition is prevalent. People often resort to unethical means to win (e.g., the recent Volkswagen scandal). Not surprisingly, competition is central to the study of economics, psychology, sociology, political science, and more. Although we know much about contestants’ behavior before and during competitions, we know little about contestants’ behavior after the competition has ended. Connecting postcompetition behaviors with preceding competition experience, we find that after a competition is over winners behave more dishonestly than losers in an unrelated subsequent task. Furthermore, the subsequent unethical behavior effect seems to depend on winning, rather than on mere success. Providing insight into the issue is important in gaining understanding of how unethical behavior may cascade from exposure to competitive settings.

Analyses of the impact of unpleasant experiences reveal two contradictory effects: direct studies of experienced utility reflect overweighting the peak (rare and most extreme) experience, but studies of decisions from experience reflect underweighting of the peak and reliance on the frequent experiences. The present research highlights the role of two contributors to this pattern. First, the results suggest that evaluations are more sensitive to rare events than decisions. It seems that the implied weighting of the peak experiences is a reflection of beliefs that affect evaluation and decisions in different ways. Second, the results show clear indications of underweighting rare events in ongoing decisions, but not in planning decisions. This pattern can be explained with the assertion of beliefs concerning the probability of the peak event is approximately accurate on average, but it changes from trial to trial. The potential value of these results is highlighted with a discussion of safety enhancement in industrial settings.

This article focuses on the influence of framing on the way people understand their contractual obligations. A large body of both psychological and economic studies suggests that people treat payoffs framed as gains and payoffs framed as losses distinctly. Building on these studies, we hypothesize that the ways parties understand their duties are affected by the way in which they are framed. More specifically, we expect that promisors will tend to adopt a more self-serving interpretation when they are making decisions in the domain of losses. To test this prediction, we run a series of four experiments that are all based on a between-subject design. The first two studies utilize experimental surveys that measure and compare participants' attitudes toward a contract interpretation dilemma. The third and fourth studies are incentive-compatible experiments, in which participants' actual interpretive decisions determine their payoff. All four experiments confirm our basic hypothesis and show that framing contractual payoffs as losses rather than as gains raises parties' tendency to interpret their obligations selfishly. These findings refine some of the previous understanding regarding the ability of penalties to optimize parties' contractual behavior, especially in situations in which monitoring is limited. Based on these findings, the article revisits some of the basic questions of contract law, shedding new light on an array of issues such as the law of liquidated damages and the optimal design of contracts.

Organizational monitoring relies frequently on self-reports (e.g., work hours, progress reports, travel expenses). A "one-by-one" policy requires employees to submit a series of reports (e.g., daily or itemized reports). An "all-at-once" policy requires an overall report (e.g., an annual or an overview report). Both policies use people’s self-reports to determine their pay, and both allow people to inflate their reports to get higher incentives, that is, to cheat. Objectively, people can cheat to the same extent under both reporting policies. However, the two policies differ in that the segmented one-by-one policy signals closer monitoring than the all-at-once policy. We suggest here that lie aversion may have a paradoxical effect on closer monitoring and lead people to cheat more. Specifically, reporting a series of segmented units of performance (allowing small lies) should lead to more cheating than a one-shot report of overall performance (that require one larger lie). Two surveys indicated that while people perceive the all-at-once policy as more trusting, they still expected people would be equally likely to cheat in both policies. An experiment tested the effects of the two reporting policies on cheating. The findings showed that contrary to the participants' intuition, but in line with research on lie aversion, the one-by-one policy resulted in more cheating than the all-at-once policy. Implications for future research and organization policy are discussed.

This Article presents the first empirical study on the way in which irrelevant anchors influence the interpretation of vague legal standards. A large body of psychological research demonstrates that when people make judgments on a continuum, they are often affected by meaningless anchors. Building on this body of work, legal scholars have shown that judicial decisions related to remedies (i.e., damages and penalties) are also influenced by such anchors. This Article extends this insight and hypothesizes that the process of interpreting vague legal norms is subject to an anchoring effect as well. To test this hypothesis, the Article presents a series of stylized experiments that measure and compare participants’ interpretation of a vague norm after they have been exposed to irrelevant anchors. Overall, the results confirm the proposed hypothesis and suggest that the content of substantive legal rules might be altered by anchors. This effect is documented in numerous legal settings and across both expert (i.e., experienced lawyers) and non-expert (i.e., students) populations. Furthermore, the effect is shown to exist when participants express judgments about a hypothetical scenario and when they make decisions with ramifications for others. Based on these findings, the Article revisits several long-standing legal debates and reevaluates their conclusions.

Competitive bidding (CB) is the dominant governmental contracting mechanism by which hundreds of billions of dollars are allocated annually. We claim that when bid evaluators assess the qualitative components of competing bids while being exposed to the bid prices, a systematic bias occurs that gives an unjust advantage to the lower bidder. We term this the Lower-Bid Bias. It is then shown that this bias can be neutralized by splitting the evaluation process into two stages, whereby bid price is revealed only after the evaluation process has culminated (two-stage CB). This is demonstrated through the findings of a survey and three controlled experiments, the first to be conducted with procurement officials. We also explain why this bias is undesirable and suggest a mandatory rule, requiring two-stage CB for any competitive public procurement based on evaluation criteria other than price. Further applications of the experiments' findings are also discussed.

Competitive bidding (CB) is the dominant governmental contracting mechanism by which hundreds of billions of dollars are allocated annually. We claim that when bid evaluators assess the qualitative components of competing bids while being exposed to the bid prices, a systematic bias occurs that gives an unjust advantage to the lower bidder. We term this the Lower-Bid Bias. It is then shown that this bias can be neutralized by splitting the evaluation process into two stages, whereby bid price is revealed only after the evaluation process has culminated (two-stage CB). This is demonstrated through the findings of a survey and two controlled experiments, the first to be conducted with procurement officials. We also explain why this bias is undesirable and suggest a mandatory rule, requiring two-stage CB for any competitive public procurement based on evaluation criteria other than price. Further applications of the experiments' findings are also discussed.

In performing skill-based tasks individuals often face a choice between easier, less demanding alternatives, but ones whose expected payoffs in case of success are lower, and difficult, more demanding alternatives whose expected payoffs in case of success are higher: What piece to play in a musical competition, whether to operate a camera in a manual or automatic mode, etc. We maintain that the decision-maker’s perspective – whether narrow or broad – is one determinant of choice, and subsequent satisfaction, in such tasks. In two experiments involving dart throwing and answering general-knowledge trivia questions, perspective was manipulated through choice procedure: A sequential choice procedure, with task difficulty chosen one at a time, was used to induce a narrow perspective while an aggregate-choice procedure was used to induce a broad perspective. In two additional experiments, both involving a sequential-choice procedure perspective was manipulated through priming. As predicted, in all experiments inducement of a narrow perspective resulted in a higher probability of choosing the more difficult task; it also led to lower-than-anticipated overall satisfaction.

In two experiments, we explored how the perspective through which individuals view their decisions influences their moral behavior. To do this we employed a computerized “Is that the answer you had in mind?” trivial-pursuit style game. The game challenges individuals’ integrity because cheating during play cannot be detected. Perspective, whether local or global, was manipulated: In Experiment 1 the choice procedure was used to evoke a local or an integrative perspective of one’s choices, whereas in Experiment 2, perspective was manipulated through priming. Across all the experiments, we observed that when given an incentive to cheat, the adoption of a local perspective increased cheating, as evidenced by overall higher reported success rates. These findings have clear implications for explaining and controlling behavior in other situations (e.g., exercising, dieting) in which the perspective one takes is a matter of choice.

This article focuses on the influence of framing on the way people understand their contractual obligations. A large body of both psychological and economic studies suggests that people treat payoffs framed as gains and payoffs framed as losses distinctly. Building on these studies, we hypothesize that the ways parties understand their duties are affected by the way in which they are framed. More specifically, we expect that promisors will tend to adopt a more self‐serving interpretation when they are making decisions in the domain of losses. To test this prediction, we run a series of four experiments that are all based on a between‐subject design. The first two studies utilize experimental surveys that measure and compare participants' attitudes toward a contract interpretation dilemma. The third and fourth studies are incentive‐compatible experiments, in which participants' actual interpretive decisions determine their payoff. All four experiments confirm our basic hypothesis and show that framing contractual payoffs as losses rather than as gains raises parties' tendency to interpret their obligations selfishly. These findings refine some of the previous understanding regarding the ability of penalties to optimize parties' contractual behavior, especially in situations in which monitoring is limited. Based on these findings, the article revisits some of the basic questions of contract law, shedding new light on an array of issues such as the law of liquidated damages and the optimal design of contracts.

Barbey & Sloman (B&S) attribute base-rate neglect to associative processes (like retrieval from memory) that fail to adequately represent the set structure of the problem. This commentary notes that associative responses can also lead to base-rate overweighting. We suggest that the difference between the two patterns is related to the distinction between decisions from experience and decisions from description.