Draft:Behavioral Economics and Personality

• Comment: In accordance with Wikipedia's Conflict of interest policy, I disclose that I have a conflict of interest regarding the subject of this article. Anthonyvw01 (talk) 17:56, 7 May 2025 (UTC)

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Inception of Behavioral Economic Research

Earlier iterations of economic research perceived that individuals are rational and selfish actors, believing that they will prioritize picking choices that give themselves the most monetary/selfish utility (Persky 1995; Rittenberg & Tregarthen 2012). This type of thought or belief was known to be “homo economicus” or economic man. However, economic researchers such as Kahneman and Tversky argued against this thought, stating that people often act irrationally due to the presence of psychological biases, heuristics, and social desirability (Camerer et al. 2004) One of the more influential theories brought through Kahneman and Tversky was “Prospect Theory”, where found evidence of a) loss aversion (people generally feel losses twice as much as gains), b) “non-linear probability weighting” (where individuals appreciate small chances of gains yet fear small chances of losses), and c) dimishing utility on increasing returns (the more the gain (loss) is from it’s original value, the smaller the increase (decrease) of utility is perceived) (Kahneman & Tversky 1979; Kahneman 2003). Since then, many other findings and biases from other authors have been studied and discovered through this argument against “homo economicus” thought.

Game Theory

This research usually involves experiments involving participants engaging in specific tasks or decisions that involve other participants. These participants can be thought of as “players” and the tasks can be thought of as a “game”. Therefore, the concept of “game theory” came about through this emphasis on game-like experiments. This resulted in creating different “games” between individuals that emphasize or measure different preferences. For example, the dictator game measures social preference, the prisoner's dilemma measures trust, and the stag hunt relies on cooperation/trust (Camerer 2004; Guth 1982; Harsanyi & Selten 1988)

Behavioral Economic Games

These games are observed almost exclusively in experimental methods due to the focus on individual behavior. Research methods such as archival and correlational/regression-based research focus more on aggregate behavior (e.g. groups of people, a firm, or countries). Qualitative methods (interviews/observational) data are more concerned with directly observing real-world phenomena, so utilizing game theory may not be very useful in this method. In the end, observing this “irrationality” within participants and even being able to claim causality with results.

While there are standard rules for behavioral economic games, the rules of these games may be modified to better measure certain constructs. For example, one experimental econ game, The Dictator Game, can be played traditionally where one participant (the Dictator) is randomly assigned the responsibility of splitting a pot of resources among themselves and another participant (the Responder). Typically, the Responder is forced to receive the resources being given. However, if experimenters would like to add a realistic fear of “rebellion” in unfair resource allocation, they can allow the responder to have the option of rejecting the resources offered to them. Additionally, this would also destroy the entire resource pool, causing some pressure for the Dictator to offer an appropriate amount of resources to the Responder now. where the Responder now has the ability to “reject” the resources given and destroy the resource pool. When experimenters make this adjustment of rules, it is now coined as “The Ultimatum Game” (Camerer 2004; Guth 1982).

Additionally, experimenters may choose to add different dimensions to the games instead of “changing” dimensions. For example, Hoffman et al 1994 wanted to observe “entitlement” behavior with competition victors. Instead of randomly assigning the Dictator role, the experimenters had participants compete in a trivia quiz in order to “earn” the role of the Dictator. They found that individuals who won the trivia quiz before allocating resources would usually be more selfish in resource dispersion (Camerer 2004; Hoffman et al. 1994).

Personality Research

While a common interest of behavioral economic researchers is moderating these experiments across different external contexts/scenarios (e.g. are Dictators more benevolent towards friends or with larger group sizes), experimenters can also moderate their experiments with “internal” context (e.g., how do narcissists and non-narcissists share resources). There has been an extensive stream of research teasing out and observing individual differences within individuals. In earlier personality research, researchers saw that individuals do have differences in their personalities. This was discovered primarily by having individuals answer questions in the Big-5 taxonomy (Goldberg 1993). This taxonomy consists of gauging an individual’s “five big” personality domains, which are: “extraversion (assertive and gregarious versus introverted), agreeableness (warm and kind versus cruel), conscientiousness (industriousness and responsible versus undependable), emotional stability (calm and serene versus anxious), and openness to experience (intellectual and creative versus close-minded)” (Roberts & Yoon 2022).

Additionally, while personality researchers were able to observe personality differences, these differences were thought to be relatively innate and stable. However, due to the more recent surge of longitudinal studies and technology, it is much more apparent that individuals can experience “personality change” (cite Roberts 2003). These changes can occur from environmental cues (e.g. college and marriage) or through the natural course of life (e.g. getting more agreeable as you get older) (Insert some cites here). Since researchers found that personality can be adaptive, there has been extensive research on what experiences or factors change people. Collectively, personality research has been a fruitful field that has been looking at many angles of personality within people internationally.

Methods of Observing Personality Differences

While these personality dimensions have been collected primarily through self-ratings (e.g. participants directly assessing themselves on different scenarios/statements that assess their personality), other methods have been used. Some examples are third party perceptions of another’s personality (e.g. another person rating the participant on different personality dimensions), coding personality themes from a participant’s open-ended responses (e.g. teasing out how “consciousness” one’s summary is to scenario given), and even behavioral observations tracked through devices (e.g. frequency of visiting different locations) (Cutler & Condon 2023; Hampson & Edmonds 2017; Matz & Harari 2024). Additionally, other personality models and dimensions have been considered as well, such as the HEXACO model (essentially the Big-5 model but with an additional dimension of “unethical” behavior) and the numerous Dark Triad models (measuring three the “sinister” dimensions of personality that compromise Machiavellianism, narcissism, and psychopathy) (Ashton & Lee 2007, 2020; Jones & Paulhus 2014).

Exploring Interactions with Personalities and Behavioral Economics

References

Ashton M. C., & Lee K. (2007). Empirical, theoretical, and practical advantages of the HEXACO model of personality structure. Personality and Social Psychology Review, 11, 150–166. https://doi.org/10.1177/1088868306294907.

Ashton, M. C., & Lee, K. (2020). Objections to the HEXACO Model of Personality Structure—and why those Objections Fail. European Journal of Personality, 34(4), 492-510

Bader, M., Hilbig, B. E., Zettler, I., & Moshagen, M. (2023). Rethinking aversive personality: Decomposing the Dark Triad traits into their common core and unique flavors. Journal of Personality, 91, 1084–1109.

Camerer, C. F. (2011). Behavioral game theory: Experiments in strategic interaction. Princeton university press. Camerer, Colin; Loewenstein, George; Rabin, Matthew (2004). Advances in Behavioral Economics. Princeton University Press. pp. 4–6

Cutler, Andrew and David M. Condon. 2023. "Deep Lexical Hypothesis: Identifying Personality Structure in Natural Language." Journal of Personality and Social Psychology 125 (1) (07): 173-197. doi:https://doi.org/10.1037/pspp0000443. https://www.proquest.com/scholarly-journals/deep-lexical-hypothesis-identifying-personality/docview/2737187998/se-2Links to an external site..

Hampson, S. E. and Edmonds, G. W. (2017). A new twist on old questions: a life span approach to the trait concept. Journal of Personality, 86(1), 97-108.Links to an external site. https://doi.org/10.1111/jopy.12304Links to an external site.

Harsanyi, J. C., & Selten, R. (1988). A general theory of equilibrium selection in games. MIT Press Books, 1 Hilbig, B. E., Zettler, I., & Heydasch, T. (2012).

Personality, Punishment and Public Goods: Strategic Shifts towards Cooperation as a Matter of Dispositional Honesty–Humility. European Journal of Personality, 26(3), 245-254. https://doi.org/10.1002/per.830

Hilbig, B. E., Thielmann, I., Hepp, J., Klein, S. A., & Zettler, I. (2015). From personality to altruistic behavior (and back): Evidence from a double-blind dictator game. Journal of Research in Personality, 55, 46-50.

Hoffman, E., McCabe, K., Shachat, K., & Smith, V. (1994). Preferences, property rights, and anonymity in bargaining games. Games and Economic behavior, 7(3), 346-380.

Kahneman, Daniel; Tversky, Amos (1979). "Prospect Theory: An Analysis of Decision under Risk" (PDF). Econometrica. 47 (2): 263–291. CiteSeerX 10.1.1.407.1910. doi:10.2307/1914185. ISSN 0012-9682. JSTOR 1914185.

Goldberg LR. 1993. The structure of phenotypic personality traits. Am. Psychol. 48(1):26-34

Güth, W., Schmittberger, R., & Schwarze, B. (1982). An experimental analysis of ultimatum bargaining. Journal of economic behavior & organization, 3(4), 367-388.

Jones, D. N., & Paulhus, D. L. (2014). Introducing the Short Dark Triad (SD3): A brief measure of dark personality traits. Assessment, 21(1), 28–41. https://doi.org/10.1177/1073191113514105 Kahneman, Daniel; Diener, Ed (2003). Well-being: the foundations of hedonic psychology. Russell Sage Foundation.

Matz, S. C., & Harari, G. M. (2021). Personality–place transactions: Mapping the relationships between Big Five personality traits, states, and daily places. Journal of Personality and Social Psychology, 120(5), 1367.

Persky, Joseph. "Retrospectives: The Ethology of Homo economicus." The Journal of Economic Perspectives, Vol. 9, No. 2 (Spring, 1995), pp. 221–231

Rittenberg and Tregarthen. "Chapter 6" (PDF). Principles of Microeconomics. p. 2. Retrieved June 20, 2012

Roberts, B. W., & Yoon, H. J. (2022). Personality psychology. Annual review of psychology, 73(1), 489-516

Zettler, I., Hilbig, B. E., & Heydasch, T. (2013). Two sides of one coin: Honesty–Humility and situational factors mutually shape social dilemma decision making. Journal of Research in Personality, 47(4), 286-295.