Essays in behavioral political economy [electronic resource] : the effects of affect, attitudes, and aspirations
Keywords: Business.

This dissertation consists of three chapters that underscore the importance of viewing decision makers as boundedly rational (Kahneman 2003; Simon 1955, 1979). Each study highlights the fact that behavioral decision theory and social psychology can help scholars understand choices made by important political and economic actors. My first two studies focus on an important group of political actors — voters. I find that voters act in an environment where optimal decision theory does not always provide a compelling account of voting behaviors that are observed empirically. Behavioral theories regarding affect and conscious versus unconscious attitudes are drawn upon to reconsider retrospective voting and the consequences of a candidate's ascriptive characteristics (e.g., gender and race) in elections, respectively. The third project focuses on individuals as economic agents, and seeks to apply behavioral decision theory to understand an important public policy problem — human trafficking vulnerability. Motivated to understand why some individuals are more vulnerable to being exploited than others, I draw upon an aspiration-based framework and empirically test my predictions with original field data collected in Nepal, a country heavily affected by human trafficking. My first chapter reconsiders models of rational behavior that posit that people behave in a careful and reasoned manner, basing their voting decisions on relevant data such as evaluations of incumbent performance or reasoned consideration of candidate stances on policy issues. We ask the following: does information and events irrelevant to government performance, yet still consequential to an individual's sense of well-being, af- fect the decisions that voters make in the polling booth? Does information irrelevant to government performance affect voting behavior? If so, how does this help us understand the mecha- nisms underlying voters' retrospective assessments of candidates' performance in office? To precisely test for the effects of irrelevant information, we explore the electoral impact of local college football games just before an election, irrelevant events that government has nothing to do with and for which no government response would be expected. We find that a win in the 10 days before Election Day causes the incumbent to receive an additional 1.61 percentage points of the vote in Senate, gubernatorial, and presidential elections, with the effect being larger for teams with stronger fan support. In addition to conducting placebo tests based on post-election games, we demonstrate these effects by using the betting market's estimate of a team's probability of winning the game before it occurs to isolate the surprise component of game outcomes. We corroborate these aggregate-level results with a survey that we conducted during the 2009 NCAA men's college basketball tournament, where we find that surprising wins and losses affect presidential approval. An experiment embedded within the survey also indicates that personal well-being may influence voting decisions on a subconscious level. We find that making people more aware of the reasons for their current state of mind reduces the effect that irrelevant events have on their opinions. These findings underscore the subtle power of irrelevant events in shaping important real-world decisions and suggest ways in which decision making can be improved. My second chapter builds on work of researchers in cognitive psychology, who have proposed that there are two distinct cognitive systems underlying reasoning. Dual process theories of the mind find that both automatic and unconscious type 1 processing that results in "implicit" attitudes, and controlled and effortful type 2 processing that results in "explicit" attitudes can be active concurrently, and the two cognitive operations compete for the control of overt responses. In this project, I ask what are the consequences of "two minds" in the judgment of voters? Dual process theories of the mind suggest that ignoring implicit attitudes in the study of vote choice largely underestimates the relationship between attitudes on ascriptive characteristics and the judgment of voters, and overlooks the possibility that socially undesirable forms of prejudice can be overridden in certain contexts. Empirical tests of the consequence of dual cognitive processes on voting behavior are conducted by analyzing the relationship between explicit and implicit measures of gender attitudes on vote choice using an original survey experiment (study 1). The implications of a "two minds" hypothesis are tested in a second domain of prejudice by studying the effects of explicit and implicit racial attitudes on the 2008 Presidential election between Barack Obama and John McCain using a nationally representative sample (study 2). In both cases, the predictions of dual process theories of the mind hold. Both explicit and implicit attitudes of ascriptive characteristics (e.g., gender and race) are non-redundant consequential predictors of vote choice. Further, when an individual is motivated and capable of overriding implicit attitudes, the effects of implicit attitudes on vote choice are largely overridden by the effortful and reflective explicit attitude. The two studies jointly point to the significance of a dual process account of reasoning in understanding the manifestation of voter prejudice in the ballot box. My third chapter studies vulnerability to being trafficked, which often stems from a willingness to acquiesce to dangerous economic opportunities (e.g., having one's child migrate far away from home without his/her family for work). In this research project, my claim is the following: an increased salience in relative deprivation can lead individuals to be more risk-seeking, putting themselves and their children at risk for modern forms of slavery. I hypothesize that the mechanism by which this occurs is as follows. Drawing on prospect theory and the theory of reference groups, I posit that information regarding others' relative wealth partitions the space of outcomes into a positive and negative region. When relative wealth is made salient, one's reference point is no longer their status quo endowment. Rather their aspiration or reference point is the higher or lower endowment held by others within their cognitive window -- those in their socio-economic and spatial neighborhood. It is then possible for expected utility from economic opportunities to be below one's reference point. One's perceived relative deprivation can then place a person in the domain of bad (below-aspirations) payoffs, and according to the prospect theory value function, this individual would be more likely to exhibit risk-seeking behavior as a result. Using a controlled survey experiment conducted in trafficking-prone areas of Nepal with a subject pool representing the target population, I find that perceived relative deprivation, a sense that one's wealth falls below some salient point of reference, induces more risk-seeking behavior with regards to economic opportunities. Additionally, using nationally-representative district-level data from Nepal on relative deprivation and trafficking incidence, I find macro-level evidence that is consistent with my micro-level evidence of perceived relative poverty explaining variation in vulnerability.