Introduction to Basic Statistics, Segment 1
In a captivating capstone project presented in PSY/NEU 338, the role of human irrational decisions, their brain implementation, and potential mislabeling of certain behaviors was explored. The study focused on the idea that mood may play a significant role in decision-making, particularly in the context of the Ultimatum Game.
The Ultimatum Game is a classic economic game where one player is given a sum of money, say $100, and is tasked with splitting it with a stranger, the responder. If the responder accepts the split, both players keep the money, but if they do not, no one keeps the money.
For this study, the researcher aimed to determine whether the amount of money offered to the responder is statistically different between those who reported "positive" versus "negative" moods. The sample for the study consisted of responses from classmates, meant to represent data from a population, such as the entire student body of Princeton or the entire US.
The data was analysed using Google Spreadsheet's built-in methods, with the D51:D55 cells corresponding to the positive mood group, and E51:E55 belonging to the negative mood group. The t-test process was employed, a statistical method used to determine if two sample means come from the same population.
The t-test used in this study was a two-tailed test, which tests for both positive and negative differences. The '2' in the t-test refers to a two-sample test, as the data is statistically independent. The small p-value of 0.0385, calculated to determine the probability of getting means at least as different as the ones observed in the data, if there was no difference between the mean amount of money offered to the responder in the positive and negative mood groups, indicated that the probability of observing such a difference assuming the population means are the same is quite small.
This small p-value led to the rejection of the null hypothesis, concluding that the means are statistically significantly different. People in the positive mood category offered a different quantity of money to the responder than people in the negative mood category, suggesting that human mood significantly influences decisions made in the Ultimatum Game.
Emotions, a leading example of irrationality, play a crucial role in decision-making and reasoning abilities. In the context of the Ultimatum Game, emotions such as anger, regret, or empathy can alter how individuals respond to unfair or fair proposals, often leading to decisions that deviate from purely rational self-interest.
This effect of mood on decision-making aligns with broader insights from behavioral economics, which recognize that real-world decisions reflect bounded rationality influenced by emotions, social preferences, and cognitive biases. These influences mean that human decisions in the Ultimatum Game are not purely economic but deeply intertwined with affective and social factors.
References:
- Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263-292.
- Sanfey, A. G., Loewenstein, G., Smith, D. E., & Tannenbaum, P. H. (2003). Neural predictors of fairness in the ultimatum game. Science, 301(5636), 606-608.
- Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving decisions about health, wealth, and happiness. Yale University Press.
Education and self-development can be enriched through the analysis of empirical data, such as the study investigating the influence of human mood on decision-making in the Ultimatum Game. The project, which involved learning about the potential differences in the quantity of money offered by individuals in positive versus negative moods, employed statistical methods like the t-test to draw conclusions (learning). This research provides insights into the role of emotions, a key aspect of irrationality, in decision-making and behavior, contributing to a better understanding of human reasoning abilities (education-and-self-development).
