Saturday, September 24, 2005

Strangers with Candy

All of a sudden I am being bombarded by professors and students who are willing to give me a combination of money and candy to participate in their psychological/linguistic/what-have-you experiments. Of course I am not at Swarthmore and am not able to participate, but it's interesting that they all include this element of candy. A typical offer is $5 and a candy bar. Why not just give people the money that is used to purchase the candy? A simple economic model will tell you that a lump sum gift is better than an in-kind gift; if the subjects wanted candy they could just buy it themselves. Here are some hypotheses:
  • There is some cheaper bulk price available to the experimenters but not to the subjects. A gift of the money spent on the candy bar could, in that case, be less valuable than the candy bar itself.
  • It would take time to go buy a candy bar. Time is valuable, so by just giving the candy bar, experimenters are also giving the time it would take to purchase it.
  • Though the price of a candy bar is a, people are willing to pay up to b > a. So people value a candy bar at b, but the experimenters can purchase it at a. (Of course, so can the subjects themselves. Why haven't they already?)
  • Candy given by the experimenters has more value than the usual candy. You can carry it around and use it as a conversation piece, for example, or enjoy your candy with fellow subjects.
I think it's always better to try to find an explanation with the assumption of rationality first, and then move on if there's nothing satisfying. That may be the case here... For example, perhaps you exhibit inconsistent behavior. Given the choice between candy and money, you would choose the money. But you prefer the situation in which someone else just gives you candy to having a choice. (Though perhaps this isn't irrational, perhaps you can have rational preferences over different choice sets? Non-standard rationality?)

5 Comments:

Anonymous Battlepanda said...

Perhaps not the most politically correct example...one might choose to give a sandwich to a homeless man rather than cash because of the fear that the more versatile money might be used to purchase something that affords immediate gratification (say, booze) but which is not beneficial to the poor schmuck in the long term.

The conductors of the study are in the opposite situation. What is best for the individual is not important to them. What they want to maximize is the temptation. A candy bar is more tempting than 67 cents precisely because, given the 67 cents, we would probably spend it on something that we rationally know is better for us.

1:18 PM  
Blogger henry said...

I think that your two individuals are actually different: the first is rational and the second isn't. Rationality means having nice (partially ordered) preferences and acting on them. The homeless man prefers booze over food. Given money he will purchase booze. So he is rational. The college student prefers candy over something else. Given money she will purchase something else. She isn't rational. Just my nitpick...

3:14 PM  
Blogger Isaac said...

I think Henry is being narrow-minded here. There is something rational about the psych. department offering a good with immediate gratification, versus something that has to be transformed into a gratifying something. So substitute costs of transformation, or something, for "tempting" and I think Battlepanda has an excellent point. It's that we perceive the costs of walking all the way from Papazian to the Science Center Coffee Bar (or even the Co-op) as being really high. So a candy bar seems more than a dollar, but probably less than, say, two dollars.

Or, you have the case of Larry offering me the choice of twenty dollars or a Lamy pen, and my taking the Lamy pen, only to realize that, in a sense, I failed the test because I could have bought the pen for about $16. Others claimed I was ripped off. But then, I wouldn't have gone to the hassle of finding and buying a Lamy pen; whereas the pure joy of having a Lamy pen that Larry gave me is priceless.

9:28 PM  
Blogger henry said...

I was interpreting "more tempting" to mean "preferable to". Which is exactly how you interpreted it...in your situation the person is rational because thats how the costs work out. But someone who actually wants a candy bar more than, say, a report cover, but spends money on the report cover isn't acting rationally. My point was just that rationality has to do with consistency of behavior with preferences and not the distinction between short-term gratification and long-term advantage.

Though one specific kind of irrationality is choosing short-term gratification over long-term advantage even though you might prefer to wait.

3:39 AM  
Anonymous Battlepanda said...

Notice that the conductor of the study offered $5 PLUS a candy bar. Presumably they found through experience that this combination is more effective as a temptation than either six candy bars on its own or $5.67. Not to get all Freudian on y'all, but I think it's because this combination has something both for the (relatively) grown-up part of our minds that knows the value of $5 as well as the Homer Simpson-esque part that goes "Mmmmmm...candy".

I'm not convinced by the argument that the candy bar is more valuable to the participant than it's dollar price suggests because they do not have to walk to the campus store to get it. Students walk to or by stores, or at least vending machines, all the time.

Also, think about game shows and how they give away expensive holidays and cars rather than the equivalent dollar amount of the prizes. Because given the money, the sensible thing to do is to pay down debt, buy insurance, fix the leaky roof etc. etc., but none of those things make participants and audience alike quite so ecstastic.

8:04 AM  

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