Jaimie W. Lien

In an increasingly complex modern social information environment, in which consumers are exposed to both changes in economic conditions and pervasive social comparison cues, there remains limited research exploring the relationship between financial anticipation, social signals, and consumption choices. Using an experimental approach, we examine how income trajectories and social information shape consumption choices. Participants in our online decision task were randomly exposed to information indicating either increasing or decreasing income trajectories, alongside social information about the popularity of a relatively cheap or expensive choice of a specific type of product, among individuals with the same income trajectory. Firstly, we find that cheap information during economic decline undermines the standard prediction that anticipated income decline leads consumers to prefer cheaper products. Specifically, the results suggest a significant non-conformity effect specific to the scenario of anticipated income decline: when income was expected to decrease and the social information indicated a majority choice of cheap products, participants were more likely to select the expensive products. On the other hand, social information had no significant impacts when income was expected to increase. Our findings challenge the conventional intuition that social information indicating a cheap majority encourages frugal consumption, instead suggesting a counter-conformity pattern under anticipated income decline.

On a daily basis, individuals encounter different types of information signals about other individuals' trustworthiness, and decide which signals are most worthy. Using controlled laboratory experiments, we investigate how hard information on an individual's prior track record versus visual information in the form of a personal photograph shape trust in a laboratory trust game. Trustors in three baseline treatments observe one of three possible signals about their randomly assigned trustee: the trustee's firstround action, a non-smiling photo of their trustee, or a smiling photo of their trustee. Two additional treatments use multiple price lists to elicit trustors' willingness to pay for the trustee's first-round track record relative to the two types of photos. Smiling photos are the only information signal that significantly increases trust and total surplus on average. Information about trustees' first-round track record has no average effect, but masks an asymmetry that favorable records raise trust to the same level as smiling photos, while unfavorable records reduce trust below the level induced by non-smiling photos. The multiple price list and baseline treatments together show that trustors are willing to pay to observe their trustee's first-round track record rather than their photo, while smiling photos in fact generate the highest trust levels. This result highlights a disparity between the type of information individuals prefer, and the type of information they respond positively to, with industrial policy consequences for online platforms and other businesses.

In an increasingly complex modern social information environment, in which consumers are exposed to both changes in economic conditions and pervasive social comparison cues, there remains limited research exploring the relationship between financial anticipation, social signals, and consumption choices. Using an experimental approach, we examine how income trajectories and social information shape consumption choices. Participants in our online decision task were randomly exposed to information indicating either increasing or decreasing income trajectories, alongside social information about the popularity of a relatively cheap or expensive choice of a specific type of product, among individuals with the same income trajectory. Firstly, we find that cheap information during economic decline undermines the standard prediction that anticipated income decline leads consumers to prefer cheaper products. Specifically, the results indicate a significant non-conformity effect specific to the scenario of anticipated income decline: when income was expected to decrease and the social information indicated a majority choice of cheap products, participants were more likely to select the expensive products. On the other hand, social information had no significant impacts when income was expected to increase. Our findings challenge the conventional intuition of a socially-driven trend in frugal consumption, highlighting counter-conformity as a driver of expensive purchase behavior during economic downturns.

In a world where verifying facts is challenging and individual opinions are pervasive, how do people leverage the “wisdom of crowds”? We presented decision-makers with true or false statements and evaluated how they use varying levels of social information, from others’ views to confidence levels and higher-order beliefs, to form their judgments. Our results show that social information combining majority opinion and confidence data is particularly effective in fostering factual knowledge, benefiting easy questions and less knowledgeable individuals without significantly harming performance on difficult questions or by more knowledgeable participants. However, individuals revise their beliefs infrequently and often rely on majority opinion as the decision heuristic, even when richer information is available. Confidence data, though informative, remains underutilized. These findings highlight both the promise and limits of crowd-based decision-making, and point to opportunities for improving collective judgment by designing information environments that support more effective use of available cues.

A meritocratic fairness ideal typically asserts that income inequality is justifiable if it arises from differences in performance rather than mere luck. In this study, we present experimental evidence that reveals how merit judgments are influenced by the sources of performance differentials, while holding fixed the underlying impact on incentives to perform. Drawing inspiration from real-world factors that create inequality, we investigate unequal opportunities in education and employment that impact performance. Contrary to some earlier findings suggesting that merit judgments are unaffected by unequal circumstances, our study demonstrates that individuals’ redistributive behaviour is responsive to both the nature and extent of these unequal opportunities. This research thus provides fresh insights into the nuanced factors that motivate people to endorse income redistribution.