## Self-standards Model of Cognitive Dissonance

Self-standards model (SSM) was proposed to integrate competing theories of self-relevant thoughts of cognitive dissonance. Among many, the following three stood in the center of the debate

• Self-consistent theory/Self as expectancy The theory suggests that dissonance arises when the behavior differ from the expectation based on self-attributes. And the reduction is through self-justification of behavior while maintaining self-expectancies.
• The theory thus suggests that people with low self-esteem or mild depression do not experience dissonance when their behavior is at odds with socially acceptable standards.
• Self-affirmation theory/Self as resource Similar to self-consistent theory, self-affirmation theory suggests that dissonance occurs when the behavior threatens one’s self concept. In contrast to the former, self-affirmation theory asserts that the self-system is global in the sense that the goal of dissonance reduction is not to savage a specific self-image endangered by the discrepant behavior but to recover the overall system.
• Despite its seemingly similarity to the self-consistent theory, self-affirmation theory makes vastly different predictions on the role of self-esteem in dissonance. According to its perspective, people with high self-esteem are less vulnerable to dissonance because self-reflection provides them with more affirmations of their competence/morality, which in turn reduces the need of self-justification.
• New look model/Self as irrelevance New look suggests that dissonance is aroused when the behavior violates normative or socially acceptable norms/standards.

SSM incorporates all three models above at the cost of complicating the framework quite a lot. In short it specifies conditions for which theories/procedures are relevant at different stage of the process.

1. The behavior can be evaluated by social or personal standards depending on the contexts and cues. For the former, the evaluation will be nomothetic thus will not be moderated by self-esteem (New look theory).
2. If the evaluation is idiographic and no other cognitions of self are accessible, self-justification will be sought to reduce the dissonance. What if other cognitions are accessible?
3. If the accessible cognition is positive and relevant, then it serves as an expectancy. As a result, high self-esteem people will show more self-justification than low self-esteem ones. (Self-consistent theory).
4. If the accessible cognition is positive, irrelevant, and self-descriptive, then it serves as a resource. Consequently, high self-esteem people will show less self-justification than low self-esteem ones. (Self-affirmation theory).
• If the cognition is not self-descriptive, people still have to seek self-justification to reduce dissonance.
• Caveat: people with high self-esteem are more likely to perceive positive traits as self-descriptive.

References
[1]Stone, Jeff, and Joel Cooper. “A self-standards model of cognitive dissonance.” Journal of Experimental Social Psychology 37.3 (2001): 228-243.
[2]Cooper, Joel. Cognitive dissonance: 50 years of a classic theory. Sage, 2007.
P.S. The flow of this entry follows closely to [1] as I personally think that it provides a more concise yet logical history of the development of SSM while [2] is decorated with more empirical/experimental evidences that motivated the development.

## Cognitive Dissonance

I just finished reading Cooper’s book on the topic and would very much like to write down what I get out of it.

Cognitive dissonance was first envisioned by Leon Festinger in the 1950s. The theory started out elegant and simple: With consistent cognitions, individuals experience uneasiness and discomfort thus are motivated to reduce the inconsistency. Here cognitions can refer to actions, beliefs, attitudes, and so on. Inconsistency can be due to inconsistent attitude and action. One of the many experimental paradigms to test the theory runs as follows: subjects are asked to evaluate a certain proposition arguing against her/his position. Lastly attitude is elicited again. For instance, subjects (usually college students) are asked about their attitudes towards increasing tuition. Expectedly most of them are against it thus are asked to write an essay/make a speech for tuition increase after which they are asked again about their attitudes on the issue. (All results will be discussed under this paradigm for exposition.) Typical findings on these experiments show that subjects change their attitudes closer to what they (are asked to) advocate. According to Festinger, subjects experience cognitive dissonance: writing an essay for tuition raise is inconsistent with their attitude against a raise. As a result of the dissonance, subjects are motivated to reduce the inconsistency. In this case (as in many other cases), changing one’s attitude is easier than changing a committed action.

The theory is appealing as it explains, elegantly, experiments and observations. However humans are hardly that simple (thus the struggle of social scientists). In the following years, many experiments and theories are raised to clarify and complete the theory. I will first discuss efforts on verifying the physiological manifestation of dissonance and then talk about modifiers found that largely rewrite the whole story.

One of the first questions raised against the theory concerns the motivated drive (Chapter 3 of the book) Festinger highlighted in his original composition. Simply put (especially intuitive to economists), psychologists wondered if people really experience tension states/arousal/emotions or anything with a physiological trait thus are motivated/driven to reduce inconsistent or is it just a metaphor/as-if argument. With the hep of misattribution and two-factor theory, experiments show that the uneasiness is experienced

• Two-factor model of Schachter and Singer (1962): an experience of emotion is based on two factors: arousal and the attachment of a cognitive label to that arousal. They conducted experiments to show that the factors are separable in the sense that how the arousal is experienced is affected by the label provided. In short, the experience of emotion is labile.
• Back to dissonance: subjects who take placebo but think they take a drug which might cause uneasiness and discomfort, do not change their attitudes as much after the essay task. Similarly, subjects who think they take a drug that might cause relaxation change their attitudes more after the task.
• These experiments show that when provided with a convenient label of their discomfort, subjects do not attribute the arousal to inconsistent cognitions thus make no effort in reducing consistency.

These are good news for the theory which solidify the original ‘guess’ of Festinger. Now the ‘bad’ news: New Look Model and Self-Standards Model (SSM henceforth) that largely kill the original idea of the theory. SSM is basically an extension of the former; some years passed before the birth of SSM but I will skip the struggle and talk directly about SSM as if it were a success in one shot (but it is really not).

• The following experimental results forced researchers to rethink about the theory: No/little attitude change is observed if (1) subjects are not presented with a choice, (2) the action does not result in any aversive and foreseeable consequence, or (3) the behavior is expected by some (social/personal) standard. For the essay task,
1. Attitude changes if subjects are asked if they would like to write such an essay (high-choice treatments) and no changes if subjects have to do so (low-choice treatments).
2. Attitude changes if the essay is to be presented to the college committee and no if it is destroyed after completion. Attitude changes if the essay might be viewed by the committee and no if it comes as a complete surprise (unforeseeable).
3. This point cannot be demonstrated with the paradigm and plays an important role in turning Festinger’s theory up-side-down. So I will discuss it in more details in the next entry.

Just as a side note: the experiments become more intriguing as the theory gets more complicated. The levels (plural really) of deception used in these experiments stunned me, an economist who sleeps with the dogma that deception is not allowed in experiments.

Okay this entry is getting too long to bear even for myself. I am gonna end here.

[1]Cooper, Joel. Cognitive dissonance: 50 years of a classic theory. Sage, 2007.
P.S. This is a very nicely written book: well-organized and fun to read. Perfect as an introduction into the theory.

## Yi Yi and Two Other Films of Edward Yang

I’ve watched 4 films from Edward Yang in total. The adventure started with Yi Yi and continued to A Bright Summer Day. The latter disappointed me greatly thus I stopped watching his films. Recently I learnt that Edward Yang thought very highly of Mikio Naruse, one of my favourite directors whose works, in my opinions, are disturbingly underappreciated.[1] For this reason, I resumed my journey with Edward Yang. I added Terrorizers and A Confucian Confusion to my collection and rewatched Yi Yi.

Eight years had lapsed since the first time I watched, yet it still touched me so deeply, if not more. The movie portraits a big family (Jian) in Taipei. Despite of a huge number of characters whose lifestyles and stories are vastly different, the movie does an excellent job putting every little episode into an unified framework/theme. The directing and editing makes every bit converges very nicely (which reminds me of another marvelous movie by Ang Lee Eat Drink  Man Woman). Both movies paint a very vivid picture of people of various works and their roles in Taiwan society at the time.

One editing trick of the movie that I am particular fond of is the use of elements from the coming scene (such as sounds) in the current scene. This makes the transition more smooth and forces the viewers to follow the flow or even actively construct anticipations.

Compared to the two other films of Edward Yang, Terrorizers and A Confucian Confusion, I’d say that Yi Yi is closer in both style and theme to Terroizers. In style, both films take a relatively slow pace with little (not zero) drama whereas A Confucian Confusion violently displays tons of emotions and shouts to your face the lessons the director wanted to convey. In this regard, Yi Yi and Terrorizers are more of a naturalistic style while A Confucian Confusion impressionistic. As for the themes, the two movies explore more in the realm of the middle-aged, the lives with regrets, and the helplessness of people who tried but in vain. A Confucian Confusion, on the other hand, is more relevant to a younger generation (probably this is why there are more shouting and dramas) who are lost in the changes of time and their own indecisiveness. Lastly, I really love the endings of both Yi Yi and Terrorizers (both with the perfect music there) but A Confucian Confusion’s ending is just like any ending of ridiculous drama – you have no idea how it should end so it just ends abruptly somewhere.

Well even though my comments towards A Confucian Confusion is rather negative, many people love this film and considers it the best of Edward Yang. And why do I like the old-man/woman’s films better? I guess I feel old too.

Reference:
[1]Edward Yang, ‘Generosity – The Invincible Invisible Style: On Naruse Mikio’, in Shigehiko Hasumi and Sadao Yamane (eds.)., Mikio Naruse (San Sebàstian, 1998), pp. 153-157.

P.S. in this article, Edward Yang analyzed the last scene of Yearning (Naruse, 1964), which is one of my favourite movies of all time and in my opinion the best Japanese cinema has offered.

## Zorn’s Lemma and Revealed Preference

I don’t think I ever understand why Axiom of Choice is always singled out; why it is special (and controversial) relative to other axioms. Gradually, I realized that probably it is not. It is just one of the axioms that found set theory. Anyways, this is not what we, as economists, should care. This entry is about Zorn’s lemma and revealed preference. I mentioned axiom of choice first just because its close relation to Zorn’s lemma. To complete the discussion of axiom of choice, let me just put the version that I personally like most here

Axiom of Choice: Cartesian product of non-empty sets is non-empty.

Now Zorn’s lemma and revealed preference. Revealed preference is one of the most fundamental result in economics. It builds a bridge between observable choice data and underlying (but invisible) preferences. There are various versions of the result but the idea is the same

Revealed Preference: Any set of choice data that satisfies some axiom of revealed preference can be rationalized by a preference relation.

In other words, however limited the data are, we can find a preference defined over the whole commodity space to make sense of the data, given that the data satisfy some conditions. Zorn’s lemma allows a compatible extension from the limited scope provided by the data to the whole commodity space.

Zorn’s Lemma: If every chain in a partial-ordered set has a upper bound, then the partial-ordered set has a maximal element.

Zorn’s lemma is essential to the following result which basically makes the revealed preference a corollary.

Szpilrajn’s Theorem on total extension of preorders: Any preorder has a compatible extension to a total order.

Below I just list the definitions of the relevant concepts assuming familiarity of common properties of binary relations

• Preorder Reflexive+Transitive
• Partial order Preorder+Antisymmetric
• Total order Partial order+Complete
• Transitive closure of a binary relation R over X is the smallest relation over X that contains R and is transitive
• Chain a totally ordered subset of a partial-ordered set
• A binary relation R* over X is a compatible extension of R if R* extends R and preserves the asymmetry of R.

Proof of Szpilrajn’s Theorem:

Let R be a preorder over X and E the set of all preorders that compatibly extend R. Clearly E is non-empty as it contains at least R itself.

Consider any non-empty chain C in E by set inclusion. We want to show that U the union of elements in C is an upper bound of C (so that we can use Zorn’s lemma). That is we need to show that all elements of C is contained in U; alternatively, U is (still) a preorder that compatibly extends R. This can be shown easily by using the properties of individual element in C (at the end of the day, one needs to show that U is reflexive, transitive, and compatibly extends R).

By Zorn’s lemma, we know that E has a maximal element S. The last step is to show that S must be total. Suppose not and there exists a pair $(x,y)$ such that neither xSy nor ySx. Consider $T=S\cup\{(x,y)\}$ and W which is the transitive closure of T. Since W includes S, if we can show that W is a compatible extension of R (reflexive is obvious), we reach a contradiction (that S cannot be the maximal element).

Again suppose W does not compatibly extend R (or S) and there exists a pair $(u,v)$ in X such that $(uSv) \wedge\ ^\neg (vSu)$ but vWu. By definition of transitive closure, we can construct a finite sequence such that $v=c_1 T c_2 T \cdots T c_{n-1} T c_n=u$. Since T and S only differ over (x,y) and if no $c_i$ is x or y, we obtain the contradiction. Otherwise, we can find $(c_i, c_{i+1})=(x,y)$. If this is the case, $y=c_{i+1} S\cdots S c_n=u S v=c_1 S \cdots c_i =x$ contradicting that S cannot rank x and y.

Thus the proof is complete and any maximal compatible extension of R is a total preorder.

The definitions and proof are from Aliprantis and Border’s book. I put it here just because I did not know why economists cared about Zorn’s lemma and this is an interesting illustration in my opinion. And I want to throw away my scratch papers.

Reference
[1]Aliprantis, Charalambos D., and C. Kim. “Border. 2006. Infinite Dimensional Analysis: A Hitchhikers Guide.”

## Commitment and Belief Revision

I came across this working paper by Falk and Zimmermann while browsing the tentative program of a workshop I am attending in the summer. Like reading the information projection paper by Madarasz (2012), I was shocked to see that no similar experiments had been conducted in economics or psychology! Typical of Falk’s experiments, all treatments are extremely simple. Subjects are shown a jar and asked to estimate the number of peas in it. Estimation is of course incentivized. Mainly they are interested to see if commitment changes the way/extend people process information and revise their beliefs. The commitment is generated by writing down an initial estimate (which is payoff-irrelevant) on a piece of paper. It turns out that commitment has huge effect on information processing and belief revision. In short, committed subjects are more reluctant to incorporate additional information or revise their beliefs. What interests me more are two additional treatments with subtle differences. In one, subjects wrote down their estimates but showed them to no one, not even the experimenters. Yet such private commitment is sufficient to generate the main effect! (Falk and Zimmermann are working on explaining the underlying mechanism of this commitment effect and it seems that they lean on the social root?!) In another, subjects only raised their hands once they had an estimate. In this treatment, no commitment effect was observed, which actually appears a little peculiar to me. After all, how (and why) would writing down something to oneself be any different from determining something in one’s head? As I’ve always believed, given what we have learnt along the way, understanding how individuals make decisions is all about figuring out the boundary conditions – this is a nice demonstration of the idea.

References
[1]Falk, Armin, and Florian Zimmermann. Information processing and commitment. mimeo, 2016.
[2]Madarász, Kristóf. “Information projection: Model and applications.” The Review of Economic Studies (2011): rdr044.

## Renegotiation

I came across a working paper by Barron, Gibbons, Gil, and Murphy (BMMG henceforth) in which they look at the contracting between distributors and exhibitors of Spanish movie industry. The contracting seems to be half form and half relational in the sense that the distributors and exhibitors formally agree upon how to divide the revenue ex ante but renegotiation is a possibility (and usually is exercised) ex post (after the screening ends). The main part of the paper is empirical which I skipped. However they do include two simple models for illustration. The second one is a multi-unit auction model which I again skipped; the first one is more of my interest which is a relational contract model. Looking into it more closely, I realized how simplified the model it (it seems very similar to a toy model discussed in Kozsegi’s behavioral contract survey paper). In a nutshell, nothing is new there; renegotiation occurs after the resolution of uncertainty and is motivated by continuation value.

Then I grew some vague interests into renegotiation and started to think about the implications of loss aversion on that. There is a paper by Herweg (right who else; such a fan) and Schmidt published on RESud in 2014. They investigate the effects of loss aversion on renegotiation; the reference point is set to be the ex-ante contract. Unsurprisingly, loss aversion hinders renegotiation thus imposes additional welfare loss (besides the part created by the loss function of course). The paper also touches upon authority contract, which I did not exactly understand. Though it seems to me that the paper focuses on what I call ex-post flexibility, such as the likelihood of renegotiation. On the other hand, ex-ante flexibility is rarely if at all mentioned. Hart and Moore 2008 (oh how much I like this paper) suggest that loss aversion also reduces the value of ex-ante flexibility. They assume that parties feel entitled to the best possible outcome allowed by the contract and would revenge by shading if it is not achieved ex post. As a result, a more inclusive contract creates entitlements to better outcomes thus increases the chance of shading. One avenue that is potentially interesting is to look at whether these two forms of flexibility is substitute or complement and which form is optimal given different level of loss aversion.

References
[1]Barron, Daniel, et al. Relational Adaptation under Reel Authority. mimeo MIT, 2015.
[2]Herweg, Fabian, and Klaus M. Schmidt. “Loss aversion and inefficient renegotiation.” The Review of Economic Studies (2014): rdu034.
[3]Hart, Oliver, and John Moore. “Contracts as reference points.” The Quarterly Journal of Economics 123.1 (2008): 1-48.