Self-Esteem, Shame and Personal Motivation

Transcription

1 Roberta Dessí 1 Xiaojian Zhao 2 1 Toulouse School of Economics 2 Hong Kong University of Science and Technology

2 Literature In psychology, a large literature documents people s need for positive self-view. In economics, Bénabou & Tirole (2002, 2011) provide a rationale for over-confidence as a solution to the potential under-investment problem associated with time-inconsistent preferences, or as a means to enjoy psychological benefits through anticipatory utility.

3 Literature In psychology, a large literature documents people s need for positive self-view. In economics, Bénabou & Tirole (2002, 2011) provide a rationale for over-confidence as a solution to the potential under-investment problem associated with time-inconsistent preferences, or as a means to enjoy psychological benefits through anticipatory utility. However, confidence varies significantly across cultures. Heine et al. (1999) find striking differences in their review of the evidence on North America and Japan.

4 Heine & Lehman (1999) Heine & Lehman (1999) use Rosenberg s (1965) global self-esteem scores, based on items such as I am able to do things as well as most other people.

5 Heine & Lehman (1999)

6 Evidence on Self-Esteem and Biases Schmitt & Allik (2005) find significant difference on self-esteem scores in 53 nations. The 10 highest-ranked nations: Serbia, Chile, Israel, Peru, Estonia, U.S., Turkey, Mexico, Croatia, Austria. The 10 lowest-ranked nations: South Korea, Switzerland, Morocco, Slovakia, Fiji, Taiwan, Czech Republic, Bangladesh, Hong Kong, Japan. In Search of East Asian Self-Enhancement: Heine & Hamamura (2007) Incentivized beliefs of the US people: Svenson (1981), Burks et al. (2010)

7 Self-Criticism, Self-Improvement and Self-Discipline Considerable evidence of more self-critical orientation among Japanese, and greater emphasis on self-improvement Actual-ideal discrepancies are significantly larger for Japanese than Canadians. (Heine & Lehman) Kaizen (continuous improvement process) in Toyota in contrast to GM (Economist, Apr 14th 2009)

8 Self-Criticism, Self-Improvement and Self-Discipline Considerable evidence of more self-critical orientation among Japanese, and greater emphasis on self-improvement Actual-ideal discrepancies are significantly larger for Japanese than Canadians. (Heine & Lehman) Kaizen (continuous improvement process) in Toyota in contrast to GM (Economist, Apr 14th 2009) Japanese stories focus on how much pain their heroes are able to bear in contrast to the Hollywood movie where the hero succeeds in finding love or in catching the bad guy. (Benedict, 1946) In schools, Japanese children are taught the importance of perseverance whereas North American educators teach children self-confidence. (Lewis, 1995)

9 Shame Benedict (1946) characterized Japan as a shame culture. Japanese behavior is more sensitive to cues from the social environment than North American behavior, implying a very important role for shame. Thus Shame occupies a privileged position for Japanese. (Creighton (1990), Doi (1973), Heine et al. (1999), Johnson (1993), Kuwayama (1992)) Further evidence shows that shame holds a greater motivational and social significance in Japan than US. (Lebra (1983), Fessler (2007)) Chinese mothers narrative retelling of young children s transgressions focuses on inducing guilt and shame, while disciplinary practices of European-American middle-class mothers are more focused on maintaining and enhancing children s self-esteem. (Miller, Fung & Mintz (1996), Wiley et al. (1998))

10 Questions Why are North Americans and East Asians different regarding their self-confidence? How is shame related to self-discipline and self-confidence? Is there a link between these psychological differences and differences in economic and social institutions?

11 Timing t = 0: Each individual starts a project (activity): e.g., job, investment, relationship. Once they have started, individuals (privately) receive a signal informative about their ability/skill, θ. They choose whether to remember the signal or forget it. (recall strategy) t = 1: With (exogenous) probability π, the individual has the opportunity to continue the existing project. In this case, he can, at a cost, invest in self-improvement, thereby increasing the expected returns from the project. With probability 1 π, the existing project ends. In this case he has to decide whether to undertake a new project. t = 2: All project outcomes are realized.

12 Projects/Activities The initial project brings a benefit W if it succeeds and zero otherwise. The individual s ability θ [0, θ max ] is the probability of success. If the project is continued at t = 1, the individual decides whether to exert self-improvement effort: by incurring the cost k, he can increase the probability of success by (θ max θ)φ. If the existing project cannot be continued at t = 1, the individual can incur a cost c to undertake a new project, which will yield benefit V if successful and zero otherwise. The probability of success in this case is θ.

13 Preferences We allow for time-inconsistent preferences. Assume that individuals at t = 1 discount expected payoffs at t = 2 with a discount factor equal to βδ, where δ is the normal discount factor while β < 1 corresponds to hyperbolic discounting. See, e.g., Strotz (1955) and Laibson (1997). People give an excessive weight to the present.

14 Signals Self-0 receives a signal: s = B ( bad signal) with probability 1 q and s = (no signal) with probability q. The expected value of θ conditional on s is given by: θ L = E[θ s = B] < θ H = E[θ s = ] (1) Let ŝ be the signal transmitted by self-0 to self-1. If s =, there is no opportunity for signal manipulation; thus ŝ =. If s = B, self-0 may either communicate the signal truthfully to self-1 (ŝ = B), or he may decide to suppress the bad signal (ŝ = ).

15 Information At date 1, before making his investment or effort decision, self-1 privately learns respectively his cost c or k. At date 0, the cost c is known by self-0 to be uniformly distributed over the interval [c L, c H ]. Similarly the cost k is uniformly distributed over the interval [k L, k H ].

16 Recall Strategy Self-0 only chooses his recall strategy; that is, the probability of recalling correctly the bad signal: h = Pr[ŝ = B s = B] (2) We shall denote by h the beliefs held by self-1 concerning self-0 s strategy.

17 Information Transmission

18 Self-1 Belief Updating and Behavior If ŝ = B, there has been no suppression. If ŝ =, self-1 s estimated probability of an accurate signal is r = Pr[s = ŝ = ; h ] = implying that his revised belief is q q + (1 q)(1 h ) (3) θ = r θ H + (1 r )θ L > θ L (4) Self-1 will exert self-improvement effort if βδφ(θ max θ )W k (5) If the first project ends, self-1 undertakes the new project if βδθ V c 0 (6)

19 Self-0 Strategy When s = B, if self-0 transmits the signal accurately to self-1 (ŝ = B), his expected utility is: U T (θ L ) = π [ δθ L W + βδφ(θ max θ L )W k L {δφ(θ max θ L )W k}dg(k) βδθl V + (1 π) {δθ L V c}df (c) (7) c L ]

20 Self-0 Strategy If self-0 suppresses the bad signal (ŝ = ), his expected utility is: U S (θ L, θ(r )) [ =π δθ L W + + (1 π) βδφ(θ max θ )W k L βδθ V {δφ(θ max θ L )W k}dg(k) c L {δθ L V c}df (c) (8) ]

21 The Costs and Benefits of Overconfidence The net gain from suppressing the bad signal is U S (θ L, θ(r )) U T (θ L ) = π Tradeoff: βδφ(θ max θ L )W + (1 π) βδφ(θ max θ )W βδθ V βδθ L V {δφ(θ max θ L )W k}dg(k) {δθ L V c}df (c) (9) Benefits: Overconfidence alleviates the under-investment problem for new project decisions. Costs: Overconfidence exacerbates the problem of under-provision of self-improvement effort.

22 Perfect Bayesian equilibria (PBE) Proposition There exist two threshold values, π H and π L (with π H > π L ), such that: (i) if π > π H, there is a unique PBE with h = 1; (ii) if π < π L, there is a unique PBE with h = 0; (iii) otherwise, there are three PBEs: the two pure-strategy equilibria with h = 1 and h = 0, and a mixed-strategy equilibrium.

23 Shame If the first project has ended, self-1 will undertake the new project if βδθ V c S (10) While self-improvement effort is only privately known, an individual s investment in the new project may be, at least imperfectly, observable (e.g. starting a new business, a new job, new relationships, moving to a different location).

24 How much shame? Is it ever socially desirable to have a strictly positive cost of shame? How much shame, if any, is socially optimal? The optimal social choice of S in can be studied as a representative individual s ex-ante choice behind the veil of ignorance (Rawls, 1971). Psychological cost: Individuals sensitivity to feelings of shame can be fostered, or reduced, by the social environment in which they grow up (family, school, neighborhood, media, etc.). Material cost: Society determines not only what constitutes shameful behavior, but also a variety of sanctions correlated with the degree of shamefulness, ranging from mild disapproval to social stigma, ostracism and different kinds of prohibitions and punishments.

25 Very Stable Societies In very stable societies, where π > max(π H, πh S ), there is a unique Perfect Bayesian equilibrium where self-0 always transmits his observed signal truthfully. Proposition In very stable societies, where π > max(π H, πh S ), it will be socially optimal to impose a strictly positive cost of shame S = c H βδθ L V if, and only if, the following condition holds: δv (θ β 2 θ L) 1 2 c H > 0.

26 Interpretation East-Asians in a stable agrarian society are more self-critical, and view themselves as incomplete, and therefore search for their own weakness. (no over-confidence) (h = 1) They have a strong shame culture. (S = c H βδθ L V ) They are hard-working, even when this is too costly for them. (over-investments) See, e.g., Heine et al. (1999), Miller, Fung & Mintz (1996), Wiley et al. (1998)

27 Very Dynamic Societies Proposition In very dynamic societies, where π < min(π L, πl S ), we have two possible equilibria: (i) An equilibrium with overconfidence (suppression of bad signal) and no cost of shame (S = 0) (ii) An equilibrium without overconfidence (truthful transmission) and a high cost of shame (S = c H βδθ L V ).

28 Interpretation Shame and overcondifence emerge as substitute mechanisms in a dynamic industrial society. Overconfidence equilibrium: North America? Shame equilibrium: Four Asian Tigers (Hong Kong, Singapore, South Korea, Taiwan) and Japan?

29 Towards a Unified Theory of Economics and Psychology... behavioral economists (and economic theorists!) should devote more effort to synthesizing existing models and developing more general ones, and less effort to modeling yet another particular behavioral observation. Drew Fudenberg, Advancing beyond Advances in Behavioral Economics, Journal of Economic Literature, 2006, 44(3) p. 699

30 Towards a Unified Theory of Economics and Psychology... behavioral economists (and economic theorists!) should devote more effort to synthesizing existing models and developing more general ones, and less effort to modeling yet another particular behavioral observation. Drew Fudenberg, Advancing beyond Advances in Behavioral Economics, Journal of Economic Literature, 2006, 44(3) p. 699 Our aim has been to develop a simple unifying framework that allows for time inconsistent preferences (hyperbolic discounting), social preferences (shame), and biased beliefs (over-confidence), and thereby shed light on endogenized cultural differences in self-esteem, self-discipline and shame.