Effortful Bayesian updating: A pupil-dilation study

Abstract

When confronted with new information, rational decision makers should update their beliefs through Bayes’ rule. In economics, however, new information often includes win-loss feedback (profits vs. losses, success vs. failure, upticks vs. downticks). Previous research using a well-established belief-updating paradigm shows that, in this case, reinforcement learning (focusing on past performance) creates high error rates, and increasing monetary incentives fails to elicit higher performance. But do incentives fail to increase effort, or rather does effort fail to increase performance? We use pupil dilation to show that higher incentives do result in increased cognitive effort, but the latter fails to translate into increased performance in this paradigm. The failure amounts to a “reinforcement paradox:” increasing incentives makes win-loss cues more salient, and hence effort is often misallocated in the form of an increased reliance on reinforcement processes. Our study also serves as an example of how pupil-dilation measurements can inform economics.

Attentional shifts and preference reversals: An eye-tracking study

“…Most of the recent studies in this and related fields target gaze and fixation data to study search patterns or processes of information acquisition (e.g., Knoepfle et al, 2009;Reutskaja et al, 2011;Polonio et al, 2015;Devetag et al, 2016;Polonio & Coricelli, 2019). Exceptions are Wang et al (2010), who (in addition to fixation patterns) examined pupil dilation in sender-receiver games and found larger pupil dilation when deceiving messages were sent and Alós-Ferrer et al (2019), who used pupil dilation as an indicator for cognitive effort in a Bayesian Updating task with varying incentives.…”

The Zero Effect: An Eye‐Tracking Study of Affect and Motivation in Risky Choices

“…Pupillometry provided an opportunity to measure the affective processes driving the zero effect. Pupillary responses are influenced by various factors, for instance, cognitive effort (Kahneman and Beatty 1966;Alós-Ferrer, Jaudas, and Ritschel 2021b), arousal due to decision uncertainty (Urai, Braun, and Donner 2017), and cognitive conflict (van Steenbergen and Band 2013). Pupil size changes can also be interpreted as indicators of the intensity of an affective experience, or arousal more generally (e.g., Bradley et al 2008;Hochman et al 2016;Kinner et al 2017).…”

“…Researchers increasingly rely on the measurement of eye movements and pupillometry to investigate the attentional processes involved in economic decisions (Alós‐Ferrer, Jaudas, and Ritschel 2021a, 2021b; Fiedler and Glöckner 2012; Krajbich, Armel, and Rangel 2010; Lohse and Johnson 1996; Orquin and Mueller Loose 2013; Schulte‐Mecklenbeck, Kühberger, and Johnson 2019; Smith and Krajbich 2019; Stewart, Hermens, and Matthews 2016). Eye‐tracking is useful to explore automatic visual attention processes in decision making because it captures unconscious processes.…”

Predicting Product Preferences on Retailers’ Web Shops through Measurement of Gaze and Pupil Size Dynamics

“…It is generally accepted that pupil dilation is a result of noradrenergic locus coeruleus activity ( Breton-Provencher & Sur, 2019 ; Joshi, Li, Kalwani, & Gold, 2016 ; Liu, Rodenkirch, Moskowitz, Schriver, & Wang, 2017 ; Murphy, O’Connell, O’Sullivan, Robertson, & Balsters, 2014 ; Reimer et al, 2016 ). Fluctuations in pupil size can be an indication of different mental processes (for a review, see: Binda & Murray, 2015 ; Joshi & Gold, 2020 ; Mathot, 2018 ; Strauch, Wang, Einhäuser, Van der Stigchel, & Naber, 2022 ), such as memory load ( Kahneman, 1966 ), cognitive effort ( Alós-Ferrer, Jaudas, & Ritschel, 2021 ), conflict processing ( van Steenbergen & Band, 2013 ), surprise ( Preuschoff, t Hart, & Einhauser, 2011 ), and (emotional) arousal ( Reimer et al, 2014 ; Reuten, van Dam, & Naber, 2018 ; Vinck, Batista-Brito, Knoblich, & Cardin, 2015 ). All are related to sympathetic nervous system activity ( Bradley, Miccoli, Escrig, & Lang, 2008 ).…”