Do you treat a $20 bill differently than twenty $1 bills?

From Eric Barker’s blog:

Labeled the “denomination effect,” study 1 shows in three field studies that the likelihood of spending is lower when an equivalent sum of money is represented by a single large denomination (e.g., one $20 bill) relative to many smaller denominations (e.g., 20 $1 bills). In two of the three field studies, individuals spent more once the decision to spend had been made. Study 2 then shows that consumers deliberately choose to receive money in a large denomination relative to small denominations when there is a need to exert self‐control in spending. Study 3 further shows that the denomination effect is contingent on individual differences in people’s desire to reduce the pain of paying associated with spending. The results suggest that the denomination effect occurs because large denominations are psychologically less fungible than smaller ones, allowing them to be used as a strategic device to control and regulate spending.

Source: “The Denomination Effect” from Journal of Consumer Research, DOI: 10.1086/599222

This interests me because I tend to fall prey to such irrational behavior.

More on the prisoners’ dilemma

One of my favorite blogs, Evolved Primate, talks about how sex differences affect cooperative behavior in a prisoners’ dilemma setting:

One of the more surprising findings in these studies has been the conspicuous absence of sex related differences in cooperative behavior, as in most of the conducted experiments to date – and certainly for all results taken together – men and women seem to exhibit virtually identical rates of cooperation. This is surprising, not only because it runs counter to stereotypical clichés (intentional) about sex and gender roles, but also because it appears to conflict with competing theories in evolutionary psychology which support the notion that women and men should exhibit different behavior when it comes to cooperation.

However, results differ when they are being watched:

All of the participants were first randomly assigned to groups of 20 people, and then they played prisoner’s dilemma games against each other and against members of the other groups. In each of the experimental games, the two interacting players were watched by one of the respective groups. That is, one player was watched by his or her own group (in-group), while the other was watched by the opposing players group (out-group).

By further separating between exclusively male, exclusively female, and mixed groups in this experiment, the researchers were then able to produce a rich data set on the differential behavior of men and women in this prisoner’s dilemma with an audience. The results are summarized as follows:

Overall men and women are again found to exhibit similar levels of cooperativeness. However, the tendency to cooperate in this new design is crucially dependent on who is watching. Men cooperate less when being watched by their own group, than when being watched by the opponent’s group. Women display the opposite pattern; they cooperate when their peers are watching, but not when only members of an “out-group” are watching. The rate of cooperation when peers are watching is higher for women than it is for men, although both exhibit comparable rates of cooperation when being watched by an out-group audience. The lack of an overall gender difference in cooperativeness therefore appears to be a result of the differing responses to who is watching, and the fact that these responses run in opposite directions for men and women.

In summary, the results support the hypothesis of qualitatively different responses to social dilemmas between men and women. From an evolutionary perspective it may be argued that

“while both males and females wish to gain the approval of their in-group members, the actions that are socially desirable differ across gender. Males wish to signal that they are formidable, while females wish to signal that they are cooperative.”


Ok, I was initially a little skeptical about the concept, especially since I have no use for games.

Nonetheless I’ve fallen prey to the confirmation bias. I’ve finally thought of a reason to get the iPad: iWork. Don’t you agree it’s a fun and sensible way to view your lecture notes? There’s Pages, Keynote, and Numbers.

iBooks is a big plus too, but I guess substituting the iPad for your textbooks isn’t about to happen any time soon:

In unveiling its new iBook application and iBookstore for the iPad, Apple highlighted a number of publishers with which it has content agreements. But those deals, for now, are U.S.-only, and one glaring omission stood out from the list: McGraw-Hill.

Nobelist Gary Becker’s comment on how the economics of the e-book industry might change as a result of the iPad:

Mysteries, beach-reading books, biographies, and other books with a general appeal that are read while traveling or on holidays are most suitable for e-readers. Why pay more to buy hard copies of such books when it is far more convenient to carry many books around in a digital form? Less attractive for e-readers are more technical books, such as books on economic theory or mathematics, where it is frequently necessary to go back and forth between earlier and later discussions. These books are much less likely to be popular in e-book form than the less technical and quick-read books.

I’d like to add that textbook material on the iPad will be a deal sweetener for university students. Think about all the times you’ve had to lug the textbook to school just to refer to a certain page for tutorial questions.

Unfortunately, these aside, I have absolutely no use for the iPad.