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Adriana de Regás Abel Seminar 103 Economic Institutions and Markets Problem Set 1: New Cognitive Perspectives 1. The psychology of political elections a) I think that the article was right to suggest that introducing a third candidate in political races often benefits one of the two main runners. This phenomenon, mostly known as the decoy effect, causes a specific change in people’s preferences between the two main candidates when a third party is also presented, this last one being asymmetrically dominated. This means that the entrance of a new candidate makes one of the two main options more attractive, which could actually help both main candidates. This is because consumers now are more focused on their main target (the candidate they want to vote for) and nudges them away from the competitor. b) A past political race example of this effect could be the presidential run in 2008 of the USA. The two main candidates, both in the Democratic field, were Obama and Hilary Clinton. John Edwards was introduced as the third candidate, which made people more certain about whether to vote for Obama or Clinton. Being able to compare both main runners with a new-joint candidate makes people’s ideas clearer about who they want to vote for. One example of the decoy effect can be reflected in the catalan elections of 2012, where la CUP (candidatura de union popular) ran for the elections for the first time in the autonomic elections and its appearance benefited ERC in comparison to the autonomic elections in 2010, as they represented similar beliefs (both being leftwing parties) but ERC were less extreme. In 2012, ERC ended up as the third most voted party while in 2010 they ended up in the fifth place. So we can see that the introduction of la CUP as a leftwing third candidate helped ERC get more votes. CiU (convergencia i unio) was the other main candidate. 2. Gossip According to evolutionary psychology, people needed gossip in order to survive the social conditions. Thus, the use of this skill became over time part of our mental programming. In the Stone Age, the individuals who were in control of the clan changed rapidly. Survivors were those smart enough to anticipate such power shifts and adjust to them, showing a skill for gossip. Nowadays, we can see these examples: in today's office environment the people who chat with just the right people at just the right time often put themselves in the right position. Now, gossip is seen as a resource of good integration into society: money, sex, power, health… Gossip is focused on these main issues because it is what people are more interested about. Acquiring a high and developed knowledge in these areas allows you to integrate into society. That’s the reason behind the use and abuse of social media, which give us easy access to all kinds of gossip: people want and like to know about others. In advertising, this theory can be implemented when using the image of a celebrity to promote your products, which high-values your brand and people see it as a good quality product. For example, Lays

Adriana de Regás Abel Seminar 103 recent advertisements show Messi as the main image of the product. As a lot of people admire Messi, they value what he is promoting. This will make people want to buy Lays. 3. Polyandry 1) Marrying men from the same family helped parents promote the survival of their own genes. This helped their children to have a better chance of survival, because humans tend to be more benevolent towards their own descendants. Thus, a woman marrying two men from different families meant that the biological father of the children was often unknown, creating a conflict of interest. would have destroyed this emotional commitment as both families would feel betrayed by the woman. 2) The changes in the individual’s environment and the adaptation and evolution of past institutions made polyandry disappear over time. This reflects the capacity of the human being to adapt their behaviour to the changes in the environment. 3) If some wifes married to or three brothers, I think that the rest of the women were left with no man to marry.

QUESTIONS: 1. The economic organization of our hunter-gathering ancestors was based on reproduction due to natural selection and self-preservation, meaning that only the best individuals survived. The activity of hunting animals and gathering fruits enabled the development of new technologies such as arrows and knives, among other weapons. They became knowledge specialists in that field and this specialization in cognition helps us understand our excellent environmental performance. 2. Having an “ecological” mind means that it has adapted to certain environments, both our common ancestral environment and our learning environment. This, in fact, causes maladaptation. Individuals who fail to adapt correctly to the rapid change in the environment are said to be maladapted. In terms of rationality, our mind is said to be economical as we only tend to spend those resources required to succeed. For example, humans tend to think that lottery numbers with repeated digits have less probability than numbers with different digits, when actually both numbers have the same probability. Cooperation was costly to achieve because individuals were not used to exchanging their own goods with other people. 3. Emotions help individuals make decisions, providing solutions that are not only faster and better adapted, but also better than rational. 4. -

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Your friend tells you that her boyfriend cheated on her. This creates a bad reputation on him and you judge her actions negatively assuming he is a bad person. If someone tackles you in a football match, you might get angry with him/her and kick him back or insult him. you end up being sent off the match by the referee, leaving your team with one person less on the pitch.

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At work, I can do my task by myself and get good results. My coworkers and I know that if we all help each other, we can get even better results so we end up doing the work together. When a football player is near to the goal and sees his teammate who is better positioned to score, he decides to pass him the ball instead of scoring himself.

6. I think that our biology is still linked to our ancestral environment as hunter-gathering (taking care of what is ours). On the other hand, culture makes individual’s specific behaviour different, making them more benevolent towards their own descendants. 7. The role of institutions helps humans overcome our evolutionary constraints through self and social control, enhancing our capacity to be more rational and interactive....