Auditing versus monitoring and the role of commitment

This paper studies the effect of timing and commitment of verification in a principal-agent relationship with moral hazard. To acquire additional information about the agent’s behavior, the principal possesses a costly technology that produces a noisy signal about the agent’s effort choice. The precision of this signal is affected by the principal’s verification effort. Two verification procedures are discussed: monitoring where the principal verifies the agent’s behavior simultaneously with his effort choice and auditing where the principal can condition her verification effort on the realized outcome. As it is well known, the principal prefers to audit the agent’s behavior if she can commit to her verification effort at the time of contracting. The main contribution of this paper is to highlight the importance of commitment by the principal to her verification effort. In particular, I show that, when the principal cannot commit to her verification effort ex-ante, the principal strictly prefers monitoring to auditing if the gains from choosing high effort are sufficiently high.

Trading mental effort for confidence in the metacognitive control of value-based decision-making

Why do we sometimes opt for actions or items that we do not value the most? Under current neurocomputational theories, such preference reversals are typically interpreted in terms of errors that arise from the unreliable signaling of value to brain decision systems. But, an alternative explanation is that people may change their mind because they are reassessing the value of alternative options while pondering the decision. So, why do we carefully ponder some decisions, but not others? In this work, we derive a computational model of the metacognitive control of decisions or MCD. In brief, we assume that fast and automatic processes first provide initial (and largely uncertain) representations of options' values, yielding prior estimates of decision difficulty. These uncertain value representations are then refined by deploying cognitive (e.g., attentional, mnesic) resources, the allocation of which is controlled by an effort-confidence tradeoff. Importantly, the anticipated benefit of allocating resources varies in a decision-by-decision manner according to the prior estimate of decision difficulty. The ensuing MCD model predicts response time, subjective feeling of effort, choice confidence, changes of mind, and choice-induced preference change and certainty gain. We test these predictions in a systematic manner, using a dedicated behavioral paradigm. Our results provide a quantitative link between mental effort, choice confidence, and preference reversals, which could inform interpretations of related neuroimaging findings.

Do people avoid mental effort after facing a highly demanding task?

Ego depletion effects are usually examined in a sequential task paradigm in which exerting mental effort in a first task is thought to affect performance on a subsequent self-control task. A so-called ego depletion effect is observed if performance on the second task is impaired for the high demand relative to the low demand group. The present studies take a different approach. Instead of measuring performance in the second task that is equally difficult for all participants, the present studies investigated effects of effortful exertion on the choice to willingly exert effort on a subsequent task. Three pre-registered studies investigated if participants select less effort demanding math problems for upcoming tasks compared to a control group after exerting mental effort in an initial task. Results were mixed. Study 1 (N = 86) revealed no significant effect of mental effort exertion on mean choice difficulty. In Study 2 (N = 269), the expected effect emerged in an exploratory analysis when controlling for math self-assessment, which was robustly associated with the choice measure. Study 3 (N = 330) descriptively, albeit non-significantly replicated this result. An internal random-effects meta-analysis revealed a small overall effect of g = 0.18 when accounting for math self-assessment, albeit with large heterogeneity. Exploratory analyses point to the importance of the subjective experience of mental effort in effort-selection paradigms. We discuss the implications of the small overall effect size for future research and the possibility to examine effort choice in everyday life.

Trading Mental Effort for Confidence: The Metacognitive Control of Value-Based Decision-Making

ABSTRACTWhy do we sometimes opt for actions or items that we do not value the most? Under current neurocomputational theories, such preference reversals are typically interpreted in terms of errors that arise from the unreliable signaling of value to brain decision systems. But, an alternative explanation is that people may change their mind because they are reassessing the value of alternative options while pondering the decision. So, why do we carefully ponder some decisions, but not others? In this work, we derive a computational model of the metacognitive control of decisions or MCD. In brief, we assume that fast and automatic processes first provide an initial (and largely uncertain) representation of options’ values, yielding prior estimates of decision difficulty. This uncertain value representation is then refined by deploying cognitive (e.g., attentional, mnesic) resources, the allocation of which is controlled by an effort-confidence tradeoff. Importantly, the anticipated benefit of allocating resources varies in a decision-by-decision manner according to the prior estimate of decision difficulty. The ensuing MCD model predicts choices, response time, subjective feeling of effort, choice confidence, and choice-induced preference change. We test these predictions in a systematic manner, using a dedicated behavioral paradigm. Our results provide a quantitative link between mental effort, choice confidence, and preference reversals, which could inform interpretations of related neuroimaging findings.

A Gift-Exchange With Probabilistic Payoffs

This article describes how there exists ample experimental evidence demonstrating a positive wage-effort relationship in which the results from the employee's effort lead to deterministic firm payoffs. The authors thus investigate a reframed version of the gift-exchange game in which the firms' payoffs can take two values, one of them is randomly determined by an external process after the effort choice has been made. They find that effort levels are significantly lower when payoffs are probabilistic than when they are deterministic. As a consequence, high waging is profitable in the deterministic, but not in the probabilistic condition. Moreover, the treatment effect is strongest among firms which offer high wages.