A Case of Evolutionary Mismatch? Why Facial Width-to-Height Ratio May Not Predict Behavioral Tendencies.

This study contributes to the growing literature linking physical characteristics and behavioral tendencies by advancing the current debate on whether a person's facial width-to-height ratio (fWHR) predicts a variety of antisocial tendencies. Specifically, our large-scale study avoided the social-desirability bias found in self-reports of behavioral tendencies by capturing survey data not only from more than 1,000 business executives but also from evaluators who reported knowing the focal individuals well. With this improved research design, and after conducting a variety of analyses, we found very little evidence of fWHR predicting antisocial tendencies. In light of prior research linking fWHR to social perceptions of evaluators, our results are suggestive of an evolutionary mismatch, whereby a physical characteristic once tied to antisocial tendencies in ancestral environments is-in modern environments-not predictive of such behaviors but instead predictive of biased perceptions.

Ethnic diversity deflates price bubbles.

Markets are central to modern society, so their failures can be devastating. Here, we examine a prominent failure: price bubbles. Bubbles emerge when traders err collectively in pricing, causing misfit between market prices and the true values of assets. The causes of such collective errors remain elusive. We propose that bubbles are affected by ethnic homogeneity in the market and can be thwarted by diversity. In homogenous markets, traders place undue confidence in the decisions of others. Less likely to scrutinize others' decisions, traders are more likely to accept prices that deviate from true values. To test this, we constructed experimental markets in Southeast Asia and North America, where participants traded stocks to earn money. We randomly assigned participants to ethnically homogeneous or diverse markets. We find a marked difference: Across markets and locations, market prices fit true values 58% better in diverse markets. The effect is similar across sites, despite sizeable differences in culture and ethnic composition. Specifically, in homogenous markets, overpricing is higher as traders are more likely to accept speculative prices. Their pricing errors are more correlated than in diverse markets. In addition, when bubbles burst, homogenous markets crash more severely. The findings suggest that price bubbles arise not only from individual errors or financial conditions, but also from the social context of decision making. The evidence may inform public discussion on ethnic diversity: it may be beneficial not only for providing variety in perspectives and skills, but also because diversity facilitates friction that enhances deliberation and upends conformity.