nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2005‒03‒20
nine papers chosen by
Marco Novarese
Universita del Piemonte Orientale

  1. The Value and Costs of Modularity: A Cognitive Perspective By Stefano Brusoni; Luigi Marengo; Andre Prencipe; Marco Valente
  2. To Know is to Be: Three Perspectives on the Codification of Knowledge By Mike Bartholomaei
  3. Estimation of an Adaptive Stock Market Model with Heterogeneous Agents By Amilon, Henrik
  4. Job Satisfaction in Europe By Namkee Ahn; Juan Ramón García
  5. Happy Birthday! You are Insured - Differences in Work Ethics Between Female and Male Workers By Skogman Thoursie, Peter
  6. Are Vietnamese Farmers Concerned with their Relative Position in Society? By Carlsson, Fredrik; Nam, Pham Khanh; Linde-Rahr, Martin; Martinsson, Peter
  7. Social Change By Jeremy Greenwood; Nezih Guner
  8. Measuring Organizational Capital in the New Economy By Black, Sandra E.; Lynch, Lisa M.
  9. Measuring the Impact of Research on Well-being: A Survey of Indicators of Well-being By Andrew Sharpe; Jeremy Smith

  1. By: Stefano Brusoni (CESPRI and CRORA, Bocconi University); Luigi Marengo (Università di Teramo); Andre Prencipe (Università G. D’Annunzio di Pescara, and SPRU, University of Sussex); Marco Valente (Università dell’Aquila, and DRUID, Aalborg Univ)
    Abstract: This paper discusses the issue of modularity from a problem-solving perspective. Modularity is in fact a decomposition heuristic, through which a complex problem is decomposed into independent or quasi-independent sub-problems. By means of a model of problem decomposition, this paper studies the trade-offs of modularity: on the one hand finer modules increase the speed of search, but on the other hand they usually determine lock-in into sub-optimal solutions. How effectively to balance this trade-off depends upon the problem environment and its complexity and volatility: we show that in stationary and complex environments there exists an evolutionary advantage to over-modularization, while in highly volatile – though “simple” – en- vironments, contrary to usual wisdom, modular search is inefficient. The empirical relevance of our findings is discussed, especially with reference to the literature on system integration.
    Keywords: modularity, problem solving, complex systems
    JEL: O3
    Date: 2004–08–30
  2. By: Mike Bartholomaei (SPRU, University of Sussex)
    Abstract: This paper presents three perspectives on the codification of knowledge. These perspectives are formed by recent contributions in the fields of economics, business and management studies and of a group of writers who have a ‘relational’ perspective from the field of organisational behaviour. A comparison of these differing views highlights not only epistemological boundaries between different approaches but can also lead to the novel approach to studying knowledge codification presented in this paper. This approach is based on the knowledge topography of Cowan et al. (2000). This paper also develops a research approach for examining the situated intricacies of knowledge sharing in group activities as a means for identifying opportunities for knowledge codification in settings where, so far, only tacit knowledge has been seen as the major focus. Such research may enable us to bridge the dichotomy of explicit versus tacit knowledge and the three perspectives on knowledge codification presented. Moreover, in-depth case studies on the possibilities for knowledge codification can advance both the academic and practical debate. (Cowan, R., David, P.A. and Foray, D. (2000) ‘The explicit economics of knowledge codification and tacitness’, Industrial and Corporate Change, 9(2), 211-254.)
    Keywords: Knowledge Codification, Knowledge Perspectives, Situated Study
    JEL: O3 D8
    Date: 2005–03–09
  3. By: Amilon, Henrik (European Central Bank)
    Abstract: Standard economic models based on rational expectations and homogeneity have problems explaining the complex and volatile nature of financial markets. Recently, boundedly rational and heterogeneous agent models have been developed and simulated returns are found to exhibit various stylized facts, such as volatility clustering and fat tails. Here, we are interested in how well the proposed models can explain all the properties seen in real data, not just one or a few at a time. Hence, we do a proper estimation of some simple versions of such a model by the use of efficient method of moments and maximum likelihood and compare the results to real data and more traditional econometric models. We discover two main findings. First, the similarities with observed data found in earlier simulations rely crucially on a somewhat unrealistic modeling of the noise term. Second, when the stochastic is more properly introduced we find that the models are able to generate some stylized facts, but that the fit generally is quite poor.
    Keywords: Efficient method of moments; heterogeneous expectations; bounded rationality; evolutionary dynamics; adaptive beliefs
    JEL: C13 C15 C32 C51 G12
    Date: 2005–01–01
  4. By: Namkee Ahn; Juan Ramón García
    Abstract: Job satisfaction is an important part of overall life satisfaction among the working age population. We examine Western Europeans’ overall job satisfaction and the satisfaction levels in several job domains using the European Community Household Panel Survey (1994-2001). With respect to overall job satisfaction, wage is important. Yet, some other factors show equally or more important effects. For example, health turns out to be a single most important determinant of overall job satisfaction. Job match quality, contract type and job status are also important. With respect to the relationship between overall and job domain satisfaction, work type comes out as the most important job domain in all countries, followed by pay, working condition and job security. In analyzing determinants of each job domain satisfaction, we find some interesting results. Female workers declare higher pay satisfaction but lower work hour satisfaction, which are consistent with the hypothesis of low aspiration and greater non-market responsibility among women. Good job matches increase satisfaction levels in all job domains, but in particular with respect to pay and work type. Local unemployment rate has no effects on overall job satisfaction, but it has significant effects in two job domains, job security and work hours. Those in countries or times of high unemployment declare much lower satisfaction with job security, while they declare higher satisfaction with hours of work. Finally, even after controlling many variables which are responsible, directly and indirectly, for overall and each job domain satisfaction, there still remain large country fixed effects. Given the same observed worker and job characteristics, Austrian, Danish and Irish workers declare substantially higher satisfaction in all job domains than the workers in the Mediterranean countries.
  5. By: Skogman Thoursie, Peter (FIEF)
    Abstract: In this paper information on individual birth dates is used as a natural experiment when estimating potential cheating behavior within the Swedish sickness insurance program. In the psychological literature there are theories why men and women react differently to ethical situations. Results in this paper are in line with these theories. The results indicate that only younger male workers cheated which supports the idea that men have lower work ethics. But additional findings also suggest that younger male workers do have some shame since they reported sick to a significant less extent the week before they had their birthday. In fact the net change in reporting sick is zero.
    Keywords: Reporting sick; Cheating; Work ethics; Natural experiment
    JEL: J22 J29
    Date: 2005–03–14
  6. By: Carlsson, Fredrik (Department of Economics, School of Economics and Commercial Law, Göteborg University); Nam, Pham Khanh (Faculty of Development Economics, University of Economics); Linde-Rahr, Martin (Department of Economics, School of Economics and Commercial Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Economics and Commercial Law, Göteborg University)
    Abstract: This paper examines the attitude towards relative position or status among rural households in Vietnam. On average, the respondents show weaker preferences for relative position than in comparable studies in Western countries. Possible explanations are the emphasis on the importance of equality and that villagers are very concerned with how the local community perceives their actions. We also investigate what influences the concern for relative position and find, among other things, that if anyone from the household is a member of the Peoples Committee then the respondent is more concerned with the relative position. <p>
    Keywords: Relative income; positionality; experiments; Vietnam; Asia
    JEL: C91 D63
    Date: 2005–03–16
  7. By: Jeremy Greenwood (University of Rochester); Nezih Guner (Pennsylvania State University)
    Abstract: Social norms are influenced by the technological environment that a society faces. Behavioral modes reflect purposive decision making by individuals, given the environment they live in. Thus, as technology changes, so might social norms. There were big changes in social norms during the 20th century, especially in sexual mores. In 1900 only six percent of unwed women engaged in premarital sex. Now, three quarters do. It is argued here that this was the result of technological improvement in contraceptives, which lowered the cost of premarital sex. The evolution from an abstinent to a promiscuous society is studied using an equilibrium matching model.
    Keywords: Social change; the sexual revolution; technological progress in contraceptives; bilateral search.
    JEL: E1 J1 O3
    Date: 2005–03
  8. By: Black, Sandra E. (UCLA, NBER and IZA Bonn); Lynch, Lisa M. (Tufts University, NBER and IZA Bonn)
    Abstract: A growing body of literature over the past decade suggests that a firm’s organizational structure/capital can contribute in significant ways to the productive capacity of a firm. But, as with other intangible assets, there is no consensus definition of what this organizational capital is, how to measure it, or how to best quantify its contribution to output (either current or future). We try to address this gap in the literature by proposing a definition of organizational capital based on recent empirical work on the impact of organizational capital on firm productivity and workers’ wages. We then discuss in detail how organizational capital has been measured and the measurement issues that face those trying to understand the extent of organizational capital in an economy.
    Keywords: human capital, productivity
    JEL: J2 D2
    Date: 2005–03
  9. By: Andrew Sharpe; Jeremy Smith
    Abstract: The main objective of this report is to conduct a survey and assessment of various indicators used by organizations, both in Canada and abroad, to measure attributes and the well-being of society at the economic, health, environmental, social, and cultural levels. The compilation includes a combination of quantitative and qualitative and objective and subjective indicators or measures. The report is divided into five major parts. The first part provides a brief overview of Canada’s research effort. The second part, by far the longest section, surveys a large number of sets of indicators and composite measures that have been developed to quantify well-being in Canada, in the United States, in OECD countries, and at the international level. The third section develops a preliminary framework for measuring the impact of research on well-being. The fourth section discusses briefly the role of indicators in public policy initiatives to improve the well-being of Canadians. The fifth and final section outlines directions for further work. The report concludes that it is entirely feasible to assess the impact of research investments in Canada on various dimensions of well-being. But it is important to specify what particular research investments and what dimensions of well-being are of interest given the many types of research investments and well-being dimensions as well as the complex interrelationships between research and well-being.
    Keywords: Well-being, Wellbeing, Well Being, Indicators, Indexes, Indices, Methodology, Economic Well-being, Economic, Social, Societal, Labour Market, Environmental, Research, R&D, Research and Development
    JEL: C82 C81 I31 I32 Z13 O30
    Date: 2005–02

This nep-cbe issue is ©2005 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.