nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2005‒05‒07
thirteen papers chosen by
Marco Novarese
Universita del Piemonte Orientale

  1. Cognition in spatial dispersion games By Blume,Andreas; DeJong,Douglas V.; Maier,Michael
  2. Learning strategic sophistication By Blume,Andreas; DeJong,Douglas V.; Maier,Michael
  3. Law and behaviours in social dilemmas: testing the effect of obligations on cooperation By Galbiati,Roberto; Vertova,Pietro
  4. Technology Frames: The Art of Perspective and Interpretation in Strategy By Virginia Acha
  5. Organisational Memory and Innovation Across Projects: Integrated Service Provision in Engineering Design Firms By Eugenia Cacciatori
  6. The connections between the Austrian tradition and some of the recent developments relating to the economic analysis of institutions. By Pierre Garrouste
  7. Effects of culture on tax compliance: A cross check of experimental and survey evidence By Ronald G. Cummings; Jorge Martinez-Vazquez; Michael McKee; Benno Torgler
  8. Intrinsic Motivation in Open Source Software Development By Jürgen Bitzer; Wolfram Schrettl; Philipp J.H. Schröder
  9. Testing Explanations of Preference Reversal: a Model By Yves Alarie; Georges Dionne
  10. Credit Rationing in a Basic Agent-Based Model By Guido Fioretti
  11. Knowledge and Preference in Reporting Financial Information By Honggao Cao; Daniel H. Hill
  13. A taxinomy of the collective figures of coordination of action: from convention to routine (In French) By Med KECHIDI (LEREPS-GRES)

  1. By: Blume,Andreas; DeJong,Douglas V.; Maier,Michael (Tilburg University, Center for Economic Research)
    Abstract: In common-interest spatial-dispersion games the agents common goal is to choose distinct locations. We experimentally investigate the role of cognition in such games and compare it with the role of cognition in spatial matching games. In our setup cognition matters because agents may be differentially aware of the dispersion opportunities that are created by the history of the game. We ask whether cognitive constraints limit the agents ability to achieve dispersion and, if there is dispersion, whether these constraints affect the mode by which agents achieve dispersion. Our main finding is that strategic interaction magnifies the role of cognitive constraints. Specifically, with cognitive constraints, pairs of agents fail to solve a dispersion problem that poses little or no problem for individual agents playing against themselves. When we remove the cognitive constraints in our design, pairs of agents solve the same problem just as well as individuals do. In addition, we find that when playing against themselves agents do not change the mode by which they solve the dispersion problem when our design removes the cognitive constraints.
    JEL: C72 C92
    Date: 2005
  2. By: Blume,Andreas; DeJong,Douglas V.; Maier,Michael (Tilburg University, Center for Economic Research)
    Abstract: We experimentally investigate coordination games in which cognition plays an important role, i.e. where outcomes are affected by the agents level of understanding of the game and the beliefs they form about each others understanding. We ask whether and when repeated exposure permits agents to learn to improve cognition in a strategic setting. We find evidence for strategic sophistication being learned, generalized and promoted. Agents acquire strategic sophistication in simple settings. They may fail to do so in similar but more demanding settings. Given the opportunity, they transfer learning from the simple to the more demanding task. There is heterogeneity in sophistication. We find some evidence for sophisticated agents trying to spread sophistication early in the game, provided there is a long enough time horizon.
    JEL: C72 C92
    Date: 2005
  3. By: Galbiati,Roberto; Vertova,Pietro (Tilburg University, Center for Economic Research)
    Abstract: Laws consist of two components: the 'obligations' they express and the 'incentives' designed to enforce them. In this paper we run a public good experiment to test whether or not obligations have any independent effect on cooperation in social dilemmas. The results show that, for given marginal incentives, different levels of minimum contribution required by obligation determine significantly different levels of average contributions. Moreover, unexpected changes in the minimum contribution set up by obligation have asymmetric dynamic effects on the levels of cooperation: a reduction does not alter the descending trend of cooperation, whereas an increase induces a temporary re-start in the average level of cooperation. Nonetheless, obligations per se cannot sustain cooperation over time.
    JEL: C91 C92 H26 H41 K40
    Date: 2005
  4. By: Virginia Acha (SPRU, University of Sussex)
    Abstract: In this paper, I bring together the literatures of the economics of innovation, corporate strategy and managerial and organizational cognition to explore how and why companies come to different conclusions and strategies for technology when presented with essentially very similar situations and information. Building on the work of Orlikowski and Gash (1994) on technological frames, I seek to explore the role of the technology frame of key senior managers in defining corporate strategy with respect to technology. To provide an empirical basis for the study, I take the case of the 6 leading US vertically integrated oil companies involved in the exploration and production of petroleum during the period 1984 to 1997. The analysis considers two key salients for the technology frame which are operationalised for the six companies based on their R&D expenditures, patents, publications and contrasted with their operational performance measures. These salients reflect respectively adaptational mapping (whereby signals in the environment prompt adaptation) and formational mapping (whereby experience and path-dependency influence interpretation) within the technology frame. The findings indicate support for the proposed approach to proxying technology frames on the two key points of salience for the upstream petroleum industry, and the paper concludes with a short discussion of future lines of research.
    Keywords: technology frames, upstream petroleum, technology strategy, adaptational mapping, formational mapping
    JEL: O32
    Date: 2005–04–26
  5. By: Eugenia Cacciatori (CRORA, Bocconi University and SPRU, University of Sussex)
    Abstract: This paper provides an exploration of the dynamics of organisational remembering in firms operating through projects. The paper focuses in particular on the deliberate use of experience accumulated in the past in order to sustain innovation in the provision of services. It relies on the notions of boundary objects and brokers to empirically explore how a common memory crossing occupational and organisational boundaries is built. In so doing, it highlights how a boundary object as memory device in a project environment operates at different levels, i.e. personal, project-specific, organisational-specific and occupational specific, and how it takes different formats to perform its roles at each level. Finally, the paper highlights the role of specific communities, beyond that of specific individuals, as boundary brokers.
    Keywords: project development, innovation processes, organisational memory, boundary brokers
    JEL: O22 O31
    Date: 2005–04–26
  6. By: Pierre Garrouste
    Abstract: This paper has two aims. First, it studies the way the Austrian theory of institutions evolved from the main works of Menger. Second, and most significantly, it tries to justify the idea that the economic analysis of institutions was inspired more or less explicitly by Menger’s thesis but more generally by the Austrian intuitions and thesis. These intuitions and theses are however amended in order to make them more formalized as well as testable.
    Keywords: Menger; Austrian tradition; emergence of the institutions; economic analysis of institutions.
    JEL: B25 B3 D0
  7. By: Ronald G. Cummings; Jorge Martinez-Vazquez (Andrew Young School of Policy Studies, Georgia State University); Michael McKee; Benno Torgler
    Abstract: There is considerable evidence that enforcement efforts can increase tax compliance. However, there must be other forces at work because observed compliance levels cannot be fully explained by the level of enforcement actions typical of most tax authorities. Further, there are observed differences, not related to enforcement effort, in the levels of compliance across countries and cultures. To fully understand differences in compliance behavior across cultures one needs to understand differences in tax administration and citizen attitudes toward governments. The working hypothesis is that cross-cultural differences in behavior have foundations in these institutions. Tax compliance is a complex behavioral issue and its investigation requires the use of a variety of methods and data sources. Results from laboratory experiments conducted in different countries demonstrate that observed differences in tax compliance levels can be explained by differences in the fairness of tax administration, in the perceived fiscal exchange, and in the overall attitude towards the respective governments. These experimental results are shown to be robust by replicating them for the same countries using survey response measures of “tax morale.”
    Keywords: tax compliance, tax morale, tax authorities
    Date: 2004–08–01
  8. By: Jürgen Bitzer (Free University Berlin Department of Economics & Institute for East European Studies); Wolfram Schrettl (Free University Berlin Department of Economics & Institute for East European Studies); Philipp J.H. Schröder (Aarhus School of Business)
    Abstract: This papers sheds light on the puzzling evidence that even though open source software (OSS) is a public good, it is developed for free by highly qualified, young and motivated individuals, and evolves at a rapid pace. We show that once OSS development is understood as the private provision of a public good, these features emerge quite naturally. We adapt a dynamic private-provision-of-public-goods model to reflect key aspects of the OSS phenomenon. In particular, instead of relying on extrinsic motives (e.g. signaling) the present model is driven by intrinsic motives of OSS programmers, such as user- programmers, play value or 'homo ludens' payoff, and gift culture benefits. Such intrinsic motives feature extensively in the wider OSS literature and contribute new insights to the economic analysis.
    Keywords: open source software, public goods, homo ludens, war of attrition
    JEL: L86 H41 L31
    Date: 2005–05–04
  9. By: Yves Alarie; Georges Dionne
    Abstract: When Cubitt, Munro and Starmer (2004) presented their new experimental investigation of preference reversal, they pointed out that their test results cannot be explained by any of the best-known explanations proposed by economists and psychologists. In this paper we propose a model based on lotteries qualities to explain these new test results.
    Keywords: Standard preference reversal, counter preference reversal, choice task, money valuation task, probability valuation task, lottery, test
    JEL: D80
    Date: 2005
  10. By: Guido Fioretti (University of Bologna)
    Abstract: A simple agent-based model of business units lending money to one another is sufficient to understand on what conditions avalanches of bankruptcies may arise. The model highlights the consequences of specialisation into money lending as well as the impact of preferential lending relations.
    Keywords: Financial Fragility, Avalanches of Bankruptcies, Agent-Based Models
    JEL: G
    Date: 2005–05–03
  11. By: Honggao Cao (University of Michigan); Daniel H. Hill (University of Michigan)
    Abstract: This article models respondent behavior in a financial survey with a framework explicitly integrating a respondent’s knowledge of and willingness to reveal his or her financial status. Whether a respondent provides a valid answer, a “don’t know”, or a “refusal” to a financial question depends on the interaction of his or her financial knowledge and preferences regarding revealing the knowledge. Using asset response and nonresponse data from the Health and Retirement Study (2000), we found that knowledge and preferences play interrelated roles in reporting financial information, that a respondent’s age, gender, education, and race and ethnicity are important predictors of respondent behavior, and that race and ethnicity affect a respondent behavior only via their influence on preferences, while gender only via its influence on knowledge. We also found strong heterogeneity in respondents’ financial knowledge and their willingness to reveal the knowledge.
    Date: 2005–03
  12. By: Pascual Berrone; Jordi Surroca; Josep A. Tribo
    Abstract: In this article, we empirically assess the impact of the Corporate Ethical Identity (CEI) on the firm’s financial performance. Drawing on formulation of both normative and instrumental stakeholder theory, we argue that firms with a strong ethical identity achieve greater degree of stakeholder satisfaction, which in turn, positively influence the firms’ financial performance. We further analyze two different dimensions of the CEI of firms: corporate revealed ethics and corporate applied ethics. Our results indicate that while revealed ethics has informational worth and enhance shareholder value, applied ethics has a positive impact through the improvement of stakeholder satisfaction. However, revealed ethics by itself (i.e. decoupled from ethical initiatives) is not sufficient to boost economic performance.
    Date: 2005–04
    Abstract: This article proposes a taxonomy of the conventional forms of coordination of the action based on the progressive weakening of their interpretability. After having proposed to weaken the load of rationality contained in the Lewis\'s convention, defined like Common Knowledge, one proposes to centre the contents of convention on the production of reference mark of behaviors in contexts of action marked by uncertainty. The rule, concept essential of any theory of the action, can be considered like particular mode of organization of the field of the action possible. General and incomplete, it is the interpretatif framework of the action. After that, we propose to base the disjunction between the procedure and the routine on the differences between the formal and the tacit. Indeed, the weakening of the interpretable character of the rule in situations where uncertainty is reduced or largely endogeneized leads to giving it a more marked prescriptive character in the form of procedure like structure of formal action and the routine like structure of tacit action.
    Keywords: Convention, rule, procedure, routine, uncertainty, coordination, action
    JEL: L15 D23 O34
    Date: 2005

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.
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