nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2005‒11‒12
nine papers chosen by
Marco Novarese
Universita del Piemonte Orientale

  1. Non-classsical measurement theory: A framework for behavioral sciences. By Victor I. Danilov; Ariane Lambert-Mogiliansky
  2. The Socioeconomics of Consumption: Solutions to the Problems of Interest, Knowledge, and Identity By Metin Cosgel
  3. A micro-foundation for the Laffer curve in a real effort experiment. By Louis Lévy-Garboua; David Masclet; Claude Montmarquette
  4. A Rational Irrational Man By Alexander Harin
  5. Innovation races: An experimental study on strategic research activities By Uwe Cantner; Andreas Nicklisch; Torsten Weiland
  6. Modeling the Firm as an Artificial Neural Network By Jason Barr; Francesco Saraceno
  7. The Effect of Job Satisfaction on Job Search: Not just whether, but also where By Josse Delfgaauw
  8. Capabilities, the self, and well-being: a research in psycho-economics By Maurizio Pugno
  9. Discussion of 'BEHAVIORAL ECONOMICS' By Ariel Rubinstein

  1. By: Victor I. Danilov; Ariane Lambert-Mogiliansky
    Abstract: Instances of non-commutativity are pervasive in human behavior. In this paper, we suggest that psychological properties such as attitudes, values, preferences and beliefs may be suitably described in terms of the mathematical formalism of quantum mechanics. We expose the foundations of non-classical measurement theory building on a simple notion of orthospace and ortholattice (logic). Two axioms are formulated and the characteristic state-property duality is derived. A last axiom concerned with the impact of measurements on the state takes us with a leap toward the Hilbert space model of Quantum Mechanics. An application to behavioral sciences is proposed. First, we suggest an interpretation of the axioms and basic properties for human behavior. Then we explore an application to decision theory in an example of preference reversal. We conclude by formulating basic ingredients of a theory of actualized preferences based in non-classical measurement theory.
    Date: 2005
  2. By: Metin Cosgel (University of Connecticut)
    Abstract: This paper is a review of the socio-economic literature on consumption. Considering consumption as a social activity, it examines how consumption solves the problems of interest, knowledge, and identity. It also discusses the main themes and important contributions in each category and offers suggestions for further research.
    Keywords: consumption, socio-economics, interest, knowledge, identity
    JEL: A12 A13 A14 D1 D8
    Date: 2005–10
  3. By: Louis Lévy-Garboua (TEAM et CIRANO); David Masclet (CREM - Université de Rennes); Claude Montmarquette (Université de Montréal et CIRANO)
    Abstract: A conjecture of Laffer, which had considerable influence on fiscal doctrine, is that tax revenues of a Leviathan state eventually decrease when the tax rate exceeds a threshold value. We conduct a real effort experiment, in which a "worker" is matched with a non-working partner, to elicit the conditions under which a Laffer curve can be observed. We ran four different treatments by manipulating work opportunities and the power to tax. In the endogenous treatment, the non-working partner chooses a tax rate among the set of possibilities and receives the revenue generated by her choice and the worker's effort response to this tax rate. In the exogenous treatment, the tax rate is randomly selected by the computer and the non-working partner merely receives the revenue from taxes. The Laffer curve phenomenon cannot be observed in the exogenous treatments, but arises in endogenous treatments. Tax revenues are then maximized at a 50% tax rate. We demonstrate that an "efficiency tax" model (with or without inequity aversion) falls short of predicting our experimental Laffer curve but an alternative model of social preferences provides a micro-foundation for the latter. This new model endogenously generates a social norm of fair taxation at a 50% tax rate under asymmetric information about workers' type. Taxpayers manage to enforce this norm by working less whenever it has been violated but do not systematically reward "kind" tax setters. Workers who maximize their expected wealth adjust work to the tax rate equitably so that tax revenues remain at a fair level. Workers who respond affectively to norm violations just refuse to work so that tax revenues are cut down. Workers endowed with higher work opportunities tend to respond more emotionally to unfair taxation in our experiment, which is consistent with the observed Laffer curve and with the history of tax revolts.
    Keywords: Taxation and labor supply, Laffer curve, experimental economies.
    JEL: C72 C91 H30 J22
    Date: 2005–10
  4. By: Alexander Harin (Modern University for the Humanities)
    Abstract: A man is a key subject of economics and economic theory. “A man is irrational” - this opinion can be made from Allais paradox, risk aversion and other well-known fundamental problems. For a long time, this opinion was a barrier to proper solution of these problems and the development of the economic theory. A radically new approach has been proposed. It considers arrangement infringement possibility as a quite different source of such problems. It opens a quite different way to solve them and remove this barrier. It helps economists to open new and rediscover old fields and trends for the research.
    Keywords: “non-ideal” economics, risk, market, bank, industry, development
    JEL: C C7 D81 G11 G22 H O
    Date: 2005–11–09
  5. By: Uwe Cantner (University of Jena, Faculty of Economics); Andreas Nicklisch (Max-Planck-Institute for Research into Collective Goods); Torsten Weiland (Max-Planck-Institute for Economics, Strategic Interactions Group)
    Abstract: In an experimental setting, firms in a duopoly market engage in a patent tournament and compete for profit-enhancing product advancements. The firms generate income by matching exogenously defined demand preferences with an appropriately composed product portfolio of their own. Demand preferences are initially unknown and first need to be revealed by an investigation of the possible product variations. The better firms approximate demand preferences, the higher their profits. In the ensuing innovation race, firms interact through information spillovers resulting from the imperfect appropriability of research successes. In the random period of the experiment, the continuity of the search process is disturbed by an exogenous shock that affects both the supply and demand side and again spurs research competition. Firms may henceforth explore an enlarged product space in attempting to match the equally modified demand preferences. In our analysis, we explore the behavioural regularities of agents who are engaged in innovation activities. As a key element we test to what extend relative economic performance exercises a stimulating effect on the implementation of innovation and imitation strategies.
    Keywords: Innovation, Imitation, Patent Tournament, Trial and Error Process
    JEL: D81 O31
    Date: 2005–11–07
  6. By: Jason Barr; Francesco Saraceno
    Abstract: The purpose of this chapter is two-fold: (1) to make the case that a standard backward propagation artificial neural network (ANN) can be used as a general model of the information processing activities of the firm, and (2) to present a synthesis of Barr and Saraceno (BS) (2002, 2004, 2005), who offer various models of the firm as an artificial neural network.
    Keywords: neural networks, information processing, firm learning, agent-based
    JEL: C63 D21 D83 L13
    Date: 2005–10
  7. By: Josse Delfgaauw (Faculty of Economics, Erasmus Universiteit Rotterdam)
    Abstract: Using survey data of public sector employees in the Netherlands, this paper shows that workers' satisfaction with various job domains not only affects whether but also where workers search for another job. An intuitive pattern emerges. Workers try to leave their current employer when their job search is instigated by dissatisfaction with an organisation-specific job domain, like management. Conversely, more job-specific problems, like a lack of autonomy, lead workers to opt for another position within their current organisation. Dissatisfaction with job domains which may have an industry-specific component, such as job duties, drives workers out of their industry. These findings suggest that on-the-job experience provides workers with information about the quality of their own job as well as of other jobs in their organisation and industry.
    Keywords: Job search; job satisfaction; public sector employees
    JEL: J28 J45 J63 M54
    Date: 2005–10–21
  8. By: Maurizio Pugno
    Abstract: Sen’s capability approach to the assessment of individual well-being and welfare policies, and to the search for theoretical foundations of a paradigm of human development, is challenged by a puzzling fact. In rich countries where material wealth and liberties are at high levels, a significant fraction of the population exhibit malaise in the form of depression, anxiety, addiction, conflicts within the family and among adolescent peers. This evidence suggests that consideration should be made of an additional functioning which is neglected by the capability approach: that of the mind in humans, i.e. the self. This addition is crucial because the self also evaluates well-being, and regulates the capability of choosing. Contributions from psychology, neuroscience, and psychiatry point out that the self is a construct built up by accumulating beliefs based on new and recalled information as a largely non-conscious process. This activity is self-serving, and may inflate or deflate the self-image, thus impairing the functioning of the self in its relation with the world. This problem seems to begin when primary close relationships thwart the feeling of the non-conscious self during infancy, although material care may be guaranteed. Policy implications for the educational and mental health system are briefly drawn.
    Keywords: capability approach,well-being,self,relatedness,unconscious,attachment,intrinsic motivations
    JEL: A12 D81 I31
    Date: 2005
  9. By: Ariel Rubinstein
    Date: 2005–11–04

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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