nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2005‒12‒20
six papers chosen by
Marco Novarese
Universita del Piemonte Orientale

  1. Deliver us from evil: religion as insurance. By Andrew E. Clark; Orsolya Lelkes
  2. How Do People Learn by Listening to Others? Experimental Evidence from Thailand By Andrew Healy
  3. Reference Dependent Preferences and the Impact of Wage Increases on Job Satisfaction: Theory and Evidence By Christian Grund; Dirk Sliwka
  4. The Evolutionary Stability of Optimism, Pessimism and Complete Ignorance By Burkhard C. Schipper
  5. Clues, cues and complexity: unpackuing the concept of organizational surprise By Cunha, Miguel Pina e; Kamoche, Ken; Clegg, Stewart R.
  6. The dynamics of managerial ideology: analyzing the cuban case By Cunha, Miguel Pina e; Cunha, Rita Campos e

  1. By: Andrew E. Clark; Orsolya Lelkes
    Abstract: This paper focusses on the insurance role of religion in buffering the well-being impact of stressful life events, and the ensuing economic and social implications. Using two large-scale European data sets, we show that the religious enjoy higher levels of life satisfaction, and that religion does insure against some adverse life events. All denominations suffer less psychological harm from unemployment than do the non-religious; equally both Catholics and Protestants are less hurt by marital separation. However, while Protestants are protected against divorce, Catholics are punished for it. These results do not seem to come about from the endogeneity of religion. These patterns in subjective well-being correspond to data on both attitudes (the religious are both anti-divorce and anti-job creation for the unemployed) and behaviour (the religious unemployed are less likely to be actively looking for work). In panel data, as implied by insurance, the religious have less variation in life satisfaction. Last, we suggest that religion's insurance role might be reflected in support for different economic and social systems: consistent with this, unemployment replacement rates across Europe are lower in more religious countries.
    Date: 2005
  2. By: Andrew Healy (Loyola Marymount University)
    Abstract: This paper presents experimental evidence about how individuals learn from information that comes from inside versus outside their ethnic group. In the experiment, Thai subjects observed information that came from Americans and other Thais that they could use to help them answer a series of questions. Two main findings emerge. First, subjects display overconfidence in their own opinions and place too low a value on the information that they observe. Second, conditional on this overconfidence, subjects weigh American information relative to Thai information in a nearly optimal way. The data also indicates that subjects appear to understand that outside information has extra value because people from different groups know different things and so have an opportunity to learn from each other.
    Keywords: laboratory experiment, economic development, Bayesian updating, behavioral economics, learning
    JEL: C11 C53 C91 D83 O10 Q16
    Date: 2005–12–16
  3. By: Christian Grund (University of Bonn and IZA Bonn); Dirk Sliwka (University of Cologne and IZA Bonn)
    Abstract: The impact of wage increases on job satisfaction is explored theoretically and empirically. To do this, we apply a utility function that rises with the absolute wage level as well as with wage increases. It is shown that when employees can influence their wages by exerting effort, myopic utility maximization directly implies increasing and concave shaped wage profiles. Furthermore, employees get unhappier over time staying on a certain job although wages increase. Using data from 19 waves of the German Socio-Economic Panel we find empirical support for both the form of the utility function and the decreasing job satisfaction patterns.
    Keywords: job satisfaction, wage increases, wage profiles, reference dependent utility, habit formation, loss aversion
    JEL: M54 J28 J30 M12
    Date: 2005–12
  4. By: Burkhard C. Schipper
    Abstract: We provide an evolutionary foundation to evidence that in some situations humans maintain optimistic or pessimistic attitudes towards uncertainty and are ignorant to relevant aspects of the environment. Players in strategic games face Knightian uncertainty about opponents' actions and maximize individually their Choquet expected utility. Our Choquet expected utility model allows for both an optimistic or pessimistic attitude towards uncertainty as well as ignorance to strategic dependencies. An optimist (resp. pessimist) overweights good (resp. bad) outcomes. A complete ignorant never reacts to opponents' change of actions. With qualifications we show that optimistic (resp. pessimistic) complete ignorance is evolutionary stable / yields a strategic advantage in submodular (resp. supermodular) games with aggregate externalities. Moreover, this evolutionary stable preference leads to Walrasian behavior in those classes of games.
    Keywords: ambiguity, Knightian uncertainty, Choquet expected utility, neo-additive capacity, Hurwicz criterion, Maximin, Minimax, Ellsberg paradox, overconfidence, supermodularity, aggregative games, monotone comparative statics, playing the field, evolution of preferences
    JEL: C72 C73 D43 D81 L13
    Date: 2005–11
  5. By: Cunha, Miguel Pina e; Kamoche, Ken; Clegg, Stewart R.
    Abstract: We discuss why surprises, defined as events that happen unexpectedly or expected events that take unexpected shapes, are important to organizations and should be considered in the organizational literature. The concept of organizational surprises is unpacked on the basis of a typology built around the (un)expectedeness of issue and process. This typology uncovers the several types of surprising events that organizations may face, and contributes to the literature by suggesting that different surprises require distinct approaches.
    Date: 2004
  6. By: Cunha, Miguel Pina e; Cunha, Rita Campos e
    Abstract: After the collapse of state socialism in Eastern Europe, management researchers devoted considerable energy to investigate ways to smooth transition to market economies. But one country of the former Soviet bloc, Cuba resisted transition and reaffirmed loyalty to communism. Little is known about management in Cuba on the managerial impacts of the combination of two major environmental forces: the American embargo and the Soviet Union collapse, both of which have challenged the sustainability of the communist regime. This study intends to approach one particular aspect of management in Cuba: the relationship between national ideology and management practice. To analyze these topics, direct qualitative data from focus groups with Cuban managers and management professors was obtained and complemented with documentary analysis. Results suggest that the dynamics of managerial ideology can be understood as the interplay of several processes operating at distinct levels: institutional, professional, organizational and individual. The study provides a nested, multi-level understanding of management and organization as parts of a wider institutional context, which is both a source of constraint and a non-tangible resource to be used by ideological bricoleurs. The interplay between the acceptance of ideology and its use as a practical resource is a potential source of change. As such, the same professional class (managers) may be both a source of continuity and a trigger of change - a finding that is line with institutional theorys claim that it is necessary to understand both institutionalization and de-institutionalization for understanding organizational change and continuity.
    Keywords: Cuba, managerial ideology, institutional change, ideological bricolage
    Date: 2004

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