nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2006‒02‒12
eleven papers chosen by
Marco Novarese
Universita del Piemonte Orientale

  1. Heterogeneous social preferences and the dynamics of free riding in public goods By Urs Fischbacher; Simon Gaechter
  2. Trust on the Streets: A Natural Field Experiment on Newspaper Purchasing By Gerald Pruckner; Rupert Sausgruber
  3. Fairness vs. Social Welfare in Experimental Decisions By Stefan Kohler
  4. Understanding Overbidding in Second Price Auctions: An Experimental Study By David J. Cooper; Hanming Fang
  5. Testing consumers' asymmetric reaction to wealth changes. By Mauro Mastrogiacomo
  6. How do consumers overcome ambivalence toward hedonic purchases ? a typology of consumer strategies By Dubois, Bernard; Laurent, Gilles; Czellar, Sandor
  7. Alternative Measures of Well-Being By Romina Boarini; Åsa Johansson; Marco Mira d'Ercole
  8. What can happiness research tell us about altruism? Evidence from the German Socio-Economic Panel By Johannes Schwarze; Rainer Winkelmann
  9. Does Envy Destroy Social Fundamentals? The Impact of Relative Income Position on Social Capital By Justina A.V. Fischer; Benno Torgler
  10. Social Sanctions in Interethnic Relations: The Benefit of Punishing your Friends By Christian Stoff
  11. Can A Turing Player Identify Itself? By David K Levine; Balázs Szentes

  1. By: Urs Fischbacher (Institute for Empirical Research in Economics); Simon Gaechter (School of Economics, University of Nottingham)
    Abstract: We provide a direct test of the role of social preferences in voluntary cooperation. We elicit individuals’ cooperation preference in one experiment and make a point prediction about the contribution to a repeated public good. This allows for a novel test as to whether there are "types" of players who behave consistently with their elicited preferences. We find clear-cut evidence for the existence of "types". People who express free rider preferences show the most systematic deviation from the predicted contributions, because they contribute in the first half of the experiment. We also show that the interaction of heterogeneous types explains a large part of the dynamics of free riding.
    Keywords: Public goods games, experiments, voluntary contributions, conditional cooperation, free riding
    JEL: C91 C72 H41 D64
    Date: 2006–01
  2. By: Gerald Pruckner (Department of Economics and Statistics, University of Innsbruck); Rupert Sausgruber (Department of Economics and Statistics, University of Innsbruck)
    Abstract: A publisher uses an honor-system for selling a newspaper in the street. The customers make payments into a cash-box, but can also just take the paper without paying. Payments are not monitored and highly anonymous; hence customers exhibit trustworthiness if they pay for the paper. We run a natural field experiment to identify motives behind payments. The experiment reveals that trustworthiness is based on a social rather than a legal norm. Additional survey questions serve to identify individual-specific components of trustworthiness. We find effects of gender, age, family status, church attendance, measures of reciprocity, social connectedness, and social risk.
    Keywords: trust, trustworthiness; natural field experiment; survey
    JEL: C93 K42
    Date: 2006–02
  3. By: Stefan Kohler
    Abstract: Experimental evidence from modified dictator games and simple choice situations indicates that concern for overall welfare is an important motive in human decision making. Models of inequality averse agents, as suggested by Fehr and Schmidt (1999) or Bolton and Ockenfels (2000), fall short in explaining behavior of proposers, who reduce their payoff below a fair split of the endowment to maximize social welfare, while other types of social preferences do well on these data. This has created the impression that inequality aversion is a misguided concept. This paper presents a formal model and shows that a combination of welfare concern and inequality aversion changes this result in favor of inequality aversion. It also establishes a unique link between altruism and social welfare in the proposed model.
    Keywords: Social Preferences, Inequality Aversion, Welfare Concern, Reciprocity
    JEL: A13 B49 C70 D63 D64
    Date: 2005
  4. By: David J. Cooper (Dept. of Economics, Weatherhead School of Management, Case Wester Reserve University); Hanming Fang (Dept. of Economics and Cowles Foundation, Yale University)
    Abstract: This paper presents results from a series of second price private value auction (SPA) experiments in which bidders are either given for free, or are allowed to purchase, noisy signals about their opponents' value. Even though theoretically such information about opponents' value has no strategic use in the SPA, it provides us with a convenient instrument to change bidders' perception about the "strength" (i.e., the value) of their opponent. We argue that the empirical relationship between the incidence and magnitude of overbidding and bidders' perception of the strength of their opponent provides the key to understand whether overbidding in second price auctions are driven by "spite" motives or by the "joy of winning." The experimental data show that bidders are much more likely to overbid, though less likely to submit large overbid, when they perceive their rivals to have similar values as their own. We argue that this empirical relationship is more consistent with a modified "joy of winning" hypothesis than with the "spite" hypothesis. However, neither of the non-standard preference explanations are able to fully explain all aspects of the experimental data, and we argue for the important role of bounded rationality. We also find that bidder heterogeneity plays an important role in explaining their bidding behavior.
    Keywords: Overbidding, Second price auctions, Spite, Joy of winning, Bounded rationality
    JEL: C91 C72
    Date: 2006–01
  5. By: Mauro Mastrogiacomo
    Abstract: This study contains several tests to show that individuals overreact to negative wealth changes, relative to positive wealth changes. This asymmetry, that is found using micro data, suggests that economists should not treat symmetrically the relation between economic variables (consumption for instance) and wealth in their models when wealth decreases. We find that this asymmetry increases with age and picks at retirement.
    Keywords: asymmetry; wealth; saving; expectations; threshold model
    JEL: D10 D84 J14
    Date: 2006–01
  6. By: Dubois, Bernard; Laurent, Gilles; Czellar, Sandor
    Abstract: Purchase decisions for hedonic products and services are often characterized by ambivalence -sensory benefits make them attractive, but consumers may feel guilty about bying them. To overcome this ambivalence, consumers frequently adopt strategies that allow them to enloy hedonic benefits while limiting their negative feelings. Combining an extensive literature review with an interpretive study, the authors identify 23 consumer strategies and propose a typology in four groups on the basis of strategy antecedents: two groups of objective strategies (obtaining consumption benefits without purchasing, objectively contining purchasing costs) and two groups of subjective strategies (manipulating the mental accounting of costs and benefits, relinquishing responsability).
    Keywords: consumer behavior; hedonic purchase; consumer strategies
    JEL: D12
    Date: 2006–02–06
  7. By: Romina Boarini; Åsa Johansson; Marco Mira d'Ercole
    Abstract: This paper assesses if GDP per capita is an adequate proxy as a measure of wellbeing or whether other indicators are more suitable for this purpose. Within the national accounts framework, other better measures of economic resources exist, but they are closely correlated with GDP per capita and are not as readily available. Illustrative calculations to ?extend? measures of economic resources to include leisure time, the sharing of income within households and distributional concerns suggest that cross-country ranking of based on these indicators and GDP per capita are generally similar, although they have evolved differently over time. Across OECD countries, levels of most measures of specific social conditions are significantly related to GDP per capita while changes over time are not. However, survey based data on happiness and life-satisfaction across OECD countries are only weakly related to levels of GDP per capita. Overall, measures of GDP per capita and economic growth remain critical for any assessment of wellbeing but they need to be complemented with measures of other dimensions of well-being to get a comprehensive picture of well-being. <P>Indicateurs alternatifs du bien-être Ce document évalue si le PIB par habitant est un indicateur indirect adéquat de mesure du bien-être ou si d?autres indicateurs sont plus appropriés à cet effet. Dans le cadre des comptes nationaux, il existe d?autres mesures des ressources économiques mais elles sont étroitement corrélées avec le PIB par habitant et ne sont pas si facilement disponibles. Si, à titre illustratif on « élargit » les mesures des ressources économiques de façon à prendre en compte le temps de loisir, le partage des revenus à l?intérieur des ménages et les aspects distributifs, on constate que le classement des pays sur la base de ces indicateurs et celui sur la base du PIB par habitant sont généralement similaires, même s?ils ont évolué différemment dans le temps. Dans les pays de l?OCDE, les niveaux de la plupart des mesures de résultats sociaux spécifiques sont liés de manière significative au PIB par habitant alors que les changements dans le temps ne le sont pas. Cependant les études basées sur les indicateurs de bonheur et de satisfaction de la vie dans les pays de l?OCDE sont très faiblement liées aux niveaux du PIB par habitant. De manière générale, les mesures de PIB par habitant et de la croissance économique demeurent cruciales pour toute évaluation du bien-être, mais il faut les compléter par des mesures reflétant d?autres dimensions du bien-être pour obtenir une image complète du bien-être.
    Keywords: national accounts, comptes nationaux, GDP, PIB, social indicators, indicateurs sociaux, subjective well-being, bien-être subjectif, living standards, niveaux de vie, composite indicators, indicateur synthétique, leisure time, temps de loisir
    JEL: D31 D6 I31 J22
    Date: 2006–01–30
  8. By: Johannes Schwarze (University of Bamberg); Rainer Winkelmann (Socioeconomic Institute, University of Zurich)
    Abstract: Much progress has been made in recent years on developing and applying a direct measure of utility using survey questions on subjective well-being. In this paper we explore whether this new type of measurement can be fruitfully applied to the study of interdependent utility in general, and altruism between parents and adult children who moved away from home in particular. We introduce an appropriate econometric methodology and, using data from the German SocioEconomic Panel for the years 2000-2004, find that the parents’ self-reported happiness depends positively on the happiness of their adult children. A one standard deviation move in the child’s happiness has the same effect as a 45 percent move in household income.
    Keywords: utility interdependence, sympathy, extended family, fixed effects
    JEL: D6 D64 C25 J10
    Date: 2005–02
  9. By: Justina A.V. Fischer; Benno Torgler
    Abstract: Research evidence on the impact of relative income position on individual attitudes and behaviour is sorely lacking. Therefore, this paper assesses such positional impact on social capital by applying 14 different measurements to International Social Survey Programme data from 25 countries. We find support for a positional concern effect or ‘envy’ whose magnitude in several cases is quite substantial. The results indicate that such an effect is non-linear. In addition, we find an indication that absolute income level is also relevant. Lastly, changing the reference group (regional versus national) produces no significant differences in the results.
    Keywords: Relative income position; envy; positional concerns; social capital; social norms; happiness
    JEL: Z13 H26 I31 D00 D60
    Date: 2006–01
  10. By: Christian Stoff (Socioeconomic Institute, University of Zurich)
    Abstract: We analyse interethnic cooperation in an infinitely repeated prisoner’s dilemma when members of one group are unable to target punishment towards individual defectors from the other group. We first show that indiscriminate punishment may sustain cooperation in this setting. Our main result, however, is that the introduction of ingroup punishment in addition to outgroup punishment represents a better sanctioning institution in the sense that cooperative outcomes may persist in situations where outgroup punishment alone fails to induce cooperation. Our findings are consistent with historical evidence on the dynamics of interethnic conflicts.
    Keywords: conflicts, interethnic cooperation, ethnicity, intergroup relations, ingroup punishment, outgroup punishment
    JEL: C70 C72 O12 O17 Z13
    Date: 2004–12
  11. By: David K Levine; Balázs Szentes
    Date: 2006–01–29

This nep-cbe issue is ©2006 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.