nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2006‒03‒11
five papers chosen by
Marco Novarese
Universita del Piemonte Orientale

  1. "Personality and Earnings" By Kaye K. W. Lee
  2. Untalented but successful By Olivier Gergaud; Vincenzo Verardi
  3. Do Students Benefit From Supplemental Instruction? Evidence From a First-Year Statistics Subject in Economics and Business By Lewis, Don; O'Brien, Martin; Rogan, Sally; Shorten, Brett
  4. Does Envy Destroy Social Fundamentals? The Impact of Relative Income Position on Social Capital By Justina A.V. Fischer; Benno Torgler
  5. An Experiment on subjective Game Valuations By Aurora Garcia-Gallego; Nikolaos Georgantzis; Maria Jose Gil Molto; Vicente Orts

  1. By: Kaye K. W. Lee
    Abstract: This paper studies personality as a potential explanation for wage differentials between apparently similar workers. This follows initial studies by Jencks (1979) that suggest that certain personality traits, such as industriousness and leadership, have an impact on earnings. The paper aims to provide a theoretical framework within which these effects may be analyzed. The study begins by outlining four issues as a backdrop to the model: rationality, the industry, firms, and workers. A crucial factor to the model is the memeÑa mental gene that affects personality. Taking these four factors into consideration, the Contested Exchange model from Bowles and Gintis (1990) is used. Then, it is adapted to study memetic effects on the wage rate. This is followed by an analysis of how memes may affect personality and thus earnings. The issues that require further study and resolution are 1) which traits create wage differentials, and 2) two-way causality: does personality affect the wage, or does a wage premium become an incentive for a person to adopt new memes?
    Date: 2006–02
  2. By: Olivier Gergaud (OMI, Université de Reims Champagne-Ardenne et CES-TEAM); Vincenzo Verardi (ECARES, Université Libre de Bruxelles)
    Abstract: When studying the problem of the emergence of superstars, scholars face great difficulties in measuring talent, obtaining confidential data on earnings, and finding econometric techniques that lead to results that are robust to the presence of outliers (superstars). In this paper we use an original dataset from the Pokemon trading card game in which (i) there is no unidentifiable heterogeneity and (ii) all characteristics of individuals are public domain. To prevent the results to be distored by the presence of outliers, we estimate the " fair " price of each individual, using the robust " Least Trimmed of Squares " regression technique in a hedonic prices framework, and check the effective price at which they are sold. This allows to identify superstars, i.e. individuals that are sold at a price which represents several times their intrinsec value. We find that the two main theories of superstars developed by Rosen (1981), who awards a central importance to talent, and by Adler (1985), who awards more importance to the need of consumers to share a common culture are complementary and not mutually exclusive as is often claimed.
    Keywords: Superstars, robust estimation, hedonic prices, leisure games.
    JEL: C4 D4
    Date: 2006–02
  3. By: Lewis, Don (University of Wollongong); O'Brien, Martin (University of Wollongong); Rogan, Sally (University of Wollongong); Shorten, Brett (University of Wollongong)
    Abstract: Peer assisted study sessions (PASS) are a type of supplemental instruction (SI) that provide students with out-of-class study review sessions with a group of peers. A student, who has successfully completed the subject and acts as a mentor, facilitates the voluntary sessions. Results of the PASS program at the University of Wollongong have been quite positive in that students, on average, who attend more PASS, achieve higher marks. However, a simple comparison does not control for self-selection bias. We control for self-selection in two ways. Firstly, we use Heckman’s two-stage correction technique to analyze the 2002 cohort. Secondly, students in the 2003 cohort were randomly allocated into three groups of equal size: 1. A control group that was allocated to normal tutorials with standard class sizes and ineligible to attend PASS; 2. A group that was eligible to attend PASS and had normal tutorials of standard sizes; 3. A group that was ineligible to attend PASS but allocated to normal tutorials with smaller class sizes. The results of both methods are consistent and indicate the PASS program has a positive impact on the academic performance of students after correcting for selection bias.
    Keywords: Economics Education; Teaching of Economics; Design of Experiments
    JEL: A2 C9
    Date: 2005
  4. 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.
    JEL: Z13 H26 I31 D00 D60
    Date: 2006–01
  5. By: Aurora Garcia-Gallego (LEE/LINEEX and Dpt Economics, Universitat Jaume I); Nikolaos Georgantzis (LEE/LINEEX and Dpt Economics, Universitat Jaume I); Maria Jose Gil Molto (Dpt Economics, Loughborough University); Vicente Orts (IEI, LEE and Dpt Economics, Universitat Jaume I)
    Abstract: We experimentally test the hypothesis that players' valuations of a game coincide with their Nash equilibrium earnings. Our results offer significantly less support for this hypothesis than for the prediction of dominant strategy play.
    Keywords: Game Value, Subgame Perfection, Dominant Strategies, Behavioral Game Theory
    JEL: C72 C91
    Date: 2006–04

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