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on Cognitive and Behavioural Economics |
| By: | Botond Koszegi; Matthew Rabin |
| Date: | 2006–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:122247000000001267&r=cbe |
| By: | Paola Manzini; Marco Mariotti; Luigi Mittone |
| Abstract: | In this paper we formulate and investigate experimentally a model of how individuals choose between sequences of monetary outcomes spread out in time. The theoretical model assumes that a decision-maker uses, in a sequential way, two criteria to screen options. Each criterion only permits a decision between some pairs of options, while the other options are incomparable according to that criterion When the first criterion is not decisive, the decision maker resorts to the second criterion to select an alternative. This type of decision procedures has encountered the favour of several psychologists, though it is quite under-explored in the economics domain. We find that: 1) traditional economic models based on discounting alone cannot explain a significant (almost 30%) proportion of the data no matter how much variability in discount functions is allowed; 2) our model, despite considering only a specific (exponential) form of discounting, can explain the data much better solely thanks to the use of the secondary criterion; 3) our model explains certain specific patterns in the choices of the 'irrational' people: we can reject the hypothesis that anomalous behaviour is due simply to random 'mistakes' around the basic predictions of discounting theories: the deviations are not random and there are clear systematic patterns of association between 'irrational' choices. |
| Keywords: | Time preference, Time sequences, Negative discounting |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:0601&r=cbe |
| By: | Stephan Meier |
| Abstract: | In recent years, a large number of economic theories have evolved to explain people’s pro-social behavior and the variation in their respective behavior. This paper surveys economic theories on pro-social behavior and presents evidence — mainly from the field — testing these theories. In addition, the survey emphasizes that institutional environment might significantly interact with pro-social preferences and explain some of the variation in observed pro-social behavior. |
| Keywords: | Human behavior ; Interpersonal relations |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:06-6&r=cbe |
| By: | Quentin Michard (CEA Saclay, Service de Physique de l’Etat Condensé); Jean-Philippe Bouchaud (Science & Finance, Capital Fund Management; CEA Saclay;) |
| Abstract: | We unveil collective effects induced by imitation and social pressure by analyzing data from three different sources: birth rates, sales of cell phones and the drop of applause in concert halls. We interpret our results within the framework of the Random Field Ising Model, which is a threshold model for collective decisions accounting both for agent heterogeneity and social imitation. Changes of opinion can occur either abruptly or continuously, depending on the importance of herding effects. The main prediction of the model is a scaling relation between the height h of the speed of variation peak and its width $w$ of the form h ~ w^{-kappa}, with kappa = 2/3 for well connected populations. Our three sets of data are compatible with such a prediction, with kappa ~ 0.62 for birth rates, kappa ~ 0.71 for cell phones and kappa ~ 0.64 for clapping. In this last case, we in fact observe that some clapping samples end discontinuously (w=0), as predicted by the model for strong enough imitation. |
| JEL: | G10 |
| Date: | 2005–04 |
| URL: | http://d.repec.org/n?u=RePEc:sfi:sfiwpa:500060&r=cbe |
| By: | Olivier Guedj (Capital Fund Management); Jean-Philippe Bouchaud (Science & Finance, Capital Fund Management; CEA Saclay;) |
| Abstract: | We study the statistics of earning forecasts of US, EU, UK and JP stocks during the period 1987-2004. We confirm, on this large data set, that financial analysts are on average over-optimistic and show a pronounced herding behavior. These effects are time dependent, and were particularly strong in the early nineties and during the Internet bubble. We furthermore find that their forecast ability is, in relative terms, quite poor and comparable in quality, a year ahead, to the simplest `no change' forecast. As a result of herding, analysts agree with each other five to ten times more than with the actual result. We have shown that significant differences exist between US stocks and EU stocks, that may partly be explained as a company size effect. Interestingly, herding effects appear to be stronger in the US than in the Eurozone. Finally, we study the correlation of errors across stocks and show that significant sectorization occurs, some sectors being easier to predict than others. These results add to the list of arguments suggesting that the tenets of Efficient Market Theory are untenable. |
| JEL: | G10 |
| Date: | 2004–10 |
| URL: | http://d.repec.org/n?u=RePEc:sfi:sfiwpa:500062&r=cbe |
| By: | Marianne Crowe; Scott Schuh; Joanna Stavins |
| Abstract: | The Emerging Payments Research Group (EPRG) at the Federal Reserve Bank of Boston sponsored a new conference, “Consumer Behavior and Payment Choice: How and Why Do Consumers Choose Their Payment Methods?” on October 27–28, 2005, at the Boston Fed. The conference brought together a diverse set of participants from the academic, private, and public sectors. This paper provides a summary and overview of the conference. Key conclusions are that the consumer’s decision-making process concerning payment choice is quite complex, that standard economic models have difficulty incorporating this complexity, that additional research—especially interdisciplinary research—into consumer choice of payment method is needed, and that this conference was an important step in that direction. |
| Keywords: | Payment systems ; Electronic funds transfers |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbpp:06-1&r=cbe |
| By: | Toepoel,Vera; Vis,Corrie; Das,Marcel; Soest,Arthur van (Tilburg University, Center for Economic Research) |
| Abstract: | In this study we use an information-processing perspective to explore the impact of response scales on respondents answers in a web survey. This paper has four innovations compared to the existing literature: research is based on a different mode of administration (web), we use an open-ended format as a benchmark, four different question types are used, and the study is conducted on a representative sample of the population. We find strong effects of response scales. Questions requiring estimation strategies are more affected by the choice of response format than questions in which direct recall is used. Respondents with a low need for cognition and respondents with a low need to form opinions are more affected by the response categories than respondents with a high need for cognition and a high need to evaluate. The sensitivity to contextual clues is also significantly related to gender, age and education |
| Keywords: | web survey;questionnaire design;measurement error;context effects;response categories;need for cognition;need to evaluate |
| JEL: | C42 C81 C93 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200619&r=cbe |
| By: | Husslage,Bart; Rennen,Gijs; Dam,Edwin R. van; Hertog,Dick den (Tilburg University, Center for Economic Research) |
| Abstract: | In the area of computer simulation Latin hypercube designs play an important role. In this paper the class of maximin Latin hypercube designs is considered. Up to now only several two-dimensional designs and designs for some small number of points are known for this class. Using periodic designs and simulated annealing we extend the known results and construct approximate maximin Latin hypercube designs for up to ten dimensions and for up to 100 design points. All these designs can be downloaded from the website http://www.spacefillingdesigns.nl |
| Keywords: | computer experiment;Latin hypercube design;non-collapsing;packing problem; simulated annealing;space-filling |
| JEL: | C90 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200618&r=cbe |