nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2006‒04‒29
nine papers chosen by
Marco Novarese
Universita del Piemonte Orientale

  1. Do people behave in experiments as in the field?: evidence from donations By Matthias Benz; Stephan Meier
  2. Inducing Absent-Mindedness in the Lab By Sudipta Sarangi; Cary Deck
  3. Choosing to Have Less Choice By Maria Salgano
  4. Learning in a Local Interaction Hawk-Dove Game By Jurjen Kamphorst; Gerard van der Laan
  5. Path Dependence and Regional Economic Evolution By Ron Martin; Peter Sunley
  6. The impact of group membership on cooperation and norm enforcement: evidence using random assignment to real social groups By Lorenz Goette; David Huffman; Stephan Meier
  7. Perceived Diversity of Complex Environmental Systems: Multidimensional Measurement and Synthetic Indicators By Ugo Gasparino; Barbara Del Corpo; Dino Pinelli
  8. Impact of Cultural Differences on Knowledge Transfer in British, Hungarian and Polish Enterprises By Aleksandra Hauke
  9. Relative Income Position and Performance: An Empirical Panel Analysis By Benno Torgler; Sascha L. Schmidt; Bruno S. Frey

  1. By: Matthias Benz; Stephan Meier
    Abstract: Laboratory experiments are an important methodology in economics, especially in the field of behavioral economics. However, it is still debated to what extent results from laboratory experiments can be applied to field settings. One highly important question with respect to the external validity of experiments is whether individuals act the same in experiments as they would in the field. ; This paper presents evidence on how individuals behave in donation experiments and how the same individuals behave in a naturally occurring decision situation on charitable giving. The results show that behavior in experiments is correlated with behavior in the field. The results are robust to variations in the experimental setting, and the correlation between experimental and field behavior is between 0.25 and 0.4. We discuss whether this correlation should be interpreted as strong or weak and what consequences the findings have for experimental economics.
    Keywords: Human behavior ; Interpersonal relations ; Charitable bequests
    Date: 2006
  2. By: Sudipta Sarangi; Cary Deck
    Abstract: After years of neglect, Piccione and Rubinstein (1997a) re-examined the problem of imperfect recall and its implications for game theory. They introduced the notion of absent-mindedness through a decision-making problem called the absentminded driver's paradox. This simple game precipitated a vigorous discussion with different researchers having strong opinions about whether the paradox actually exists. Alternative interpretations and varied ways to resolve the paradox were suggested. In the hopes of forwarding this debate, we provide a technique to directly test absentmindedness in the laboratory, even though in the past it has been claimed to be impossible to achieve absent-mindedness in a controlled environment. To accomplish this we rely on a technique called divided attention to impair a subject's recollection of previous choices. Our findings indicate that subjects in the experiment suffer from absent-mindedness while still behaving in a rational manner. Our experimental data for the absent-minded driver’s game shows that a substantial number of subjects demonstrate behavior consistent with the paradox.
  3. By: Maria Salgano (Northwestern University)
    Abstract: This paper investigates choice between opportunity sets. I argue that individuals may prefer to have fewer options for two reasons: First, smaller choice sets may provide information and reduce the need for the agent to contemplate the alternatives. Second, contemplation costs may be increasing in the size of the choice set, making smaller sets more desirable even when they do not provide any information to the agent. I identify which of these reasons drives individual behavior in a laboratory experiment. I find strong support for both the information and cognitive overload arguments. The effects do not disappear as participants gain experience with the task. Applications of these results include firms’ choices of product variety, as costs increase with the number of products offered, and the design of government policies, such as the Medicare Drug Discount Card Program, in which older citizens can choose among numerous cards for discounts in prescription drugs.
    Keywords: Choice, Opportunity Sets
    JEL: C9 C91
    Date: 2006–02
  4. By: Jurjen Kamphorst (Faculty of Law, Leiden University); Gerard van der Laan (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)
    Abstract: We study how players in a local interaction hawk dove game will learn, if they can either imitate the most succesful player in the neighborhood or play a best reply versus the opponent's previous action. From simulations it appears that each learning strategy will be used, because each performs better when it is less popular. Despite that, clustering may occur if players choose their learning strategy on the basis of largely similar information. Finally, on average players will play Hawk with a probability larger than in the mixed Nash equilibrium of the stage game.
    Keywords: Learning; Local Interaction; Hawk-Dove game
    JEL: C73
    Date: 2006–03–29
  5. By: Ron Martin; Peter Sunley
    Abstract: In recent years, economic geographers have seized on the concepts of ‘path dependence’ and ‘lock-in’ as key ingredients in constructing an evolutionary approach to their subject. However, they have tended in to invoke these notions without a proper examination of the ongoing discussion and debate devoted to them within evolutionary economics and elsewhere. Our aim in this paper, therefore, is, first, to highlight some of the unresolved issues surround these concepts, and, second, to explore their usefulness for understanding the regional economic evolution. We argue that in many important aspects, path dependence and lock-in are place-dependent processes, and as such require geographical explanation. At the same time, there has been little discussion of regional path creation: te assumption has been that new technological-economic paths emerge at random or spontaneously across space, an assumption that we find too simplistic. This leads on to the key question as to why some regional economies become locked into development paths that lose dynamism, whilst other regional economies seem able to avoid this danger and in effect are able ‘reinvent’ themselves through successive new paths or phases of development. We conclude that whilst path dependence is an important feature of the economic landscape, the concept requires further elaboration if it is to function as a core concept in an evolutionary economic geography.
    Keywords: path dependence, evolutionary economic geography, regional economic evolution, lock-in
    Date: 2006–03
  6. By: Lorenz Goette; David Huffman; Stephan Meier
    Abstract: Due to incomplete contracts, efficiency of an organization depends on willingness of individuals to take non-selfish actions, such as cooperating when there is no incentive to do so or punishing inefficient actions by others. Organizations also constitute a social boundary, or group. We investigate whether this social aspect of organizations has an important benefit— fostering unselfish cooperation and norm enforcement within the group—but also whether there is a dark side, in the form of hostility between groups. Our experiment provides the first evidence free from the confounding effect of self-selection into groups. Individuals are randomly assigned to different platoons during a four-week period of officer training in the Swiss Army. We conduct choice experiments—simultaneous prisoner’s dilemma games, with and without third-party punishment—in week three. Random assignment significantly increases willingness to cooperate with fellow platoon members. Assignment does not lead to hostility, in the sense of vindictive punishment of outsiders, but does affect norm enforcement, enhancing willingness to enforce a norm of cooperation towards fellow platoon members. This suggests that the social aspect of organizations motivates efficient behavior even when ordinary incentives fail and helps to explain practices designed to foster social ties or group identification within an organization.
    Keywords: Human behavior ; Interpersonal relations
    Date: 2006
  7. By: Ugo Gasparino (Fondazione Eni Enrico Mattei); Barbara Del Corpo (Fondazione Eni Enrico Mattei); Dino Pinelli (University of Bologna)
    Abstract: The general attitude towards the sustainable management of environmental resources is evolving towards the implementation of ‘participatory’ (as opposed to the classical ‘command and control’) and, especially at local scale, ‘bottom up’ (as opposed to the classical ‘top down’) approaches. This progress pushes a major interest in the development and application of methodologies able to ‘discover’ and ‘measure’ how environmental systems tend to be perceived by the different Stakeholders. Due to the ‘nature’ of the investigated systems, often too ‘complex’ to be treated through a classical deterministic approach, as typical for ‘hard’ physical/mathematical sciences, any ‘measurement’ has necessarily to be multidimensional. In the present report an approach, more typical of ‘soft’ social sciences, is presented and applied to the analysis of the sustainable management of water resources in seven Southern and Eastern Mediterranean Watersheds. The methodology is based on the development and analysis (explorative factor analysis, multidimensional scaling) of a questionnaire and is aimed at the ‘discovery’ and ‘measurement’ of a latent multidimensional ‘underlying structure’ (‘conceptual map’). It is the opinion of the authors, that the identification of a set of ‘consistent’, ‘independent’, ‘bottom up’ and ‘shared’ synthetic indicators (aggregated indices) could be strongly facilitated by the interpretation of the dimensions of the emerging ‘underlying structure’.
    Keywords: Participative Approach, Cognitive Map, Factor Analysis, Indicators of Sustainability, Sustainable Water, Management
    JEL: C13 C42 D74 Q01 Q25
    Date: 2006–04
  8. By: Aleksandra Hauke (University of Economics)
    Abstract: The aim of the article is to verify the hypothesis, that despite the cultural differences existing among Great Britain, Hungary and Poland, all enterprises put much effort to ensure good conditions for knowledge sharing by their employees. It consists of two major parts. In the first one, the theoretical concepts of culture and knowledge are presented. In the second part, the interpretation of results obtained in research on macro and micro level analyses in three European countries are shown. The macro level analysis is based on the differences in cultural dimensions presented by G. Hofstede and R. Gestland while the micro level analysis is conducted based on the results of empirical investigation carried out by International Research Group: Marketing in the XXI century, among companies operating in Great Britain, Hungary and Poland. Results obtained through this survey are compared with cultural dimensions in order to see how significant the distance between the received theory and empirical investigation is.
    Keywords: Cultural Differences, Knowledge Transfer
    JEL: L10
    Date: 2006–04
  9. By: Benno Torgler (Yale Center for International and Area Studies); Sascha L. Schmidt (University of St. Gallen); Bruno S. Frey (University of Zurich)
    Abstract: Many studies have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. However, behavioral evidence is rare. This paper provides an empirical analysis on how individuals’ relative income position affects their performance. Using a unique data set for 1114 soccer players over a period of eight seasons (2833 observations), our analysis suggests that the larger the income differences within a team, the worse the performance of the soccer players is. The more the players are integrated in a particular social environment (their team), the more evident this negative effect is.
    Keywords: Relative Income, Positional Concerns, Envy, Performance, Social Integration
    JEL: D00 D60 L83
    Date: 2006–02

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.