nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2006‒06‒17
six papers chosen by
Marco Novarese
Universita del Piemonte Orientale

  1. Empirics of Social Interactions By Yannis Ioannides
  2. Testing Preference Axioms in Discrete Choice experiments: A Reappraisal By Jens Leth Hougaard; Tue Tjur; Lars Peter Østerdal
  3. Determinants influencing the choice of a cooperation partner By Uwe Cantner; Andreas Meder
  4. The Dynamics of Perception: Modelling subjective well-being in a short panel By Stephen Pudney
  5. Does Democracy Foster Trust? By Helmut Rainer; Thomas Siedler
  6. The ignorant observer. By Thibault Gajdos; Feriel Kandil

  1. By: Yannis Ioannides
    Abstract: Empirical studies of social interactions address a multitude of definitional, econometric and measurement issues associated with role of interpersonal and social group influences in economic decisions. Applications range from studies of crime patterns, neighborhood influences on upbringing and conformist behavior, mutual influences among classmates and keeping up with roommates in colleges regarding academic and social activities, to herding and to learning about social services. The entry reviews several instances of successful identification of effects emanating from others' behavior as distinct from characteristics of others. Data sets with increasingly rich contextual information will allow estimation of complex models of economic decisions.
    Keywords: Social interactions, peer effects, contextual effects, neighborhood choice, neighbors, neighborhoods, neighborhood effects, laboratory experiments, field experiments, self selection, social networks.
    JEL: C25 I30 R00
    Date: 2006
  2. By: Jens Leth Hougaard (Department of Economics, University of Copenhagen); Tue Tjur (Copenhagen Business School); Lars Peter Østerdal (Department of Economics, University of Copenhagen)
    Abstract: Recent studies have tested the preference axioms of completeness and transitivity, and have detected other preference phenomena such as unstability, learning- and tiredness effects, ordering effects and dominance, in stated preference discrete choice experiments. However, it has not been explicitly addressed in these studies which preference models are actually being tested, and the connection between the statistical tests performed and the relevant underlying models of respondent behavior has not been explored further. This paper tries to fill that gap. We specifically analyze the meaning and role of the preference axioms and other preference phenomena in the context of stated preference discrete choice experiments, and examine whether or how these can be subject to meaningful (statistical) tests.
    Keywords: stated preference discrete choice experiments; completeness; transitivity; random utility; statistical tests
    JEL: B41 C52 D01
    Date: 2006–06
  3. By: Uwe Cantner (University of Jena, Faculty of Economics); Andreas Meder (University of Jena, Faculty of Economics)
    Abstract: This paper provides empirical tests of hypotheses of cooperative behavior provided by evolutionary approaches in the resource-based view of the firm. The influences of "technological proximity", individual incentives to cooperate and managerial tools to the choice of research partner are analyzed. Using German patent data we can show the positive influence of those three determinants. The results of this paper confirm theories dealing with the path-dependency of research activities.
    Keywords: innovation, resource-based view of the firm, cooperation, technological proximity, organizational know-how
    JEL: C30 L14 O32
    Date: 2006–06–10
  4. By: Stephen Pudney (Institute for Social and Economic Research)
    Abstract: We consider the neglected issue of the dynamics of perceptions, as expressed in responses to survey questions on subjective well-being. We develop a simulated ML method for estimation for dynamic linear models, where the dependent variable is partially observed through ordinal scales. This latent autoregression (LAR) model is often more appropriate than the usual state-dependence (SD) model for attitudinal and interval variables. The paper contains an application to a model of households’ perceptions of their financial well-being, demonstrating the superior fit of the LAR model to both the usual static model and the SD model.
    Keywords: GHK simulator, bhps, dynamic panel data models, maximum simulated likelihood, ordinal variables
    Date: 2006–05
  5. By: Helmut Rainer (University of St. Andrews); Thomas Siedler (University of Essex, DIW Berlin and IZA Bonn)
    Abstract: The level of trust inherent in a society is important for a wide range of microeconomic and macroeconomic outcomes. This paper investigates how individuals’ attitudes toward social and institutional trust are shaped by the political regime in which they live. The German reunification is a unique natural experiment that allows us to conduct such a study. Using data from the German General Social Survey (ALLBUS) and from the German Socio- Economic Panel Study (SOEP), we obtain two sets of results. On one side, we find that, shortly after reunification, East Germans displayed a significantly less trusting attitude than West Germans. This suggests a negative effect of communism in East Germany versus democracy in West Germany on social and institutional trust. However, the experience of democracy by East Germans since reunification did not serve to increase levels of social trust significantly. In fact, we cannot reject the hypothesis that East Germans, after more than a decade of democracy, have the same levels of social distrust as shortly after the collapse of communism. In trying to understand the underlying causes, we show that the persistence of social distrust in the East can be explained by negative economic outcomes that many East Germans experienced in the post-reunification period. Our main conclusion is that democracy can foster trust in post-communist societies only when citizens’ economic outcomes are right.
    Keywords: social trust, institutional trust, political regimes
    JEL: P51 Z13
    Date: 2006–05
  6. By: Thibault Gajdos (Centre d'Economie de la Sorbonne); Feriel Kandil (CERC)
    Abstract: Most prominent models of economic justice (and especially those proposed by Harsanyi and Rawls) are based on the assumption that impartiality is required for making moral decisions. However, although Harsanyi and Rawls agree on that, and furthermore agree on the fact that impartiality can be obtained under appropriate conditions of ignorance, they strongly disagree on the consequences of these assumptions. According to Harsanyi, they provide a justification for the utilitarian doctrine, whereas Rawls considers that they imply egalitarianism. We propose here an extension of Harsanyi's Impartial Observer Theorem, that is based on the representation of ignorance as the set of all possible probability distributions. We obtain a characterization of the observer's preferences that, under our most restrictive conditions, is a linear combination of Harsanyi's and Rawls' criteria. Furthermore, this representation is ethically meaningful, in the sense that individuals' utilities are cardinally measurable and unit comparable. This allows us to conclude that the impartiality requirement cannot be used to decide between Rawls' and Harsanyi's positions. Finally, we defend the view that a (strict) combination of Harsanyi's and Rawls' criteria provides a reasonable rule for social decisions.
    Keywords: Impartiality, justice, decision under ignorance.
    JEL: D63 D81
    Date: 2005–02

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