nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2007‒01‒23
eighteen papers chosen by
Marco Novarese
University of the Piemonte Orientale

  1. Charles Darwin meets Amoeba economicus: Why Natural Selection Cannot Explain Rationality. By E. Khalil
  2. Rationality, Rule-Following and Emotions: On the Economics of Moral Preferences By V. Vanberg
  3. Collective Trust Behavior By Holm, Håkan; Nystedt, Paul
  4. Evolutionary Economics and Moral Relativism - Some Thoughts By Binder, Martin
  5. Extending the Bounded Rationality Model: The Distributed Cognition Approach By Secchi Davide; Bardone Emanuele
  6. Docility and “through doing” morality: An alternative approach to ethics By Magnani Lorenzo; Bardone Emanuele; Secchi Davide
  7. Artificiality in Social Sciences By Rennard, Jean-Philippe
  8. CODIFICATION SCHEMES AND FINITE AUTOMATA By Amparo Urbano; Penélope Hernández
  9. A Classification of Games by Player Type By Gary Bornstein
  10. Are people samaritans or avengers? By Ottone, Stefania
  11. Does Stake Size matter for Cooperation and Punishment? By Martin G. Kocher; Peter Martinsson; Martine Visser
  12. Rage Against the Machines: How Subjects Learn to Play Against Computers By Peter Dürsch; Albert Kolb; Jörg Oechssler; Burkhard C. Schipper
  13. Ambiguity Aversion as a Predictor of Technology Choice: Experimental Evidence from Peru By Jim Engle-Warnick; Javier Escobal; Sonia Laszlo
  14. The Revealed Preference Implications of Reference Dependent Preferences By Faruk Gul; Wolfgang Pesendorfer
  15. ?Emotional? versus ?Emotioneel?: Advertising Language and Emotional Appraisal By Puntoni, S.
  16. Ethnic Persistence, Assimilation and Risk Proclivity By Holger Bonin; Amelie Constant; Konstantinos Tatsiramos; Klaus F. Zimmermann
  17. Individual and Couple Decision Behavior under Risk:The Power of Ultimate Control By André de Palma; Nathalie Picard; Anthony Ziegelmeyer
  18. Is the veil of ignorance only a concept about risk? An experiment By Hörisch, Hannah

  1. By: E. Khalil
    Abstract: Advocates of natural selection usually regard rationality as redundant, i.e., as a mere linguistic device to describe natural selection. But this “Redundancy Thesis” faces the anomaly that rationality differs from natural selection. One solution is to conceive rationality as a trait selected by the neo-Darwinian mechanism of natural selection as . But this “Rationality-qua-Trait Thesis” faces a problem as well: Following neo-Darwinism, one cannot classify one allele of, e.g., eyesight as better than another without reference to constraints—while one can classify rationality as better than irrationality irrespective of constraints. Therefore, natural selection cannot be a trait. This leads us to the only solution: Rationality is actually a method that cannot be reduced to a trait. This “Rationality-qua-Method Thesis” lays the ground for alternative, developmental views of evolution.
    Keywords: Redundancy Thesis, rationality anomaly, Rationality-qua-Trait Thesis, incoherence problem, Rationality-qua-Method Length 31 pages
    JEL: D0
    Date: 2007–01
  2. By: V. Vanberg
    Abstract: The long-standing critique of the ‘economic model of man’ has gained new impetus not least due to the broadening research in behavioral and experimental economics. Many of the critics have focused on the apparent difficulty of traditional rational choice theory to account for the role of moral or ethical concerns in human conduct, and a number of authors have suggested modifications in the standard model in response to such critique. This paper takes issue with a quite commonly adopted ‘revisionist’ strategy, namely seeking to account for moral concerns by including them as additional preferences in an agent’s utility function. It is argued that this strategy ignores the critical difference between preferences over outcomes and preferences over actions, and that it fails to recognize that ‘moral preferences’ belong into the second category. Preferences over actions, however, cannot be consistently accounted for within a theoretical framework that focuses on the rationality of single actions. They require a shift of perspective, from a theory of rational choice to a theory of rule-following behavior. Length 30 pages
    Date: 2007–01
  3. By: Holm, Håkan (Department of Economics, Lund University); Nystedt, Paul (Department of Economics and Management, Linköping University)
    Abstract: This paper investigates trust in situations, where decision-makers are large groups and the decision-mechanism is collective, by developing a game to study trust behavior. Theories from behavioral economics and psychology suggest that trust in such situations may differ from individual trust. Experimental results here reveal a large difference in trust but not in trustworthiness between the individual and collective setting. Furthermore, an artefactual field experiment captures the determinants of collective trust behavior among two cohorts in the Swedish population. One result is that beliefs about the other and the own group are strongly associated with collective trustworthiness and trust behavior.
    Keywords: Collective Trust; Voting; Experiment; Beliefs
    JEL: C72 C90 C93 D70
    Date: 2006–12–20
  4. By: Binder, Martin
    Abstract: Doubts about the decidability of moral questions have often been used as an excuse for economists to eschew any normative propositions. Evolutionary economics, still lacking a well-developed normative branch, gives rise to a form of descriptive moral relativism. This paper wants to explore the consequences of adopting a form of meta-ethical and normative moral relativism as well. It develops a normative position called ‘naturalistic relativism’, which is a naturalistically reconstructed neo-pragmatist form of relativism. The paper also gives an argument why this position seems to be the adequate normative correlate for evolutionary economics.
    Keywords: evolutionary economics; moral relativism; sensory utilitarianism; continuity hypothesis; naturalistic relativism
    JEL: Z00 B52 B41
    Date: 2006–08–22
  5. By: Secchi Davide (Department of Economics, University of Insubria, Italy); Bardone Emanuele (Department of Philosophy, Computational Philosophy Laboratory, University of Pavia)
    Abstract: The way Simon, and the major part of the scholars, presented and used bounded rationality directly refers to human computational capabilities (or “brute-force”). Despite its broad powers of explanation, some problems arise when taking into account the way the human cognitive system really works. In order to avoid these problems, we present an alternative model of rationality, where computation plays only a part, together with the implemented role of external resources, emotional and other non-strictly-rational variables.
    Keywords: bounded rationality, distributed cognition, external resources, decision-making, problem solving, emotions
    Date: 2005–09
  6. By: Magnani Lorenzo (Department of Philosophy, Computational Philosophy Laboratory, University of Pavia, Italy); Bardone Emanuele (Department of Philosophy, Computational Philosophy Laboratory, University of Pavia, Italy); Secchi Davide (Department of Economics, University of Insubria, Italy)
    Abstract: In this paper, we aim at presenting the distributed morality approach as it can be described by the docility model of social interactions. The proposition “morality is a matter of social interaction” constitutes our starting point. We aim at pointing out the ways through which individuals create moral alternatives to a given situation. The paper is dedicated to presenting morality as something connected to human cognition. We introduce a “manipulative” way of thinking about morality, and we argue that it is “distributed” through things, animals, computers, and other human beings (section I); furthermore, the idea of a type of “through doing” morality comes up. Then, we find that this model supports an alternative view of the socio-economic system and, therefore, we suggest that the docility model (section II, as amended from Simon’s original model 1990; 1993), fits the case. The field of business ethics exempts useful insights from research on this issue. Recent studies on moral thinking and moral imagination seem to support this research project.
    Keywords: cognition, distributed morality, docility, social interactions, socioeconomic system
    Date: 2006–07
  7. By: Rennard, Jean-Philippe
    Abstract: This text provides with an introduction to the modern approach of artificiality and simulation in social sciences. It presents the relationship between complexity and artificiality, before introducing the field of artificial societies which greatly benefited from the computer power fast increase, gifting social sciences with formalization and experimentation tools previously owned by "hard" sciences alone. It shows that as "a new way of doing social sciences", artificial societies should undoubtedly contribute to a renewed approach in the study of sociality and should play a significant part in the elaboration of original theories of social phenomena.
    Keywords: artificial societies; multi-agent systems; distributed artificial intelligence; complexity
    JEL: C63
    Date: 2006
  8. By: Amparo Urbano (Universitat de València); Penélope Hernández (Universidad de Alicante)
    Abstract: This paper is a note on how Information Theory and Codification Theory are helpful in the computational design both of communication protocols and strategy sets in the framework of finitely repeated games played by boundedly rational agents. More precisely, we show the usefulness of both theories to improve the existing automata bounds of Neyman¿s (1998) work on finitely repeated games played by finite automata.
    Keywords: Complexity, codification, repeated games, finite automata
    JEL: C73 C72
    Date: 2007–01
  9. By: Gary Bornstein
    Date: 2007–01–12
  10. By: Ottone, Stefania
    Abstract: The aim of this experiment is twofold. First of all, I want to compare the human tendency to punish unfair behavior to the desire to help victims of that unfairness, in presence of a budget constraint and without the expectation of a long-run pecuniary gain. Secondly, I want to check whether players'behavior changes when the initial endowment is earned and not randomly assigned. Our experiment frame is the Solomon's game.
    Date: 2007–01
  11. By: Martin G. Kocher (CREED, Universiteit van Amsterdam); Peter Martinsson (Göteborg University, Sweden); Martine Visser (Göteborg University, Sweden)
    Abstract: The effects of stake size on cooperation and punishment are investigated using a public goods experiment. We find that an increase in stake size does neither significantly affect cooperation nor, interestingly, the level of punishment.
    Keywords: C72; C91; H41
    Date: 2006–11–22
  12. By: Peter Dürsch (University of Heidelberg, Department of Economics); Albert Kolb (University of Bonn, Department of Economics); Jörg Oechssler (University of Heidelberg, Department of Economics); Burkhard C. Schipper (University of California, Department of Economics)
    Abstract: We use an experiment to explore how subjects learn to play against computers which are programmed to follow one of a number of standard learning algorithms. The learning theories are (unbeknown to subjects) a best response process, fictitious play, imitation, reinforcement learning, and a trial & error process. We test whether subjects try to influence those algorithms to their advantage in a forward-looking way (strategic teaching). We find that strategic teaching occurs frequently and that all learning algorithms are subject to exploitation with the notable exception of imitation. The experiment was conducted, both, on the internet and in the usual laboratory setting. We find some systematic differences, which however can be traced to the different incentives structures rather than the experimental environment.
    Keywords: learning; fictitious play; imitation; reinforcement; trial & error; strategic teaching; Cournot duopoly; experiments; internet.
    JEL: C72 C91 C92 D43 L13
    Date: 2005–10
  13. By: Jim Engle-Warnick; Javier Escobal; Sonia Laszlo
    Abstract: The lack of adoption of new farming technologies despite known benefis is a well-documented phenomenon in development economics. In addition to a number of market constraints, risk aversion predominates the discussion of behavioral determinants of technology adoption. We hypothesize that ambiguity aversion may also be a determinant, since farmers may have less information about the distribution of yield outcomes from new technologies compared with traditional technologies. We test this hypothesis with a laboratory experiment in the field in which we measure risk and ambiguity preferences. We combine our experiment with a survey in which we collect information on farm decisions and identify market constraints. We find that ambiguity aversion does indeed predict actual technology choices on the farm. <P>Un phénomène bien documenté en économie du développement est le nombre peu élevé d’agriculteurs qui décident d’adopter de nouvelles technologies en agriculture, malgré leurs avantages connus. En plus des nombreuses contraintes imposées par le marché, l’aversion au risque prédomine la discussion sur les déterminants de l’adoption de nouvelles technologies. Nous émettons l’hypothèse que l’aversion à l’ambiguïté pourrait aussi être un déterminant puisqu’il est possible que les agriculteurs aient moins d’information sur la distribution du rendement des nouvelles technologies que sur celle des technologies traditionnelles. Nous testons la validité de cette hypothèse avec une expérience en laboratoire sur le terrain où nous mesurons les préférences vis-à-vis du risque et de l’ambiguïté. Nous combinons notre expérience à un sondage portant sur les décisions prises en matière d’agriculture et identifiant les contraintes du marché. Nous constatons qu’effectivement, l’aversion à l’ambiguïté dicte les choix technologiques réels relatifs à la ferme.
    Keywords: experimental economics, risk measurement instruments, risk preferences, rural development, technology choice, choix technologiques, développement rural, économie expérimentale, instruments de mesure du risque, préférences vis-à-vis du risque
    JEL: O33 O18 C91
    Date: 2007–01–01
  14. By: Faruk Gul; Wolfgang Pesendorfer
    Date: 2007–01–12
  15. By: Puntoni, S. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The article contributes to current understanding of language effects in advertising by uncovering a previously ignored mechanism shaping consumer response to an increasingly globalized marketplace. Extending recent psycholinguistic research on the emotions of bilinguals, a series of experiments shows that bilingual consumers report greater perceived emotional intensity for stimuli (e.g. ads) presented in their native language than in their second language.
    Keywords: Bilinguals;Advertising;Psycholinguistic research;
    Date: 2006–12–20
  16. By: Holger Bonin; Amelie Constant; Konstantinos Tatsiramos; Klaus F. Zimmermann
    Abstract: The paper investigates the role of social norms as a determinant of individual attitudes by analyzing risk proclivity reported by immigrants and natives in a unique representative German survey. We employ factor analysis to construct measures of immigrants' ethnic persistence and assimilation. The estimated effect of these measures on risk proclivity suggests that adaptation to the attitudes of the majority population closes the immigrant-native gap in risk proclivity, while stronger commitment to the home country preserves it. As risk attitudes are behaviourally relevant, and vary by ethnic origin, our results could also help explain differences in economic assimilation of immigrants.
    Keywords: Risk attitudes, ethnic persistence, assimilation, second generation effects, gender
    JEL: D1 D81 F22 J15 J16 J31 J62 J82
    Date: 2006
  17. By: André de Palma (University of Cergy-Pontoise (théma) and ENPC, Member of Institut Universitaire de France); Nathalie Picard (University of Cergy-Pontoise (théma) and INED); Anthony Ziegelmeyer (Max Planck Institute)
    Abstract: This paper reports results of an experiment designed to analyze the link between risky decisions made by couples, and risky decisions made separately by each spouse. We estimate both the individuals and the couples’ degrees of risk aversion, and we analyze how the risk preferences of the two spouses aggregate when they have to perform joint decisions under risk. We show that the man has more decision power than the woman, but the woman’s decision power increases when she has ultimate control over the joint decision.
    Date: 2007
  18. By: Hörisch, Hannah
    Abstract: We implement the Rawlsian thought experiment of a veil of ignorance in the laboratory which introduces risk and possibly social preferences. We find that both men and women react to the risk introduced by the veil of ignorance. Only the women additionally exhibit social preferences that reflect an increased concern for equality. Our results for women imply that maximin preferences can also be derived from a combination of some, not necessarily infinite risk aversion and social preferences. This result contrasts the Utilitarians' claim that maximin preferences necessarily represent preferences with infinite risk aversion.
    Keywords: veil of ignorance; social preferences; equality; efficiency; experiment
    JEL: D63 D64 C99
    Date: 2007–01

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