nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2007‒06‒30
ten papers chosen by
Marco Novarese
University of the Piemonte Orientale

  1. Choquet OK? By John D Hey; Gianna Lotito; Anna Maffioletti
  2. Cooperation as self-interested reciprocity in the Centipede By Farina, Francesco; Sbriglia, Patrizia
  3. Anticipated verbal feedback induces altruistic behavior By Ellingsen, Tore; Johannesson, Magnus
  4. Overborrowing and undersaving: lessons and policy implications from research in behavioral economics By Marques Benton; Stephan Meier; Charles Sprenger
  5. Cooperation in the Cockpit: Evidence of Reciprocity and Trust among Swiss Air Force Pilots By Beat Hedinger; Lorenz Goette
  6. Propositions for the Building of a Quantitative Austrian Modelling: An Answer to Prof. Rizzo and to Prof. Vriend By Rodolphe Buda
  7. Conventions and Exemplars: an alternative conceptual framework By John Latsis
  8. Prospects for an evolutionary economic psychology: Buying and consumption as a test case By S.E.G. Lea; L.Newson
  9. What Emotional Labor is: A Review of Literature By Mishra Sushanta Kumar
  10. Man and Woman Talk: Grammatical and Syntactical Similarities and Disparities By Kaul Asha; Nandan Debmalya

  1. By: John D Hey; Gianna Lotito; Anna Maffioletti
    Abstract: There is a large theoretical literature in both economics and psychology on decision making under ambiguity (as distinct from risk) and many preference functionals proposed in this literature for describing behaviour in such contexts. However, the empirical literature is scarce and largely confined to testing between various proposed functionals. Using a new design, in which we create genuine ambiguity in the laboratory and can control the amount of ambiguity, we generate data which enables us to estimate several of the proposed preference functionals. In particular, we fit Subjective Expected Utility, Prospect Theory, Choquet Expected Utility, Maximin, Maximax, and Minimum Regret preference functionals, and examine how the fit changes when we vary the ambiguity. We find that the Choquet formulation performs best overall, though it is clear that different decision makers have different functionals. We also identify new decision rules which are not explicitly modelled in the literature.
    Keywords: Ambiguity, Subjective Expected Utility, Prospect Theory, Choquet Expected Utility, Decision Making, Maximin, Maximax, Minimum Regret, Bingo Blower
    JEL: D81
    Date: 2007–06
  2. By: Farina, Francesco; Sbriglia, Patrizia
    Abstract: Cooperation is a pervasive social phenomenon but more often than not economic theories have little to say about its causes and consequences. In this paper, we explore the hypothesis that cooperative behaviour might be motivated by purely selfish interest when the “social” payoff in a game is increasing. We report the results of a series of experiments on the centipede game. The experiments are organized in two subsequent steps. Subjects first participate in a 2-period trust game, randomly matched with unknown partners. We apply the strategy method in order to elicit their social preferences. On the basis of their pre-game behaviour, individuals are divided into three main social groups: selfish individuals, pure altruists and reciprocators. At the second step of the experiment, subjects play a repeated 6-move centipede game with increasing final payoff. Each subject plays twice in a low stake and in a high centipede game, and he/she is informed about his/her co-player social preferences. We identify the origin of cooperation within homogeneous and heterogeneous social groups.
    Keywords: social preferences; altruisms; experiments.
    JEL: A10
    Date: 2007–02
  3. By: Ellingsen, Tore (Dept. of Economics, Stockholm School of Economics); Johannesson, Magnus (Dept. of Economics, Stockholm School of Economics)
    Abstract: A distinctive feature of humans compared to other species is the high rate of cooperation with non-kin. One explanation is that humans are motivated by concerns for social esteem. In this paper we experimentally investigate the impact of anticipated verbal feedback on altruistic behavior. We study pairwise interactions in which one subject, the “divider”, decides how to split a sum of money between herself and a recipient. Thereafter, the recipient can send an unrestricted anonymous message to the divider. The subjects’ relationship is anonymous and one-shot to rule out any reputation effects. Compared to a control treatment without feedback messages, donations increase substantially when recipients can communicate. With verbal feedback, the fraction of zero donations decreases from about 40% to about 20%, and there is a corresponding increase in the fraction of equal splits from about 30% to about 50%. Recipients who receive no money almost always express disapproval of the divider, sometimes strongly and in foul language. Following an equal split, almost all recipients praise the divider. The results suggest that anticipated verbal rewards and punishments play a role in promoting altruistic behavior among humans.
    Keywords: Punishment; Approval; Disapproval; Dictator game; Altruism; Communication; Verbal feedback
    JEL: C91 D64
    Date: 2007–06–21
  4. By: Marques Benton; Stephan Meier; Charles Sprenger
    Abstract: The U.S. household carries over $7,500 in uncollateralized debt and likely saves at a negative rate. There is a growing body of evidence that this borrowing and saving behavior may not, as assumed by standard economics, be the product of rational financial planning. This paper discusses insights from behavioral economics on how self-control problems could play a crucial role in determining such financial outcomes. It is important to note that self-control problems, as defined in this paper, are thought of as an issue affecting all people, not just those involved in our specific research. ; The paper reports results from a field study targeted to low-to-moderate income individuals conducted in Dorchester, MA. It links measured self-control to borrowing and savings outcomes taken from individual credit reports and survey questions respectively. We find that self-control problems are associated with higher borrowing, specifically on credit cards, and lower savings of income tax refunds. The paper discusses how policy prescriptions built around addressing selfcontrol issues could prove helpful in improving financial outcomes.
    Keywords: Consumer credit ; Saving and investment
    Date: 2007
  5. By: Beat Hedinger (Institute for Strategy and Business Economics, University of Zurich); Lorenz Goette (Economic Research, Federal Reserve Bank of Boston)
    Abstract: Cooperation between workers is important for firms. Cooperation can be maintained through positive or negative reciprocity between workers. In an environment where cooperation yields high efficiency gains negative reciprocity may, however, result in high costs for firms. Therefore positive reciprocity should be prevailing in these environments. To test this assumption we conduct experiments with Swiss Air Force pilots and a student reference group. We find that pilots’ cooperation is based on stronger positive reciprocal behaviour. We conclude that Swiss Air Force pilots maintain team-work with high levels of positive reciprocity, regardless of the identity of their partner.
    Keywords: Trust, Reciprocity
    JEL: C9
    Date: 2006–10
  6. By: Rodolphe Buda
    Abstract: In this paper, we try to promote the building of a Quantitative Austrian Modelling (QAM). QAM must be viewed as a complementary quantitative prolongation of the Austrian methods and as a complementary approach to the already existing quantitative approaches - especially we would like here to answer to the appeal of Prof. N.J.Vriend [61]. As we explain it in the first part, our approach resulted from a critical view of the econometric procedures by Austrian methods and, from a theoretical instrumental study of the econometric models. We define the main properties to quantitative approaches and especially to the QAM. In the second part, we present QAM principles and equations (of the AUSTRIAN model), and justify it according to the classical Austrian point of view. The QAM could be viewed as an answer to Prof. M.J.Rizzo [49] about the relationship between the Praxeology and the Econometrics. Indeed, according to its properties, even if QAM won't be able to recreate any observable data, it could give a consistent pattern where the other quantitative approaches could fit. Especially, QAM could help, we hope so, to answer the question we asked about the quality of the econometric behavioral equations [8], in providing two levels of data, from where we could extract a relationship useful to correct observable econometric data. QAM is in building.
    Keywords: Austrian Economics - Agent-based Computational Economics - Methodological Individualism - Quantitative approaches - Econometrics - Micro-Macroeconomic Bridge
    JEL: B41 B53 C5 C63 C87 C88
    Date: 2007
  7. By: John Latsis
    Abstract: This paper proposes an alternative reading of what conventions are and how they might be used by social scientists in theoretical and empirical work. In the first section of the paper, I trace the modern conception of convention to two characterisations offered by David Hume. I claim that Hume’s two notions of convention provide the basic intuition behind the majority of modern approaches. The second section highlights an important and often implicit characteristic that most theories of convention share: the desire to explain the normativity of conventional practices has led commentators to characterise convention as a sub-category of social rules. I go on to argue that the Wittgensteinian literature on rule-following undermines this strategy and that rules cannot provide the normative guidance required of them by social theorists. The third section describes a promising alternative. I argue that the notion of exemplar, first proposed by Thomas Kuhn in the history and philosophy of science, can be used to clarify and advance the study of convention. The paper concludes with a illustration of how this alternative framework can be used by social scientists.
    JEL: D43 D51
    Date: 2007
  8. By: S.E.G. Lea; L.Newson
    Abstract: Until a few generations ago, humans made their living by foraging, like other animals. We have therefore inherited genes that allowed our ancestors to thrive as hunters and gatherers. Thriving in a modern economy requires very different behaviours but we cope because the human brain evolved to be flexible with the ability to form cooperative networks with other humans and to maintain the shared body of information, expertise and values which we call “cultureâ€. We argue that human economic behaviour is influenced by both the genes and the culture that we “inherit†and that both are a result of a Darwinian evolutionary process. An evolutionary approach is therefore likely to be of value in developing theories of economic behaviour. We then use this approach to analyse in broad terms how people that are born with the brains of foragers living in a small-scale society become consumers in a modern society and where this behaviour is likely to lead our species.
    Keywords: Length 31 pages
    Date: 2007–06
  9. By: Mishra Sushanta Kumar
    Abstract: The dominance of customer over the production/service employee, and as a result of this, increasing use of emotional labor in the workplace furthers the need to understand what emotional labor is. In this regard, the present paper reviews the literature to explain the concept ‘emotional labor’. In explaining emotional labor and its nomological network, the paper discusses the factors that affect and are affected by it. This paper contributes to the existing literature by assimilating different works done in this domain and providing a comprehensive understanding of emotional labor. This paper focuses on some of the critical issues, about which, the existing literature on emotional labor is silent and thus, providing a platform for further research.
    Date: 2006–12–28
  10. By: Kaul Asha; Nandan Debmalya
    Abstract: Multiple research studies on grammar and syntax used by men and women stress disparities stemming from gender specific styles of “talk”. Borrowing from the existing literature, we analyzed transcripts of 107 employees in an Indian organization to study variations, if any, in grammar and syntax across genders at the middle management level. Our study was based on an analysis of reported speech of a critical incident of upward influence in the organization. We classified the transcripts into two clusters, viz., male and female. A frequency count for some grammatical and syntactical forms was taken. Frequency count of the grammatical forms revealed no significant disparity in language used by males and females in same and mixed sex groups. The reasons for this finding are as follows: 1. Use of language is not gender specific. More specifically, sentential constructs are not governed by gender. 2. The content and context, if similar, yield similar results. 3. Evolution of a language pattern that is “organizationally fit” rather than gender governed. Significant variations in use of tags and hedges were identified. Based on the above findings, we attribute the variations in syntactical forms to aspects other than those related to “male” or “female” concepts of style, proposed by earlier researchers – for a study of the concept of style will require a framework which studies the linguistic form and the social functions in sync.
    Date: 2007–06–07

This nep-cbe issue is ©2007 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.
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