nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2007‒09‒16
fifteen papers chosen by
Marco Novarese
University of the Piemonte Orientale

  1. Individual Responsibility and the Funding of Collective Goods By Louis Levy-Garboua; Claude Montmarquette; Marie-Claire Villeval
  2. Social Image and the 50-50 Norm: A Theoretical and Experimental Analysis of Audience Effects By James Andreoni
  3. Do the Reciprocal Trust Less? By Steffen Altmann; Thomas Dohmen; Matthias Wibral
  4. Selfish-biased conditional cooperation: On the decline of contributions in repeated public goods experiments By Tibor Neugebauer; Javier Perote; Ulrich Schmidt; Malte Loos
  5. Doing good or doing well? Image motivation and monetary incentives in behaving prosocially By Dan Ariely; Anat Bracha; Stephan Meier
  6. Let’s Talk It Over: Coordination Via Preplay Communication With Level-k Thinking By Vincent P Crawford
  7. Three Minimal Market Games: Theory and Experimental Evidence By Juergen Huber; Martin Shubik; Shyam Sunder
  8. Congestion, Equilibrium and Learning: The Minority Game By Kets, W.; Voorneveld, M.
  9. Modelling Negotiated Decision Making: a Multilateral, Multiple Issues, Non-Cooperative Bargaining Model with Uncertainty By Alessandra Sgobbi; Carlo Carraro
  10. Experimental Economics: Contributions, Recent Developments, and New Challenges By Marie-Claire Villeval
  11. Endogenous Leadership Selection and Influence By Emrah Arbak; Marie-Claire Villeval
  12. Cognitive & Relational Distance in Alliance Networks: Evidence on the Knowledge Value Chain in the European ICT Sector By Olivier BROSSARD (LEREPS-GRES); Jérôme VICENTE (LEREPS-GRES)
  14. Preferences, Intentions, and Expectations: A Large-Scale Experiment With a Representative Subject Pool By Bellemare, C.; Kroger, S.; Soest, A.H.O. van
  15. Systematic errors in decision-making By Juan D Carrillo; Isabelle Brocas

  1. By: Louis Levy-Garboua (CES-TEAM and Paris School of Economics); Claude Montmarquette (CIRANO and Université de Montréal); Marie-Claire Villeval (GATE CNRS, Institute for the Study of Labor (IZA))
    Abstract: When a deficit occurs in the funding of collective goods, it is usually covered by raising the amount of taxes or by rationing the supply of the goods. This article compares the efficiency of these institutions. We report the results of a 2x2 experiment based on a game in the first stage of which subjects can voluntarily contribute to the funding of a collective good that is being used to compensate the victims of a disaster. In the second stage of the game, in case of a deficit, we introduce either taxation or rationing. Each treatment is subjected to two conditions: the burden of the deficit is either uniform for all the subjects, or individualized according to the first-stage contribution. We show that the individualized treatments favor the provision of the collective good through voluntary cooperation whereas the uniform treatments encourage free-riding. Individualized taxation brings the voluntary contributions closer to the optimum while uniform rationing appears to be the worst system since free-riding restrains the provision of the good.
    Keywords: collective goods, experiment, interior Pareto optimum, rationing, responsibility, taxation
    JEL: C91 H21 H30 H41 H50
    Date: 2007–09
  2. By: James Andreoni
    Date: 2007–09–03
  3. By: Steffen Altmann (University of Bonn and IZA); Thomas Dohmen (IZA); Matthias Wibral (University of Bonn and IZA)
    Abstract: We study the intrapersonal relationship between trust and reciprocity in a laboratory experiment. Reciprocal subjects trust significantly more than selfish ones. This finding raises questions about theories of social preferences which predict that "fairer" players should trust less.
    Keywords: trust, reciprocity, social preferences, fairness, laboratory experiment
    JEL: C91 D63
    Date: 2007–08
  4. By: Tibor Neugebauer; Javier Perote; Ulrich Schmidt; Malte Loos
    Abstract: In the recent literature, several hypotheses have been put forward in order to explain the decline of contributions in repeated public good games. We present results of an experiment which allows to evaluate these hypotheses. The main characteristics of our experimental design are a variation of information feedback and an elicitation of individual beliefs about others’ contributions. Altogether, our data support the hypothesis of conditional cooperation with a selfish bias.
    Keywords: experimental economics, information feedback, public goods, voluntary contributions, conditional cooperation
    JEL: C72 C92 H41
    Date: 2007–09
  5. By: Dan Ariely; Anat Bracha; Stephan Meier
    Abstract: This paper examines image motivation—the desire to be liked and well-regarded by others— as a driver in prosocial behavior (doing good), and asks whether extrinsic monetary incentives (doing well) have a detrimental effect on prosocial behavior due to crowding out of image motivation. ; By definition, image depends on one’s behavior being visible to other people. Using this unique property we show that image is indeed an important part of the motivation to behave prosocially. Moreover, we show that extrinsic incentives interact with image motivation and are therefore less effective in public than in private. Together, these results imply that image motivation is crowded out by monetary incentives; this means that monetary incentives are more likely to be counterproductive for public prosocial activities than for private ones.
    Date: 2007
  6. By: Vincent P Crawford
    Date: 2007–09–03
  7. By: Juergen Huber; Martin Shubik; Shyam Sunder
    Date: 2007–09–03
  8. By: Kets, W.; Voorneveld, M. (Tilburg University, Center for Economic Research)
    Abstract: The minority game is a simple congestion game in which the players? main goal is to choose among two options the one that is adopted by the smallest number of players. We characterize the set of Nash equilibria and the limiting behavior of several well-known learning processes in the minority game with an arbitrary odd number of players. Interestingly, different learning processes provide considerably different predictions.
    Keywords: Learning;congestion games;replicator dynamic;perturbed best response dynamics;quantal response equilibria;best-reply learning
    JEL: C72 D83
    Date: 2007
  9. By: Alessandra Sgobbi (Fondazione Eni Enrico Mattei); Carlo Carraro (University of Venice, Fondazione Eni Enrico Mattei and EuroMediterranean Center on Climate Change)
    Abstract: The relevance of bargaining to everyday life can easily be ascertained, yet the study of any bargaining process is extremely hard, involving a multiplicity of questions and complex issues. The objective of this paper is to provide new insights on some dimensions of the bargaining process – asymmetries and uncertainties in particular – by using a non-cooperative game theory approach. We develop a computational model which simulates the process of negotiation among more than two players, who bargain over the sharing of more than one pie. Through numerically simulating several multiple issues negotiation games among multiple players, we identify the main features of players’ optimal strategies and equilibrium agreements. As in most economic situations, uncertainty crucially affects also bargaining processes. Therefore, in our analysis, we introduce uncertainty over the size of the pies to be shared and assess the impacts on players’ strategic behaviour. Our results confirm that uncertainty crucially affects players’ behaviour and modifies the likelihood of a self-enforcing agreement to emerge. The model proposed here can have several applications, in particular in the field of natural resource management, where conflicts over how to share a resource of a finite size are increasing.
    Keywords: Bargaining, Non-Cooperative Game Theory, Simulation Models, Uncertainty
    JEL: C61 C71 C78
    Date: 2007–07
  10. By: Marie-Claire Villeval (GATE CNRS)
    Abstract: Although economics has long been considered as a non-experimental science, the development of experimental economics and behavioral economics is amazingly rapid and affects most fields of research. This paper first attempts at defining the main contributions of experiments to economics. It also identifies four main trends in the development of experimental research in economics. The third contribution of this paper is to identify the major theoretical and methodological challenges faced by behavioral and experimental economics.
    Keywords: behavioral economy, Experimental economics, field experiment, quantitative methods
    JEL: A12 C90 D0
    Date: 2007–03
  11. By: Emrah Arbak (GATE CNRS); Marie-Claire Villeval (GATE CNRS)
    Abstract: In social dilemmas, leading a team by making heroic efforts may prove costly, especially if the followers are not adequately motivated to make similar sacrifices. Attempting to understand what motivates these seemingly selfless individuals to lead, we report the results of a two-stage public good experiment with endogenous timing. Even though it turns out to be costly on average, a large proportion of our subjects volunteer to lead. Our findings suggest that a fraction of these leaders are socially concerned, while others expect to distill some personal gain, possibly of non-pecuniary nature. The composition of the team also matters, as publicizing certain attributes of a subject’s teammates has an impact on her decision to lead. Lastly, though voluntary leaders improve efficiency in their team, they are not necessarily more influential than randomly imposed leaders.
    Keywords: endogenous switching models, experiment, influence, leadership, voluntary contribution
    JEL: A13 C92 D63 J33 M54
    Date: 2007–03
    Abstract: This paper deals with the firms’ motives for entering into knowledge partnerships. We start by showing that networking strategies are designed to access external knowledge whilst maintaining at the same time a sufficient level of knowledge appropriation and tradability. The ICT sector (and interplaying ones) is particularly concerned by this accessibility/appropriation trade-off. The questions of modularity, complementarity, compatibility and standardisation are critical in the formation of corporate strategic and technological partnerships. Considering that knowledge in this sector is complex and systemic, we construct a theoretical typology of knowledge partnerships by crossing the levels of cognitive and relational proximity with the knowledge phases of exploration, examination and exploitation. This typology is then tested on empirical data through the use of a classification algorithm. The dataset is based on a sample of strategic alliances in the European ICT sector extracted from SDC Platinum. We show that strategic alliances are clustered in relation to the knowledge phases (exploration, examination, exploitation), and that the alliance categories are characterised by levels of relational and cognitive distance which actually are in keeping with the theoretical predictions.
    Keywords: knowledge networks; knowledge phases; proximities; strategic alliances; ICT sector
    JEL: L22 L24 L63 O31
    Date: 2007
  13. By: Simon Gaechter (University of Nottingham); Eric Johnson (Columbia University); Andreas Herrmann (University of St Gallen)
    Abstract: Loss aversion can occur in riskless and risky choices. Yet, there is no evidence whether people who are loss averse in riskless choices are also loss averse in risky choices. We measure individual-level loss aversion in riskless choices in an endowment effect experiment by eliciting both WTA and WTP from each of our 360 subjects (randomly selected customers of a car manufacturer). All subjects also participate in a simple lottery choice task which arguably measures loss aversion in risky choices. We find substantial heterogeneity in both measures of loss aversion. Loss aversion in the riskless choice task and loss aversion in the risky choice task are highly significantly and strongly positively correlated. We find that in both choice tasks loss aversion increases in age, income, and wealth, and decreases in education.
    Keywords: Loss aversion, endowment effect, field experiments
    JEL: C91 C93 D81
    Date: 2007–07
  14. By: Bellemare, C.; Kroger, S.; Soest, A.H.O. van (Tilburg University, Center for Economic Research)
    Abstract: We specify and estimate an econometric model which separately identifies distributional preferences and the effects of perceived intentions on responder behavior in the ultimatum game. We allow the effects of perceived intentions to depend, among other things, on the subjective probabilities responders attach to the possible offers. We estimate the model on a large representative sample from the Dutch population. We find that the relative importance of distributional preferences and perceived intentions depends significantly on the socioeconomic characteristics of responders. Strong inequity aversion to the other player?s disadvantage is found for lower educated and older respondents. Responders tend to punish unfavorable offers more if they expect that fair proposals will occur with higher probability.
    Keywords: Inequity aversion;intentions;subjective expectations.
    JEL: C93 D63 D84
    Date: 2007
  15. By: Juan D Carrillo; Isabelle Brocas
    Date: 2007–09–03

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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