nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2007‒10‒20
six papers chosen by
Marco Novarese
University of the Piemonte Orientale

  1. The economics of the telethon: leadership, reciprocity and moral motivation By David Masclet; Marc Willinger; Charles Figuières
  2. Observational Learning: Evidence from a Randomized Natural Field Experiment By Hongbin Cai; Yuyu Chen; Hanming Fang
  3. Testing Rationality on Primitive Knowledge By Gossner, Oliver; Tsakas, Elias
  4. Tax Evasion: Cheating Rationally or Deciding Emotionally? By Giorgio Coricelli; Mateus Joffily; Claude Montmarquette; Marie-Claire Villeval
  5. Forecasting elections using expert surveys: an application to U.S. presidential elections By Jones, Randall J.; Armstrong, J. Scott; Cuzan, Alfred G.
  6. Stochastic Reference Points And The Dependence Structure By Enrico De Giorgi; Thierry Post

  1. By: David Masclet; Marc Willinger; Charles Figuières
    Abstract: We run a series of experiments in which subjects have to choose their level of contribution to a pure public good. The design differs from the standard public good game with respect to the decision procedure. Instead of deciding simultaneously in each round, subjects are randomly ordered in a sequence which differs from round to round. We compare sessions in which subjects can observe the exact contributions from earlier decisions ("sequential treatment with information") to sessions in which subjects decide sequentially but cannot observe earlier contributions ("sequential treatment without information"). The results indicate that sequentiality increases the level of contribution to the public good when subjects are informed about the contribution levels of lower ranked subjects while sequentiality alone has no effect on contributions. Moreover, we observe that earlier players try to influence positively the contributions of subsequent decision makers in the sequence, by making a large contribution. Such behaviour is motivated by the belief that subsequent players will reciprocate by also making a large contribution. We also discuss the effect of group size on aggregate contributions. Finally, we conceptualize a model where agents’ preferences incorporate a “weak” moral motivation element. The moral motivation is “weak” in the sense that contributors update their morally ideal level of contribution according to observed behaviours. This suggested qualification of rational contributors fits well with the patterns observed in the lab.
    Date: 2007–10
  2. By: Hongbin Cai; Yuyu Chen; Hanming Fang
    Abstract: We present results about the effects of observing others' choices, called observational learning, on individuals' behavior and subjective well-being in the context of restaurant dining from a randomized natural field experiment. Our experimental design aims to distinguish observational learning effect from saliency effect (because observing others' choices also makes these choices more salient). We find that, depending on specifications, the demand for the top 5 dishes was increased by an average of about 13 to 18 percent when these popularity rankings were revealed to the customers; in contrast, being merely mentioned as some sample dishes did not significantly boost their demand. Moreover, we find that, consistent with theoretical predictions, some modest evidence that observational learning effect was stronger among infrequent customers. We also find that customers' subjective dining experiences were improved when presented with the information about the top choices by other consumers, but not when presented with the names of some sample dishes.
    JEL: C93 D83
    Date: 2007–10
  3. By: Gossner, Oliver (Paris School of Economics); Tsakas, Elias (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We study whether rational information processing is testable. Our main result shows that, under positive conditions, negative introspection holds if and only if it holds for primitive propositions. In particular, it is sufficient to test negative introspection on primitive propositions.<p>
    Keywords: Partitional possibility correspondence; negative introspection; primitive propositions
    JEL: D80 D83 D89
    Date: 2007–10–12
  4. By: Giorgio Coricelli; Mateus Joffily; Claude Montmarquette; Marie-Claire Villeval
    Abstract: The economic models of tax compliance predict that individuals should evade taxes when the expected benefit of cheating is greater than its expected cost. When this condition is fulfilled, the high compliance however observed remains a puzzle. In this paper, we investigate the role of emotions as a possible explanation of tax compliance. Our laboratory experiment shows that emotional arousal, measured by Skin Conductance Responses, increases in the proportion of evaded taxes. The perspective of punishment after an audit, especially when the pictures of the evaders are publicly displayed, also raises emotions. We show that an audit policy that induces shame on the evaders favors compliance. <P>Les modèles économiques d'évasion fiscale prédisent que les individus devraient frauder dès que le bénéfice attendu de l'évasion dépasse son coût espéré. Sous cette condition, le fort taux de revenu déclaré pourtant observé constitue une énigme. Dans cet article, nous nous intéressons au rôle des émotions comme explication possible de ce phénomène. Notre expérience de laboratoire montre que l'intensité des émotions, mesurée par la conductance de la peau, augmente avec la proportion du revenu qui n'est pas déclarée. La perspective d'une sanction à l'issue d'un contrôle, en particulier lorsque la photo des contrevenants est diffusée, soulève également des émotions. Nous montrons qu'une politique de contrôle qui suscite la honte chez les fraudeurs favorise l'honnêteté fiscale.
    Keywords: tax evasion, emotions, neuro-economics, physiological measures, shame, experiments., fraude fiscale, émotions, neuro-économie, mesures physiologiques, honte, expériences.
    JEL: C91 C92 D87 H26
    Date: 2007–10–01
  5. By: Jones, Randall J.; Armstrong, J. Scott; Cuzan, Alfred G.
    Abstract: Prior research offers a mixed view of the value of expert surveys for long-term election forecasts. On the positive side, experts have more information about the candidates and issues than voters do. On the negative side, experts all have access to the same information. Based on prior literature and on our experiences with the 2004 presidential election and the 2008 campaign so far, we have reason to believe that a simple expert survey (the Nominal Group Technique) is preferable to Delphi. Our survey of experts in American politics was quite accurate in the 2004 election. Following the same procedure, we have assembled a new panel of experts to forecast the 2008 presidential election. Here we report the results of the first survey, and compare our experts’ forecasts with predictions by the Iowa Electronic Market .
    Keywords: forecasting; elections; expert surveys; Delphi
    JEL: Y80
    Date: 2007–10–02
  6. By: Enrico De Giorgi (University of Lugano); Thierry Post (Erasmus University Rotterdam)
    Abstract: This study develops a framework for dealing with stochastic reference points and endogenously selecting the reference point in reference-dependent choice theories that accounts for the joint probability distribution of the prospects and the reference point. Without accounting for the dependence structure, the endogenous reference point can deviate from the decision-maker’s optimum. Accounting for dependence, reference dependence affects choice behavior only if the reference point is (in part or in whole) exogenously fixed. In an application to well-known US investment benchmark data, investors invest in riskless T-bills rather than stocks if we ignore the dependence structure, while investing in small value stocks is optimal when we account for dependence.
    Keywords: Reference-dependent preferences, loss aversion, prospect theory, dependence structure
    JEL: D81 C23 C91 C93
    Date: 2007–02

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