nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2007‒11‒17
ten papers chosen by
Marco Novarese
University of the Piemonte Orientale

  1. Two are Better Than One! Individuals' Contributions to Unpacked Public Goods By Michele Bernasconi, Luca Corazzini, Sebastian Kube, Michel André Maréchal.
  2. Cognitive Dissonance, Pessimism, and Behavioral Spillover Effects By David L. Dickinson; Robert Oxoby
  3. What is Behavioural Economics Like? By Lanteri, Alessandro; Carabelli, Anna
  4. The Effect of Incentive Structure on Heuristic Decision Making: The Proportion Heuristic By Robert Oxoby
  5. Behavioural Anomalies, Bounded Rationality and Simple Heuristics By Suren Basov; Liam Blanckenberg; Lata Gangadharan
  6. Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States By Iris Bohnet; Fiona Greig; Benedikt Herrmann; Richard Zeckhauser
  7. Leader Affective Displays and Attributions of Charisma: The Role of Arousal By Damen, F.J.A.; Knippenberg, D.L. van; Knippenberg, B. van
  8. Consumer Networks and Firm Reputation: A First Experimental Investigation By Gabriele K. Lünser; Jean-Robert Tyran
  9. Choice under Markovian Constraints By Leonardo Boncinelli
  10. Where do Personal Experience and Imitation Drive Choice? By Leonardo Boncinelli

  1. By: Michele Bernasconi, Luca Corazzini, Sebastian Kube, Michel André Maréchal. (ISLA, Universita' Bocconi, Milano)
    Abstract: We study the effects on voluntary contributions of unpacking a single linear public good into distinct but identical parts. In our experiment, subjects either participate to a one linear public good game or a two linear and identical public goods game, with marginal per capita returns of contributions being constant across treatments. We find that unpacking public goods significantly increases contributions of both unexperienced and experienced subjects. Our results highlight new strategies for NGOs for increasing charitable donations.
    Keywords: Voluntary contributions to public goods, unpacking effect, laboratory experiment, charitable donations.
    JEL: C91 C92 H40 H41
    Date: 2007–11
  2. By: David L. Dickinson; Robert Oxoby
    Date: 2007–10–26
  3. By: Lanteri, Alessandro; Carabelli, Anna
    Abstract: Behavioural Economics’ milestones, Endowment Effect and Loss Aversion, have been recognized as ‘well documented,’ ‘robust,’ and ‘important’ even by the critics. But well documented, robust, and important what? Are these stylized facts, theoretical constructs, or psychological truths? Do they express genuine preferences or are they judgement mistakes? We discuss the problems with the nature of these claims in the lights of the goals of Behavioural Economics: to improve economics’ realisticness and to be considered mainstream. We argue that, under sensible interpretations of Loss Aversion and Endowment Effect, Behavioural Economics is neither more realistic than, nor part of the mainstream.
    Keywords: Behavioural Economics; Decision-Making; Endowment Effect; Loss Aversion; Uncertainty
    JEL: D81 A12 D8
    Date: 2007–11
  4. By: Robert Oxoby
    Date: 2007–10–26
  5. By: Suren Basov; Liam Blanckenberg; Lata Gangadharan
    Abstract: The use of bounded rationality in explaining economic phenomena has attracted growing attention. In spite of this, there is still considerable disagreement regarding the meaning of bounded rationality. Basov (2005) argues that when modeling boundedly rational behaviour it is desirable to start with an explicit formulation of the learning process. A complete understanding of the boundedly rational decision-making process requires development of an evolutionary-dynamic model which can give rise to such learning processes. Evolutionary dynamics implies that individuals use heuristics to adjust their choices in light of past experiences, moving in the direction that appears most beneficial, where these adjustment rules are assumed ‘hardwired’ into human cognition through the process of biological evolution. In this paper we elaborate on the latter point by building a model of evolutionary selection relevant to heuristics. We show that in addition to explaining the origin of learning rules this approach also sheds light on some well documented preference anomalies.
    Keywords: Bounded Rationality;Heuristics;Replicator Dynamics
    JEL: C0 D7
    Date: 2007
  6. By: Iris Bohnet (Kennedy School of Government, Harvard University); Fiona Greig (Kennedy School of Government, Harvard University); Benedikt Herrmann (School of Economics, University of Nottingham); Richard Zeckhauser (Kennedy School of Government, Harvard University)
    Abstract: Due to betrayal aversion, people take risks less willingly when the agent of uncertainty is another person rather than nature. Individuals in six countries (Brazil, China, Oman, Switzerland, Turkey, and the United States) confronted a binary-choice trust game or a risky decision offering the same payoffs and probabilities. Risk acceptance was calibrated by asking individuals their “minimum acceptable probability” (MAP) for securing the high payoff that would make them willing to accept the risky rather than the sure payoff. People’s MAPs are generally higher when another person rather than nature determines the outcome. This indicates betrayal aversion.
    JEL: C72 C91
    Date: 2007–10
  7. By: Damen, F.J.A.; Knippenberg, D.L. van; Knippenberg, B. van (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Research suggests that leader displays of positive affect are conducive to attributions of charisma. We qualify and extend this conclusion by arguing that this mainly holds for displays of positive affect that are associated with high levels of arousal. Results of a scenario experiment and a survey support this hypothesis, and show that besides the transfer of positive feelings per se, it is the transfer of arousal that mediates the relationship between leader affective displays and attributions of charisma.
    Keywords: Charisma;Leader Affect;Arousal;Positive Feelings;
    Date: 2007–10–30
  8. By: Gabriele K. Lünser (University College London); Jean-Robert Tyran (Department of Economics, University of Copenhagen)
    Abstract: Arguing that consumers are the carriers of firms’ reputations, we examine the role of consumer networks for trust in markets that suffer from moral hazard. When consumers are embedded in a network, they can exchange information with their neighbours about their private experiences with different sellers. We find that such information exchange fosters firms' incentives for reputation building and, thus, enhances trust and efficiency in markets. This efficiency-enhancing effect is already achieved with a rather low level of network density.
    Keywords: trust; consumer networks; moral hazard; information conditions; reputation
    JEL: C72 C92 D40 L14
    Date: 2007–11
  9. By: Leonardo Boncinelli
    Abstract: In this paper I provide a descriptive model of choice over time by a population of constrained maximizing agents. Agents’ choice sets are markovian in the sense that they depend on previous choices. The unperturbed dynamics turns out to be trapped into local maxima whatever the length of memory. In the presence of perturbations efficiency is got with a memory of at least two periods. This provides a useful insight for what drives to efficient evolution in this setting: perturbations create variety and a two period long memory allows comparisons and selection
    Keywords: personal experience; limited cognitive capabilities; stochastically stable distribution
    JEL: D01 D80 D81
    Date: 2007–10
  10. By: Leonardo Boncinelli
    Abstract: This papers investigates the efficiency of aggregate choice in the long run when the individual decision is driven by both personal experience and imitation. Personal experience is represented by choice sets depending upon previous choices. Imitation is modeled first through popularity weighting and then through a network of social influences. Intuition suggests imitation can work as a source of variety, spreading behaviors among which memory can make selection. However inefficiencies will persist in the stochastically stable distribution whenever the length of memory is not sufficiently long to stop inferior behaviors from moving perpetually along periodic cycles of social influences.
    Keywords: imitation; personal experience; limited cognitive capabilities
    JEL: D01 D80 D81 D85 Z13
    Date: 2007–10

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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