nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2008‒06‒07
six papers chosen by
Marco Novarese
University of the Piemonte Orientale

  1. Manipulating Reference States: the Effect of Attitudes on Utility By Astrid Matthey
  2. Truth and trust in communication - Experiments on the effect of a competitive context By Rode, Julian
  3. A non-standard approach to a market with boundedly rational consumers and strategic firms. Part I: A microfoundation for the evolution of sales By Christina Matzke, Benedikt Wirth
  4. Moral Sentiments and Material Interests behind Altruistic Third-Party Punishment By Stefania Ottone; Ferruccio Ponzano; Luca Zarri
  5. The Envious Punisher: Understanding Third and Second Party Punishment with Simple Games By Andreas Leibbrandt; Raúl López-Pérez
  6. Revealed Conflicting Preferences By Attila Ambrus; Kareen Rozen

  1. By: Astrid Matthey (Max-Planck-Institute of Economics)
    Abstract: In economic theory, utility depends on past, present and future outcomes. The experiment described in this paper suggests that utility also depends on people's attitudes, and that it can easily be manipulated through these attitudes. The results imply, ?rst, that purely outcome-based models of individual utility may be incomplete. Second, that reference-states are not determined completely endogenously but can be influenced from outside. And third, that experiments in economics may be sensitive to subtle details of the experimental design.
    Keywords: utility, reference state, attitudes, priming, experiment
    JEL: D01 D10 C91
    Date: 2008–05–30
  2. By: Rode, Julian (Sonderforschungsbereich 504)
    Abstract: The paper employs laboratory experimentation to study the effect of competition on truth telling and trust in communication. A sequence of either competitive or cooperative interactions preceded an experimental communication game. In the game, informed advisors sent a recommendation to decision-makers who faced uncertainty about the consequences of their choice. While many advisors told the truth against their monetary self-interest, the propensity to tell the truth was unaffected by the contextual priming. In contrast, decision-makers trusted significantly less in a competitive context. The effect was strongest when they faced full uncertainty. The paper relates this result to psychological and neuro-economic findings on automatic information processing. The data of this study were largely in line with Subjective Equilibrium Analysis (Kalai and Lehrer, 1995).
    Date: 2008–04–10
  3. By: Christina Matzke, Benedikt Wirth
    Abstract: In our model, individual consumers follow simple behavioral decision rules based on imitation and habit as suggested in consumer research, social learning, and related fields. Demand can be viewed as the outcome of a population game whose revision protocol is determined by the consumers' behavioral rules. The consumer dynamics are then analyzed in order to explore the demand side and first implications for a strategic supply side.
    Keywords: bounded rationality, social learning, population game, mean dynamic
    JEL: C61 C62 C79
  4. By: Stefania Ottone (EconomEtica and University of Eastern Piedmont; EconomEtica and University of Eastern Piedmont); Ferruccio Ponzano (University of Eastern Piedmont; University of Eastern Piedmont); Luca Zarri (Università di Verona; Dipartimento di Scienze economiche (Università di Verona))
    Abstract: Social norms are ubiquitous in human life. Their role is essential in allowing cooperation to prevail, despite the presence of incentives to free ride. As far as norm enforcement devices are concerned, it would be impossible to have widespread social norms if second parties only enforced them. However, both the quantitative relevance and the motivations underlying altruistic punishment on the part of ‘unaffected’ third parties are still largely unexplored. This paper contributes to shed light on the issue, by means of an experimental design consisting of three treatments: a Dictator Game Treatment, a Third-Party Punishment Game Treatment (Fehr and Fischbacher, 2004) and a Metanorm Treatment, that is a variant of the Third-party Punishment Game where the Recipient can punish the third party. We find that third parties are willing to punish dictators (Fehr and Fischbacher, 2004; Ottone, 2008) and, in doing so, they are affected by ‘reference-dependent fairness’, rather than by the ‘egalitarian distribution norm’. By eliciting players’ normative expectations, it turns out that all of them expect a Dictator to transfer something – not half of the endowment. Consequently, the Observers’ levels of punishment are sensitive to their subjective sense of fairness. A positive relation between the level of punishment and the degree of negative subjective unfairness emerges. Subjective unfairness also affects Dictators’ behaviour: their actual transfers and their ideal transfer are not significantly different. Finally, we interestingly find that third parties are also sensitive to the receivers’ (credible) threat to punish them: as the Dictator’s transfer becomes lower and lower than the Observer’s ideal transfer, the Observer’s reaction is – other things being equal – significantly stronger in the Metanorm Treatment than in the Third-Party Punishment Game Treatment. Hence, despite their being to some extent genuinely nonstrategically motivated, also third parties – like second parties – are sensitive to the costs of punishing.
    Keywords: Third-Party Punishment; Moral Sentiments; Material Interests; Subjective Unfairness; Social Norms.
    JEL: C72 C9 D63 Z13
    Date: 2008–05
  5. By: Andreas Leibbrandt; Raúl López-Pérez
    Abstract: We provide a systematic comparison of punishment from unaffected third parties and affected second parties using a within-subject design in ten simple games. We apply the classification analysis by El-Gamal and Grether (1995) and find that a parsimonious model assuming subjects are either envious or selfish best explains the punishment from both third and second parties. Third and second parties punish richer co-players, even if they chose a socially or Pareto-efficient allocation or if they are merely bystanders who made no choice. Despite their unaffected position, we do not find that third parties punish in a more impartial or normative manner.
    Keywords: Envy, fairness, inequity aversion, norms, punishment, reciprocity
    JEL: C70 C91 D63 D74 Z13
    Date: 2008–05
  6. By: Attila Ambrus; Kareen Rozen
    Date: 2008–05–31

This nep-cbe issue is ©2008 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.