nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2008‒06‒27
eight papers chosen by
Marco Novarese
University of the Piemonte Orientale

  1. Bounded Decision Making: From Description to Improvement By Dolly Chugh; Katherine Lyford Milkman; Max H. Bazerman
  2. Are leading papers of better quality? Evidence from a natural experiment By Tom Coupé; Victor Ginsburgh; Abdul Noury
  3. Being of two minds: an ultimatum experiment investigating affective processes By Dominique Cappellettia; Werner Güth; Matteo Ploner
  4. Looking Awkward When Winning and Foolish When Losing: Inequity Aversion and Performance in the Field By Benno Torgler; Markus Schaffner; Bruno S.Frey; Sascha L. Schmidt
  5. The Importance of Character Education for Tweens as Consumers By Noha El-Bassiouny; Ahmed Taher; Ehab M. Abou Aish
  6. The role of fairness motives and spatial considerations in explaining departures from Nash equilibrium: stationary and evolutionary lessons from 2x2 games By Tavoni, Alessandro
  7. The Effect of Aspirations, Habits, and Social Security on the Distribution of Wealth. By Jordi Caballé; Ana I. Moro Egido
  8. Does early maternal employment affect non-cognitive children outcomes? By Zsuzsa Blasko

  1. By: Dolly Chugh (New York University, Stern School of Business); Katherine Lyford Milkman (Harvard Business School); Max H. Bazerman (Harvard Business School, Negotiation, Organizations & Markets Unit)
    Abstract: The optimal moment to address the question of how to improve human decision making has arrived. In recent research, judgment and decision-making scholars have moved beyond the concept of bounded rationality to recognize a broader set of bounds that affect decision making. We specify a taxonomy that assembles the field's knowledge about these decision-making bounds and organizes efforts toward deepening this knowledge and developing strategies for improvement. Specifically, we group five identified decision-making bounds into three broad categories: bounds on information processing, bounds on the optimal weighting of priorities, and bounds on noticing information. The first category encompasses bounded rationality, the first bound to be discovered and studied extensively. The second category encompasses bounded willpower and bounded self-interest. The third category encompasses two recently identified bounds: bounded ethicality and bounded awareness. By organizing diverse theories into a clear framework, the taxonomy should aid researchers and educators in identifying new strategies for improving decision making.
    Date: 2008–06
  2. By: Tom Coupé (Kyiv School of Economics and Kyiv Economics Institute); Victor Ginsburgh (ECARES, Université Libre de Bruxelles and CORE, Université Catholique de Louvain); Abdul Noury (CORE, Université Catholique de Louvain)
    Abstract: Leading papers in a journal’s issue attract, on average, more citations than those that follow. It is, however, difficult to assess whether they are of better quality (as is often suggested), or whether this happens just because they appear first in an issue. We make use of a natural experiment that was carried out by a journal in which papers are randomly ordered in some issues, while this order is not random in others. We show that leading papers in randomly ordered issues also attract more citations, which casts some doubt on whether, in general, leading papers are of higher quality.
    Date: 2008–06
  3. By: Dominique Cappellettia (CIFREM, University of Trento, Italy); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); Matteo Ploner (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany)
    Abstract: We experimentally investigate how affective processes influence proposers' and responders' behaviour in the Ultimatum Game. Using a dual-system approach, we tax cognitive resources through time pressure and cognitive load to enhance the influence of affective processes on behaviour. We find that proposers offer more under time pressure and this seems to be due to strategic considerations rather than to other-regarding concerns. We also find that responders are more likely to reject under time pressure. Surprisingly, both proposers and responders appear to be unaffected by cognitive load manipulation.
    Keywords: Ultimatum Game, dual-system theories, time pressure, cognitive load, Experimental Economics.
    JEL: C72 C78 C91
    Date: 2008–06–18
  4. By: Benno Torgler; Markus Schaffner; Bruno S.Frey; Sascha L. Schmidt
    Abstract: The experimental literature and studies using survey data have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. Individuals are concerned about social comparisons. However, behavioral evidence in the field is rare. This paper provides an empirical analysis, testing the model of inequity aversion using two unique panel data sets for basketball and soccer players. We find support that the concept of inequity aversion helps to understand how the relative income situation affects performance in a real competitive environment with real tasks and real incentives.
    Keywords: Inequity aversion, relative income, positional concerns, envy, social comparison, performance, interdependent preferences
    JEL: D00 D60 L83
    Date: 2008–06–16
  5. By: Noha El-Bassiouny (Faculty of Management Technology, The German University in Cairo); Ahmed Taher (American University in Cairo); Ehab M. Abou Aish (Faculty of Management Technology, The German University in Cairo)
    Abstract: Tweens is a term that denotes a market segment mentality that falls between children at the lower end and teens at the upper end. Tweens marketing strategies are considered critical for most global brands. Advocates against excessive consumerism and materialism polluting innocent childhood, specifically tweens, call for values implantation through character education in the school to breed more educated consumers. The effect of implanting character building programs in schools on the consumer behavior of the exposed children in the marketplace, however, has never been tested before. This research endeavor is, in essence, an overlap between consumer behavior and educational psychology, investigating the link between personality and behavior in the market. It falls under both positivist and interpretive consumer research, specifically the consumer socialization of children. The aim of this work is to develop a conceptual model linking character education to purchasing lifestyles and consumption patterns of the exposed children as consumers. Following, prospects for future research are highlighted.
    Keywords: Educational psychology, character education, attitudes and lifestyles, opinion-leadership, humanitarianism, ethnocentrism, adolescents and middle schools
    JEL: M30 M31
    Date: 2008–06
  6. By: Tavoni, Alessandro
    Abstract: Substantial evidence has accumulated in recent empirical works on the limited ability of the Nash equilibrium to rationalize observed behavior in many classes of games played by experimental subjects. This realization has led to several attempts aimed at finding tractable equilibrium concepts which perform better empirically, often by introducing a reference point to which players compare the available payoff allocations, as in impulse balance equilibrium and in the inequity aversion model. The first part of this paper is concerned with reviewing the recent reference point literature and advancing a new, empirically sound, hybrid concept. In the second part, evolutionary game theoretic models are employed to investigate the role played by fairness motives as well as spatial structure in explaining the evolution of cooperative behavior.
    Keywords: Other-regarding preferences; Inequity aversion; Endogenous preferences; Evolutionary stability; Prisoner’s dilemma
    JEL: B52 A13 D64 C72 C73
    Date: 2008–06–20
  7. By: Jordi Caballé (Unitat de Fonaments de l’Anàlisi Economica and CODE, Universitat Autònoma de Barcelona.); Ana I. Moro Egido (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: In this paper, we analyze how the introduction of habits and aspirations affects the distribution of wealth when individuals’ labor productivity is subject to idiosyncratic shocks and bequests arise from a joy-of-giving motive. In the presence of either bequests or aspirations, labor income shocks are transmitted intergenerationally and this transmission, together with the contemporaneous income shocks, determines the stationary distribution of wealth. We show that the introduction of aspirations increases both the intragenerational variability of wealth and the corresponding degree of intergenerational mobility. The opposite result holds when habits are introduced. Finally, we discuss how aspirations and habits interact with the redistributive features of an unfunded social security system.
    Keywords: Aspirations, Habits, Wealth Distribution, Social Security.
    JEL: D31 E21 E62
    Date: 2008–06–09
  8. By: Zsuzsa Blasko (Institute of Economics, Hungarian Academy of Sciences)
    Abstract: This review aims at summarizing research-findings in the field of early maternal employment and children's psychological development. We are concentrating on maternal work during the first 4-5 years of children's life, and look at research investigating linkages between maternal employment and various aspects of children's psychological functioning in these early years or later. Most articles discussed here came from the Journal of Marriage and the Family, although some other journals are also included. When selecting the articles, attempts were made to collect relatively recent papers if possible from various research traditions, including sociological as well as psychological approaches. Our review has shown that according to the existing research evidence early maternal employment per se has a clear adverse effect on children's socioemotional development only if it happens in the first year of children's life. Consequences of later employment (eg. when the child reaches 4 year of age) might even include positive ones. In itself, it also seems to do very little difference whether the mother works full time or part time. It is only extremely long hours that might cause concern. There are however other circumstances that might divert the impact of maternal work into a negative direction. These include incongruence between maternal employment preferences and actual behaviour, high level of occupational stress, low income and low complexity of work. When these circumstances are present, children of working mothers are more likely to show behavioural problems than their counterparts. Possible negative effects of maternal employment can in theory be overcome by a high quality alternative care and also with much attention given to the child in the restricted amount time the mother can spend with her/him. In the reality however, risk factors tend to accumulate and positive factors are not easily available for those most in need.
    Keywords: maternal employment, behaviour problems, psychological development, early ages
    JEL: I29 J13
    Date: 2008–06

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.