nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2008‒07‒14
nine papers chosen by
Marco Novarese
University of the Piemonte Orientale

  1. Eliciting Motives for Trust and Reciprocity by Attitudinal and Behavioural Measures By Farina, Francesco; O'Higgins, Niall; Sbriglia, Patrizia
  2. Social Interactions and the Salience of Social Identity By McLeish, Kendra N.; Oxoby, Robert J.
  3. Fungibility, Labels, and Consumption By Abeler, Johannes; Marklein, Felix
  4. Blood donations and incentives: evidence from a field experiment By Lorenz Goette; Alois Stutzer
  5. Hypothetical bias and certainty calibration in a value of time experiment By Swärdh, Jan-Erik
  6. Does Irritation Induced by Charitable Direct Mailings Reduce Donations? By Diepen, M. van; Donkers, A.C.D.; Franses, Ph.H.B.F.
  7. A Comment on Ellsberg's two-color experiment, portfolio inertia and ambiguity By Youichiro Higashi; Sujoy Mukerji; Norio Takeoka; Jean-Marc Tallon
  8. Complexity and Macro Pedagogy: The Complexity Vision as a Bridge between Graduate and Undergraduate Macro By David Colander; Casey Rothschild
  9. Why Do Leaders Matter? The Role of Expert Knowledge By Goodall, Amanda H.; Kahn, Lawrence M.; Oswald, Andrew J.

  1. By: Farina, Francesco (University of Siena); O'Higgins, Niall (University of Salerno); Sbriglia, Patrizia (University of Naples II)
    Abstract: Value Surveys may reveal well-behaved societies by the statistical treatment of the agents’ declarations of compliance with social values. Similarly, the results of experiments conducted on games with conflict of interest trace back to two important primitives of social capital – trust and reciprocity – which can be used to explain deviations from the Nash equilibrium and which lead to the optimal cooperative outcome. In this paper we attempt to elicit the true motive(s) underlying the behaviour of players in experimental trust and dictator games and suggest that the most informative utilization of surveys in this regard goes beyond the simple comparison of answers to a questionnaire with actual behaviour. Specifically the paper uses descriptive statistics and ordered probit models to analyse whether, and to what extent, answers to a questionnaire about attitudes to trusting and reciprocating predict subjects’ behaviour and, by comparing behaviour in Trust and Dictator Game, disentangles the strategic and altruistic motivations. We find no simple or direct correlation between behavioural trust or trustworthiness and attitudinal trust or disposition to reciprocate. However, dividing subjects according to attitudinal trust and trustworthiness, we observe that the link between the questionnaire and experimental sessions is more subtle than the mere correlation between average attitudes and average behaviours. The information conveyed by a survey appears to be much more powerful ex post – once the two motivational components have been separated out.
    Keywords: trust, reciprocity, experimental economics, ordered probit
    JEL: C72 C91 D63 D64
    Date: 2008–07
  2. By: McLeish, Kendra N. (University of Calgary); Oxoby, Robert J. (University of Calgary)
    Abstract: In this paper, we explore the effect of identity salience on behavior in a simple social interaction. Specifically, we compare behavior in a ultimatum game across three treatments: priming subjects with a shared identity, priming subjects with an identity distinct from those with whom they will interact, and priming subjects with no particular identity. We find that subjects are most cooperative in the identity-priming treatment and least cooperative in the distinctiveness-priming treatment. Similarly, subjects reveal the highest demands in the identity-priming treatment and the lowest demands in the distinctiveness-priming treatment. We discuss the implications of these results with respect to literature on organizational identity.
    Keywords: identity, experiments, bargaining
    JEL: C92 D64 M52
    Date: 2008–06
  3. By: Abeler, Johannes (University of Bonn); Marklein, Felix (Federal Ministry of Finance)
    Abstract: Fungibility of money is a central principle in economics. It implies that any unit of money is substitutable for another and that the composition of income is irrelevant for consumption. We find in a field experiment that even in a simple, incentivized setup many subjects do not treat money as fungible. When a label is attached to a part of their budget, subjects change consumption according to the suggestion of the label. A controlled laboratory experiment confirms this result and further shows that subjects with lower mathematical abilities are more likely to violate fungibility. The findings lend support to behavioral models such as narrow bracketing or mental accounting. One implication of our results is that in-kind benefits distort consumption more than usually assumed.
    Keywords: fungibility, In-kind benefits, mental accounting, inframarginal consumers, field experiment, laboratory experiment
    JEL: C91 C93 D01 H31 I38
    Date: 2008–05
  4. By: Lorenz Goette; Alois Stutzer
    Abstract: There is a longstanding concern that material incentives might undermine prosocial motivation, leading to a decrease in blood donations rather than an increase. This paper provides an empirical test of how material incentives affect blood donations in a large-scale field experiment spanning three months and involving more than 10,000 previous donors. We examine two types of incentive: a lottery ticket and a free cholesterol test. Lottery tickets significantly increase donations, in particular among less motivated donors. The cholesterol test leads to no discernable impact on usable blood donations. If anything, it creates a small negative selection effect in terms of donations that must be discarded.
    Keywords: Human behavior ; Altruism
    Date: 2008
  5. By: Swärdh, Jan-Erik (VTI)
    Abstract: This study is the first to analyze hypothetical bias in a willingness to pay for time context as well as the first to test certainty calibration of the value of time. Hypothetical and real actions are compared in an experimental setting where the subjects are given an offer to leave the experiment in advance by paying a given amount of cash. The results show a weak tendency of positive hypothetical bias in the willingness to pay for value of time, though this effect is not different from zero at conventional significance levels. However, certainty calibration, by using the information from a follow-up question where the subjects are self-stating their preference certainty of their hypothetical choice, provides evidence of a significant positive hypothetical bias for non-certain subjects whereas this bias is eliminated for certain subjects.
    Keywords: Value of time; Hypothetical bias; Certainty calibration; Preference certainty
    JEL: C20 C91 D80
    Date: 2008–07–02
  6. By: Diepen, M. van; Donkers, A.C.D.; Franses, Ph.H.B.F. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Charities mainly rely on direct mailings to attract the attention of potential donators. Individuals may feel irritated by these mailings, in particular when they receive many mailings. We study the consequences of perceived irritation on stated behavior and on actual behavior. Target selection by charities likely results in good donators receiving many mailings and hence they might also be most irritated. Therefore, irritation with direct mailings might be endogenously determined. To create exogenous variation in irritation, we design a unique controlled field experiment in cooperation with five of the largest charities in the Netherlands. Our analysis reveals that direct mailings do result in irritation, but surprisingly this affects neither stated nor actual donating behavior.
    Keywords: direct marketing;irritation;charity donations;field experiment
    Date: 2008–06–30
  7. By: Youichiro Higashi (Department of economics - University of Rochester); Sujoy Mukerji (Oxford University - University of Oxford); Norio Takeoka (Department of economics - University of Rochester); Jean-Marc Tallon (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, Ecole d'économie de Paris - Paris School of Economics - Université Panthéon-Sorbonne - Paris I)
    Abstract: The final step in the proof of Proposition 1 (p.311) of Mukerji and Tallon (2003) may not hold in general<br />because $\varepsilon>0$ in the proof cannot be chosen independently of $w,z$. We point out by a counterexample that the axioms they impose are too weak for Proposition 1. We introduce a modified set of axioms and re-establish the<br />proposition
    Keywords: ambiguity;bid ask spread;Ellsberg paradox
    Date: 2008
  8. By: David Colander; Casey Rothschild
    Abstract: The macro economy is complex; everyone knows that. Complex systems are difficult to analyze and manage; everyone knows that too. The best approach to teaching and describing the complex macro economy is something we know much less well. Currently, in teaching macro to both graduate and undergraduate students, we don’t stress just how complex the economy really is. The argument in this paper is that we should emphasize that complexity to frame the macro question.1 Having done that, we can get on with what we do, and much of the structure of both the graduate and undergraduate macro can be taught as it currently is. But instead of seeing the approaches at the two levels as substitutes for one another, complexity helps to frame as what they really are: complementary approaches to addressing a challenging set of questions.
    Date: 2008–01
  9. By: Goodall, Amanda H. (University of Warwick); Kahn, Lawrence M. (Cornell University); Oswald, Andrew J. (University of Warwick)
    Abstract: Why do some leaders succeed while others fail? This question is important, but its complexity makes it hard to study systematically. We examine an industry in which there are well-defined objectives, small teams, and exact measures of leaders’ characteristics. We show that a strong predictor of a leader’s success in year T is that person’s own level of attainment, in the underlying activity, in approximately year T-20. Our data come from 15,000 professional basketball games. The effect on team performance of the coach’s ‘expert knowledge’ is large and is discernible in the data within 12 months of his being hired.
    Keywords: organizational performance, firms, leadership, fixed-effects, productivity
    JEL: J24 M51
    Date: 2008–07

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