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on Cognitive and Behavioural Economics |
| By: | Burks, Stephen V. (University of Minnesota, Morris); Carpenter, Jeffrey P. (Middlebury College); Goette, Lorenz (Federal Reserve Bank of Boston); Rustichini, Aldo (University of Minnesota) |
| Abstract: | Economic analysis has said little about how an individual’s cognitive skills (CS's) are related to the individual’s preferences in different choice domains, such as risk-taking or saving, and how preferences in different domains are related to each other. Using a sample of 1,000 trainee truckers we report three findings. First, we show a strong and significant relationship between an individual’s cognitive skills and preferences, and between the preferences in different choice domains. The latter relationship may be counterintuitive: a patient individual, more inclined to save, is also more willing to take calculated risks. A second finding is that measures of cognitive skill predict social awareness and choices in a sequential Prisoner's Dilemma game. Subjects with higher CS's more accurately forecast others' behavior, and differentiate their behavior depending on the first mover’s choice, returning higher amount for a higher transfer, and lower for a lower one. After controlling for investment motives, subjects with higher CS’s also cooperate more as first movers. A third finding concerns on-the-job choices. Our subjects incur a significant financial debt for their training that is forgiven only after twelve months of service. Yet over half leave within the first year, and cognitive skills are also strong predictors of who exits too early, stronger than any other social, economic and personality measure in our data. These results suggest that cognitive skills affect the economic lives of individuals, by systematically changing preferences and choices in a way that favors the economic success of individuals with higher cognitive skills. |
| Keywords: | field experiment, risk aversion, ambiguity aversion, loss aversion, time preference, Prisoners Dilemma, social dilemma, IQ, MPQ, numeracy, U.S. trucking industry, for-hire carriage, truckload (TL), driver turnover, employment duration, survival model |
| JEL: | C81 C93 L92 J63 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3609&r=cbe |
| By: | Coralio Ballester (Department of Economics, University of Alicante.); Pablo Brañas-Garza (Department of Economic Theory and Economic History, University of Granada.); María Paz Espinosa (Universidad del País Vasco) |
| Abstract: | This paper analyzes the impact of social integration on cooperative behavior. We show that if the social network shows assortative mixing then conditional cooperation is an equilibrium strategy for altruistic subjects with a high degree of social integration.We provide experimental evidence on the relationship between individuals’ position in a social network and their contributions in a public good game. |
| Keywords: | public good game, social networks, conditional cooperation. |
| JEL: | C91 D64 C72 H41 |
| Date: | 2008–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:08/04&r=cbe |
| By: | Guillaume Destré (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Louis Lévy-Garboua (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); Michel Sollogoub (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: | A model of informal training which combines learning from own experience and learning from others is proposed in this paper. It yields a closed-form solution that revises Mincer–Jovanovic's [Mincer, J., Jovanovic, B., 1981. Labor mobility and wages. In: Rosen, S. (Ed.), Studies in Labor Markets. Chicago University Press, Chicago, pp. 21–64] treatment of tenure in the human capital earnings function. We estimate the structural parameters of this non-linear model on a large French cross-section with matched employer–employee data. We find that workers on average can learn from others 10% of their own human capital on entering one plant, and catch half of their learning from others’ potential in just 2 years. The private marginal returns to education are declining with education as more educated workers have less to learn from others and share the social returns of their own education with their less qualified co-workers. The potential for learning from others on the job varies across jobs and establishments, and this provides a new distinction between imitation jobs and experience jobs. Workers in imitation jobs, who learn most from others, tend to have considerably longer tenure than workers in experience jobs. Although workers in experience jobs can learn little from others, we find that they learn a lot by themselves. We document several analogies between the imitation jobs/experience jobs “dualism” and the primary/secondary jobs and firms’ dualism implied by the dual labor market theory. However, our binary classification of jobs depicts the data more closely than the dual theory categorization into primary-type and secondary-type establishments. Competition prevails between jobs and firms but jobs differ by their learning technology. |
| Keywords: | Human capital earnings functions; Matched employer–employee data; Informal training; Learning from others; Learning from experience; Returns to tenure; Social returns of education; Labor market dualism |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00304283_v1&r=cbe |
| By: | Klucharev, V.; Smidts, A.; Fernández, G. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | Human behavior is affected by various forms of persuasion. The general persuasive effect of high expertise of the communicator, often referred to as "expert power", is well documented. We found that a single exposure to a combination of an expert and an object leads to a long-lasting positive effect on memory for and attitude towards the object. Using functional magnetic resonance imaging (fMRI), we probed the neural processes predicting these behavioral effects. Expert context was associated with distributed left-lateralized brain activity in prefrontal and temporal cortices related to active semantic elaboration. Furthermore, experts enhanced subsequent memory effects in the medial temporal lobe (i.e. in hippocampus and parahippocampal gyrus) involved in memory formation. Experts also affected subsequent attitude effects in the caudate nucleus involved in trustful behavior, reward processing and learning. These results may suggest that the persuasive effect of experts is mediated by modulation of caudate activity resulting in a re-evaluation of the object in terms of its perceived value. Results extend our view of the functional role of the dorsal striatum in social interaction and enable us to make the first steps toward a neuroscientific model of persuasion. |
| Keywords: | persuasion;expertise;memory encoding;attitude;social influence;celebrities;neuroeconomics |
| Date: | 2008–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:1765012784&r=cbe |
| By: | Andriy Zapechelnyuk; Ro'i Zultan |
| Abstract: | We consider a multitype population model with unobservable types, in which players are engaged in the `mutual help' game: each player can increase her partner's fitness at a cost to oneself. All individuals prefer free riding to cooperation, but some of them, helpers, can establish reciprocal cooperation in a long-term relationship. Such heterogeneity can drive cooperation through a partner selection mechanism under which helpers choose to interact with one another and shun non-helpers. However, in contrast to the existing literature, we assume that each individual is matched with an anonymous partner, and therefore, stable cooperation cannot be achieved by partner selection per se. We suggest that helpers can signal their type to one another in order to establish long-term relationships, and we show that a reliable signal always exists. Moreover, due to the difference in future benefits of a long-term relationship for helpers and non-helpers, the signal need not be a handicap, in the sense that the cost of the signal need not be correlated with type. |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:huj:dispap:dp483&r=cbe |
| By: | Weizsäcker, Georg (London School of Economics) |
| Abstract: | The paper presents a new meta data set covering 13 experiments on the social learning games by Bikhchandani, Hirshleifer, and Welch (1992). The large amount of data makes it possible to estimate the empirically optimal action for a large variety of decision situations and ask about the economic significance of suboptimal play. For example, one can ask how much of the possible payoffs the players earn in situations where it is empirically optimal that they follow others and contradict their own information. The answer is 53% on average across all experiments – only slightly more than what they would earn by choosing at random. The players’ own information carries much more weight in the choices than the information conveyed by other players’ choices: the average player contradicts her own signal only if the empirical odds ratio of the own signal being wrong, conditional on all available information, is larger than 2:1, rather than 1:1 as would be implied by rational expectations. A regression analysis formulates a straightforward test of rational expectations, which rejects, and confirms that the reluctance to follow others generates a large part of the observed variance in payoffs, adding to the variance that is due to situational differences. |
| Keywords: | failure of rational expectations, information cascades, social learning, meta analysis |
| JEL: | C72 C92 D82 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3616&r=cbe |
| By: | Elisabetta Lazzaro (University of Padua); Carlofilippo Frateschi (University of Padua) |
| Abstract: | In cultural consumption it is quite reasonable to expect that the formation and the evolution of preferences, and the related individual choice behaviour, is affected by various interactions within families, peer and other social groups. Our investigation focuses on a specific form of "indirect" interaction effect, that is the reciprocal influence that a married person's preferences and characteristics can have on the cultural consumption of her/his partner. Using the last two available nationwide crosssection datasets on the leisure activities of the Italian population (ISTAT, 1995 and 2000), we estimate the mutual influence of spouses's educational and cultural background, besides other factors, on the consumption of three kinds of cultural activities, namely museum/exhibition, theatre, and opera and classical music concerts. |
| Keywords: | Mutual social interactions, cultural consumption |
| JEL: | D79 D12 Z11 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0084&r=cbe |
| By: | Sabrina Teyssier (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines) |
| Abstract: | This paper reports on the results of an experiment testing whether the agents selfselect between a competitive payment scheme and a revenue-sharing scheme depending on their inequity aversion. Average efficiency should be increased when these payment schemes are endogenously chosen by agents. We show that the choice of the competition is negatively affected by disadvantageous inequity aversion and risk aversion. In the second half of the experiment, the effect of individual preferences is indirect through the effect of past results. The self-selection of agents increases the efficiency of the competitive scheme but not that of the revenue-sharing scheme, due to a heterogeneity of behaviors. |
| Keywords: | performance pay ; incentives ; self-selection ; inequity aversion ; competition ; revenue-sharing scheme |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00303727_v1&r=cbe |
| By: | Anat Bracha; Donald Brown |
| Date: | 2008–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:122247000000002291&r=cbe |