nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2008‒08‒14
ten papers chosen by
Marco Novarese
University of the Piemonte Orientale

  1. Cooperativeness and Impatience in the Tragedy of the Commons By Fehr, Ernst; Leibbrandt, Andreas
  2. What Ethics Can Learn From Experimental Economics - If Anything By Werner Güth; Hartmut Kliemt
  3. How important is pro-social behaviour in the delivery of public services? By Paul Gregg; Paul A. Grout; Anita Ratcliffe; Sarah Smith; Frank Windmeijer
  4. Forecasting Elections from Voters’ Perceptions of Candidates’ Positions on Issues and Policies By Graefe, Andreas; Armstrong, J. Scott
  5. The Impact of Social Comparisons on Reciprocity By Simon Gaechter; Daniele Nosenzo; Martin Sefton
  6. When You Are Born Matters: The Imapct of Date of Birth on Child Cognitive Outcomes in England By Claire Crawford; Lorraine Dearden; Costas Meghir
  7. The Sentiment Bias in English Soccer Betting By Egon Franck; Erwin Verbeek; Stephan NŸesch
  8. Information and Beliefs in a Repeated Normal-Form Game By Fehr, Dietmar; Kübler, Dorothea; Danz, David N.
  9. Ability, Schooling Inputs and Earnings: Evidence from the NELS By Eren, Ozkan
  10. Triple-loop learning as foundation for profound change, individual cultivation, and radical innovation: Construction processes beyond scientific and rational knowledge. By Peschl, Markus F.

  1. By: Fehr, Ernst (University of Zurich); Leibbrandt, Andreas (University of Zurich)
    Abstract: This paper examines the role of other-regarding and time preferences for cooperation in the field. We study the preferences of fishermen whose main, and often only, source of income stems from using a common pool resource (CPR). The exploitation of a CPR involves a negative interpersonal and inter-temporal externality because individuals who exploit the CPR reduce the current and the future yield for both others and themselves. Accordingly, economic theory predicts that more cooperative and more patient individuals should be less likely to exploit the CPR. Our data supports this prediction because fishermen who exhibit a higher propensity for cooperation in a laboratory public goods experiment, and those who show more patience in a laboratory time preference experiment, exploit the fishing grounds less in their daily lives. Moreover, because the laboratory public goods game exhibits no inter-temporal spillovers, measured time preferences should not predict cooperative behavior in the laboratory. This prediction is also borne out by our data. Thus, laboratory preference measures are useful to capture important dimensions of field behavior.
    Keywords: cooperation, common pool resource, experiments, generalizability, methodology
    JEL: B4 C9 D8 O1
    Date: 2008–08
  2. By: Werner Güth (Max Planck Institute of Economics, Jena, Strategic Interaction Group); Hartmut Kliemt (Frankfurt School of Finance and Management)
    Abstract: Relying on the specific example of ultimatum bargaining experiments this paper explores the possible role of empirical knowledge of behavioural "norm(ative) facts" within the search for an inter-personal (W)RE - (Wide) Reflective Equilibrium on normative issues. Assuming that pro-social behaviour "reveals" ethical orientations, it is argued that these "norm-facts" can and should be used along with stated preferences in justificatory arguments of normative ethics and economics of the "means to given ends" variety.
    Keywords: Meta-Ethics, Experimental Economics, Reflective Equilibrium
    JEL: D64 D7 K00 Z13
    Date: 2008–08–12
  3. By: Paul Gregg; Paul A. Grout; Anita Ratcliffe; Sarah Smith; Frank Windmeijer
    Abstract: A number of papers have posited that there is a relationship between institutional structure and pro-social behaviour, in particular donated labour, in the delivery of public services, such as health, social care and education. However, there has been very little empirical research that attempts to measure whether such a relationship exists in practice. This is the aim of this paper. Including a robust set of individual and job-specific controls, we find that individuals in the non-profit sector are significantly more likely to donate their labour, measured by unpaid overtime, than those in the for-profit sector. We can reject that this difference is simply due to implicit contracts or social norms. We find some evidence that individuals differentially select into the non-profit and for-profit sectors according to whether they donate their labour.
    Keywords: pro-social behaviour; public services; donated labour; motivation
    JEL: H11 J32 J45 L31 L32
    Date: 2008–05
  4. By: Graefe, Andreas; Armstrong, J. Scott
    Abstract: Ideally, presidential elections should be decided based on how the candidates would handle issues facing the country. If so, knowledge about the voters’ perception of the candidates should help to forecast election outcomes. We make two forecasts of the winner of the popular vote in the U.S. Presidential Election. One is based on voters’ perceptions of how the candidates would deal with issues (problems facing the country) if elected. We show that this approach would have correctly picked the winner for the three elections from 1996 to 2004. The other is based on voters’ preference for policies and their perceptions of which policies the candidates are likely to pursue. Both approaches lead to a forecast that Democrat candidate Barack Obama will win the popular vote.
    Keywords: forecasting methods; regression models; index method; experience tables; accuracy
    JEL: C5
    Date: 2008–08–04
  5. By: Simon Gaechter (University of Nottingham); Daniele Nosenzo (University of Nottingham); Martin Sefton (University of Nottingham)
    Abstract: We investigate the effects of pay comparison information (i.e. information about what coworkers earn) and effort comparison information (information about how co-workers perform) in experimental firms composed of one employer and two employees. Exposure to pay comparison information in isolation from effort comparison information does not appear to affect reciprocity toward employers: in this case own wage is a powerful determinant of own effort, but co-worker wages have no effect. By contrast, we find that exposure to both pieces of social information systematically influences employees’ reciprocity. A generous wage offer is virtually ineffective if an employee is matched with a lazy co-worker who is also paid generously: in such circumstances the employee tends to expend low effort irrespective of her own wage. Reciprocity is more pronounced when the co-worker is hard-working, as effort is strongly and positively related to own wage in this case. Reciprocity is also pronounced when the employer pays unequal wages to the employees: in this case the co-worker’s effort decision is disregarded and effort decisions are again strongly and positively related to own wage. On average exposure to social information weakens reciprocity, though we find substantial heterogeneity in responses across individuals, and find that sometimes social information has beneficial effects. We suggest that group composition may be an important tool for harnessing the positive effects of social comparison processes.
    Keywords: Reciprocity, gift-exchange, social information, social comparisons, pay comparisons, peer effects
    JEL: A13 C92 J31
    Date: 2008–08
  6. By: Claire Crawford; Lorraine Dearden; Costas Meghir
    Keywords: Birth effects, birth penalties, school start dates, cognitive outcomes
    Date: 2007–10
  7. By: Egon Franck (Institute for Strategy and Business Economics, University of Zurich); Erwin Verbeek (Institute for Strategy and Business Economics, University of Zurich); Stephan NŸesch (Institute for Strategy and Business Economics, University of Zurich)
    Abstract: This paper investigates sentiment betting both theoretically and empirically. We model the profitable pricing decision of a bookmaker in the presence of both pricesensitive and price-insensitive sentiment bettors who derive extra utility by backing the team they support. Using unique betting volume data from a bet exchange market, we first test the validity of employing home attendance and press coverage as proxies of the amount of sentimental betting. Second, multivariate analysis of a sample of over 32,000 bets on English soccer games shows that bookmakers actively shade prices to attract betting volume evoked by sentiment. Bookmakers offer more favourable odds where fan support is comparably large. The sentiment bias has amplified recently as a reaction to the increased overall price elasticity and the greater share of price-sensitive sentiment bettors in online betting.
    Keywords: betting; market efficiency; behavioral bias; soccer
    JEL: D11 D12 D21 D81 G14
    Date: 2008
  8. By: Fehr, Dietmar (Technical University of Berlin); Kübler, Dorothea (Technical University of Berlin); Danz, David N. (Technical University of Berlin)
    Abstract: We study beliefs and choices in a repeated normal-form game. In addition to a baseline treatment with common knowledge of the game structure and feedback about choices in the previous period, we run treatments (i) without feedback about previous play, (ii) with no information about the opponent’s payoffs and (iii) with random matching. Using Stahl and Wilson’s (1995) model of limited strategic reasoning, we classify behavior with regard to its strategic sophistication and consider its development over time. We use belief statements to check for the consistency of subjects’ actions with the stated beliefs as well as for the accuracy of their beliefs (relative to the opponent’s true choice). In the baseline treatment we observe more sophisticated play as well as more accurate beliefs and more best responses to beliefs over time. We isolate feedback as the main driving force of learning to play strategically and to form beliefs that accurately predict the behavior of the opponent.
    Keywords: beliefs, experiments, strategic uncertainty, learning
    JEL: C72 C92 D84
    Date: 2008–08
  9. By: Eren, Ozkan
    Abstract: Utilizing the National Educational Longitudinal Study data, this paper examines the role of pre-market cognitive and noncognitive abilities, as well as schooling inputs, on young men’s earnings. In addition to the conditional mean, we estimate the impacts over the earnings distribution using recently developed (instrumental) quantile regression techniques. Our results show that noncognitive ability is an important determinant of earnings, but the effects are not uniform across the distribution. We find noncognitive ability to be most effective for low earners. Cognitive ability, on the other hand, does not yield any impact either at the mean or at the distributional level once we control for educational attainment. We also find that, on average, pupil-teacher ratio is a significant determinant of earnings. However, similar to noncognitive ability, the effects are not homogeneous.
    Keywords: Cognitive Ability; Instrumental Quantile Regression; Measurement Error; Noncognitive Ability; Pupil-Teacher Ratio
    JEL: C10 C14 I21 J24 I28
    Date: 2008–06
  10. By: Peschl, Markus F.
    Abstract: Purpose: How does new knowledge or profound change come about and which processes of construction are involved? This article aims at developing an epistemological as well as methodological framework which is capable of explaining how profound and radical change can be brought about in various contexts, such as in individual cultivation, in organizations, in processes of radical innovation, etc. The concept of emergent innovation will be developed—it is based on the triple-loop learning strategy and the U-theory approach which opens up a perspective how the domain of scientific/rational knowledge, constructivism, and wisdom could grow together more closely. Design/Structure: This article develops a strategy which is referred to as “triple-loop learning”, which is not only the basis for processes of profound change, but also brings about a new dimension in the field of innovation, learning, and knowledge dynamics: the existential realm and the domain of wisdom. A concrete approach realizing the triple-loop learning strategy is presented. The final section shows, how these concepts can be interpreted in the context of the constructivist approach and how they might offer some extensions to this paradigm. Findings: The process of learning and change has to be extended to a domain which concerns existential issues as well as questions of wisdom. Profound change can only happen, if these domains are taken into consideration. The triple-loop learning strategy offers a model fulfilling this criterion. It is an “epistemo-existential strategy” for profound change on various levels. Conclusions: The (cognitive) processes and attitudes of receptivity, suspension, redirecting, openness, deep knowing, as well as “profound change/innovation from the interior” turn out to be core concepts in this process of emergent innovation. They are compatible with constructivist concepts. Glasersfeld’s concept of functional fitness is carried to an extreme in the suggested approach of profound change and finds an extension in the existential domain.
    Keywords: Double-loop learning; individual cultivation; emergent innovation; (radical) innovation; knowledge creation; knowledge society; personality development; presencing; profound change; triple-loop learning; U-theory; wisdom.
    JEL: O32 O31
    Date: 2006–11–14

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.
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