nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2008‒09‒29
seven papers chosen by
Marco Novarese
University of the Piemonte Orientale

  1. An experimental study of asymmetric reciprocity By Omar Al-Ubaydli; Min Sok Lee
  2. Altruism, Favoritism, and Guilt in the Allocuation of Family Resources: Sophie's Choice in Mao's Mass Send Down Movement By Hongbin Li; Mark Rosenzweig; Junsen Zhang
  3. Is mistrust self-fulfilling? By Reuben, Ernesto; Sapienza, Paola; Zingales, Luigi
  4. Bubbles and information: An experiment By Matthias Sutter; Jürgen Huber; Michael Kirchler
  5. The Impact of Trust on Reforms By Heinemann, Friedrich; Tanz, Benjamin
  6. Feedback-Seeking Behavior as a Self-Regulation Strategy for Creative Performance By K. E. M. DE STOBBELEIR; S. J. ASHFORD; D. BUYENS
  7. Evolutionary Stability in Common Pool Resources. By Jean-Philippe Atzenhoffer

  1. By: Omar Al-Ubaydli (Department of Economics and Mercatus Center, George Mason University); Min Sok Lee
    Abstract: Do people have a stronger propensity to reward or punish? When reacting to intentions, Offerman (2002) concluded that people punish more. Using the Falk and Fischbacher (2006) model, we extend Offerman's design in two ways. First, we control for the strength of the positive/negative intentions to which an individual reacts when rewarding/punishing. Second, we can precisely compare the strength of intention- and distribution-based motives for reward/punishment. Doing so requires measuring second-order expectations of subjects' own behavior, i.e., what a subject predicts that other subjects predict that he will do. Second-order expectations can be elicited directly or they can be induced by telling a subject what others expect him to do.Under elicited second-order expectations, we find that negative reciprocity is stronger than positive reciprocity, though if we isolate the distributional motive for reciprocity, then we find that positive reciprocity is stronger than negative reciprocity. Under induced second-order expectations, positive distributional reciprocity is stronger than negative distributional reciprocity while other forms of reciprocity are equally strong.
    Keywords: reciprocity, reward, punishment
    Date: 2008–07
  2. By: Hongbin Li (Tsinghua University); Mark Rosenzweig (Yale University); Junsen Zhang (Chinese University of Hong Kong)
    Abstract: In this paper, we use new survey data on twins born in urban China, among whom many experienced the consequences of the forced mass rustication movement of the Chinese “cultural revolution,” to identify the distinct roles of altruism and guilt in affecting behavior within families. Based on a model depicting the choices of the allocation of parental time and transfers to multiple children incorporating favoritism, altruism and guilt, we show the conditions under which guilt and altruism can be separately identified by experimental variation in parental time with children. Based on within-twins estimates of affected cohorts, we find that parents selected children with lower endowments to be sent down; that parents behaved altruistically, providing more gifts to the sibling with lower earnings and schooling; but also exhibited guilt – given the current state variables of the two children, the child experiencing more years of rustication received significantly higher transfers.
    Keywords: guilt, altruism, China
    JEL: J12 J13 O12
    Date: 2008–09
  3. By: Reuben, Ernesto; Sapienza, Paola; Zingales, Luigi
    Abstract: We study experimentally the effect of expectations on trustworthiness. Most subjects respond with untrustworthy behavior if they find out that little is expected from them. This suggests that guilt aversion plays an important role in inducing trustworthiness.
    Keywords: trust; trustworthiness; reciprocity; guilt aversion
    JEL: C92 Z13 C72
    Date: 2008–05
  4. By: Matthias Sutter; Jürgen Huber; Michael Kirchler
    Abstract: We study whether information about imminent future dividends can abate bubbles in experimental asset markets. Using the seminal design of Smith et al. (1988) we find that markets where traders are asymmetrically informed about future dividends have smaller, and shorter, bubbles than markets with symmetrically informed or uninformed traders. Hence, fundamental values are better reflected in market prices – implying higher market efficiency – when some traders know more than others about the future prospects of an asset. We also find that asymmetric information has a similar abating impact on bubbles as when uninformed traders accumulate experience, though for different reasons.
    Keywords: Bubbles, information, experiment
    JEL: C91 D83
    Date: 2008–09
  5. By: Heinemann, Friedrich; Tanz, Benjamin
    Abstract: In a constantly changing economic environment a country's ability to undertake institutional reforms is crucial to maintain economic growth and to promote the welfare of its citizens. A wide range of determinants for institutional reforms have been identified. However, the impact of trust on reforms has so far never been addressed. We provide theoretical arguments why trust should influence institutional changes and test the relationship empirically. We find a significant positive relation between trust and reforms with regard to government size, the legal system, and deregulation of private businesses and the labor market. The results in other policy fields are ambiguous.
    Keywords: Trust, Economic Freedom, Policy Reforms
    JEL: E60 H11
    Date: 2008
    Abstract: Using a sample of 456 supervisor-employee dyads from 4 organizations, this study examined how employees use feedback seeking as a self-regulation strategy to manage their creative performance. As hypothesized, employees’ cognitive style and perceived organizational support for creativity affected two patterns of their feedback seeking, i.e. their tendency to inquire for feedback from various sources and their propensity to monitor their environment for indirect feedback cues. Feedback inquiry from various sources further related to supervisor ratings of employee creative performance. These results highlight the importance of studying employees’ self-regulatory behaviors in the creative process and support the proposition that feedback seeking is not only a strategy that facilitates individual adaptation, but also an individual resource that can help individuals to achieve creative outcomes.
    Date: 2008–09
  7. By: Jean-Philippe Atzenhoffer
    Abstract: The Tragedy of the Commons refers to the dissipation of a common- pool ressource when any appropriator has free access to it. Under the behavior of absolute payoff maximisation, the common-pool resource game leads to a Nash equilibrium in which the resource is overexploited. However, some empirical studies show that the overutilization is even larger than the Nash equilibrium predicts. We account for these results in an evolutionary framework. Under an imitation-experimentation dynamics, the long run stable behavior implies a larger exploitation of the resource than in the classical Nash equilibrium.
    Keywords: common-pool resource, imitation behavior, evolutionary stable strategy, evolutionary games.
    JEL: C73 D41 Q20
    Date: 2008

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