nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2008‒12‒07
twelve papers chosen by
Marco Novarese
University of the Piemonte Orientale

  1. Social choice on complex objects: A geometric approach By Luigi Marengo; Simona Settepanella
  2. Individual Expectations and Aggregate Behavior in Learning to Forecast Experiments By Cars Hommes; Thomas Lux
  3. Identifying Social Norms Using Coordination Games: Why Does Dictator Game Sharing Vary? By Krupka, Erin L.; Weber, Roberto A.
  4. An Experimental Study of Conventions and Norms By Francesco Guala; Luigi Mittone
  5. Homo Reciprocans: Survey Evidence on Behavioural Outcomes By Dohmen Thomas; Falk Armin; Huffman David; Sunde Uwe
  6. Does monetary punishment crowd out pro-social motivation? The case of hospital bed-blocking By Tor Helge Holmås; Egil Kjerstad; Hilde Lurås; Odd Rune Straume
  7. Stated versus inferred beliefs: A methodological inquiry and experimental test By Rutstrom, E. Elizabet; Wilcox, Nathaniel
  8. Identity work and identity regulation in managers' personal development training By Andersson, Thomas
  9. Incentives and the Sorting of Altruistic Agents into Street-Level Bureaucracies By Buurman, Margaretha; Dur, Robert
  10. WTP vs. WTA: Christmas Presents and the Endowment Effect By Bauer, Thomas; Schmidt, Christoph M.
  11. Luck or Cheating? A Field Experiment on Honesty with Children By Alessandro Bucciol; Marco Piovesan
  12. Lies in Disguise. An experimental study on cheating By Urs Fischbacher; Franziska Heusi

  1. By: Luigi Marengo; Simona Settepanella
    Abstract: Marengo and Pasquali (2008) present a model of object construction in majority voting and show that, in general, by appropriate changes of such bundles, different social outcomes may be obtained. In this paper we extend and generalize this approach by providing a geometric model of individual preferences and social aggregation based on hyperplanes and their arrangements. As an application of this model we give a necessary condition for existence of a local social optimum. Moreover we address the question if a social decision rule depends also upon the number of voting agents. More precisely: are there social decision rules that can be obtained by an odd (even) number of voting agent which cannot be obtained by only three (two) voting agent? The answer is negative. Indeed three (or two) voting agent can produce all possible social decision rules.
    Keywords: Social choice; object construction power; agenda power; intransitive cycles; arrangements; graph theory.
    JEL: D71 D72
  2. By: Cars Hommes; Thomas Lux
    Abstract: Models with heterogeneous interacting agents explain macro phenomena through interactions at the micro level. We propose genetic algorithms as a model for individual expectations to explain aggregate market phenomena. The model explains all stylized facts observed in aggregate price fluctuations and individual forecasting behaviour in recent learning to forecast laboratory experiments with human subjects (Hommes et al. 2007), simultaneously and across different treatments
    Keywords: Learning, heterogeneous expectations, genetic algorithms, experimental economics
    JEL: C91 C92 D83 D84 E3
    Date: 2008–11
  3. By: Krupka, Erin L. (IZA); Weber, Roberto A. (Carnegie Mellon University)
    Abstract: We explore the influence of social norms on behavior. To do so, we introduce a method for identifying norms, based on the property that social norms reflect social consensus regarding the appropriateness of different possible behaviors. We demonstrate that the norms we elicit, along with a simple model combining concern for norm-compliance with utility for money, predict changes in behavior across several variants of the dictator game in which behavior changes substantially following the introduction of minor contextual variations. Our findings indicate that people care not just about monetary payoffs but also care about the social appropriateness of any action they take. Our work also suggests that a social norm is not always a single action that should or should not be taken, but rather a profile of varying degrees of social appropriateness for different available actions.
    Keywords: norms, matching games, dictator games
    JEL: C91 C72
    Date: 2008–11
  4. By: Francesco Guala; Luigi Mittone
    Abstract: Although it is now recognized that norms play an important role in many economic decisions, compliance with conventions is generally considered to be driven by rational self-interest only. We report instead experimental data showing that (1) ‘external’ norms of fairness sustain social conventions that have emerged from repeated play of simple coordination games; and (2) with repetition such conventions acquire an ‘intrinsic’ normative power of their own. This creates pressure towards conformity, and patterns of regular behaviour that are far stronger and more stable than those that would be generated by mere self-interest and rationality.
    Date: 2008
  5. By: Dohmen Thomas; Falk Armin; Huffman David; Sunde Uwe (ROA rm)
    Abstract: This paper complements the experimental literature that has shown theimportance of reciprocity for behaviour in stylized labour markets or otherdecision settings. We use individual measures of reciprocal inclinations in alarge, representative survey, and relate reciprocity to real world labour marketbehaviour and life outcomes. We find that reciprocity matters, and we find thatthe way in which it matters is very much in line with the experimental evidence.In particular, positive reciprocity is associated with receiving higher wages andworking harder. Negatively reciprocal inclinations tend to reduce effort. Firmsdo not pay lower wages to individuals with strong negatively reciprocalinclinations. Instead, negative reciprocity increases the likelihood of beingunemployed. Looking at broader measures of success, in terms of number ofclose friends, and subjective well-being, we find that positively reciprocalinclination are associated with greater happiness and ability to sustain friendshiprelations, with the opposite being true for negative reciprocity.
    Keywords: education, training and the labour market;
    Date: 2008
  6. By: Tor Helge Holmås (Health Economics Bergen (HEB), University of Bergen); Egil Kjerstad (Institute for Research in Economics and Business Administration (SNF) and Health Economics Bergen (HEB)); Hilde Lurås (Helse Øst Health Services Research Centre, Akershus University Hospital, Norway.); Odd Rune Straume (Universidade do Minho - NIPE)
    Abstract: We study whether the use of explicit monetary incentives might be counter-productive. In particular, we focus on the effect of fining owners of long-term care institutions who prolong length of stay at hospitals. We outline a simple theoretical model, based on motivational crowding theory, deriving the conditions for explicit monetary incentives to have potentially counterproductive effects. In the empirical part, we exploit a natural experiment involving changes in the catchments areas of two large Norwegian hospitals. We find that bed-blocking is reduced when transferring long-term care providers from a hospital using monetary fines to prevent bed-blocking to a hospital not relying on this incentive scheme, and vice versa. We interpret these results as examples of monetary incentives crowding out agents’ intrinsic motivation, leading to a reduction in effort.
    Keywords: Motivation crowding; Intrinsic motivation; Monetary punishment; Hospital bed blocking
    JEL: D64 I18 Z13
    Date: 2008
  7. By: Rutstrom, E. Elizabet; Wilcox, Nathaniel
    Abstract: If asking subjects their beliefs during repeated game play changes the way those subjects play, using those stated beliefs to evaluate and compare theories of strategic behavior is problematic. We experimentally verify that belief elicitation can alter paths of play in a repeated asymmetric matching pennies game. In this setting, belief elicitation improves the goodness of fit of structural models of belief learning, and the prior beliefs implied by such structural models are both stronger and more realistic when beliefs are elicited than when they are not. These effects are, however, confined to the player type who sees a strong asymmetry between payoff possibilities for her two strategies in the game. We also find that “inferred beliefs” (beliefs estimated from past observed actions of opponents) can be better predictors of observed actions than the “stated beliefs” resulting from belief elicitation.
    Keywords: beliefs; stated beliefs; belief elicitation; inferred beliefs; estimated beliefs; belief updating; repeated games; experimental methods
    JEL: C92 D83 C25 C73
    Date: 2008–09
  8. By: Andersson, Thomas (Gothenburg Research Institute)
    Abstract: This article describes the role of personal development training in managers’ identity processes. Personal development training constitutes a local management discourse, which can influence both identity work and identity regulation processes. The study emphasizes the importance of personal life stories in understanding how managers are influenced by personal development training. The training provokes different processes of identity work and identity regulation, and managers actively work with different identity templates, both on macro and micro levels, in pursuit of their ongoing identity processes.
    Keywords: identity; identity work; identity regulation; personal development; discourse
    Date: 2008–11–26
  9. By: Buurman, Margaretha (Erasmus University Rotterdam); Dur, Robert (Erasmus University Rotterdam)
    Abstract: Many street-level bureaucrats (such as caseworkers) have the dual task of helping some clients, while sanctioning others. We develop a model of such a street-level bureaucracy and study the implications of its personnel policy on the self-selection and allocation decisions of agents who differ in altruism towards clients. When bureaucrats are paid flat wages, they do not sanction, and the most altruistic types sort into bureaucracy. Pay-for-performance induces some bureaucrats to sanction, but necessitates an increase in expected wage compensation, which can result in sorting from both the top and bottom of the altruism distribution. We also show how client composition affects sorting and why street-level bureaucrats often experience an overload of clients.
    Keywords: street-level bureaucracy, sorting, altruism, personnel policy, pay-for-performance
    JEL: J3 J4 L3 M5
    Date: 2008–11
  10. By: Bauer, Thomas (RWI Essen); Schmidt, Christoph M. (RWI Essen)
    Abstract: Using data on the valuation of Christmas gifts received by students in different fields at a German university, we investigate whether the endowment effect differs between students of economics and other respondents and whether it varies with the market price of the object under consideration. Our estimation results suggest that economics students have both, a significant lower WTP and WTA, indicating that existing studies on the efficiency loss of holiday gifts and experimental studies on the endowment effect that rely on data from economics students may be biased. The result further indicates that the endowment effect is independent of the market price of the object.
    Keywords: loss aversion, endowment effect, Christmas presents, deadweight loss
    JEL: D01 D49 D61
    Date: 2008–11
  11. By: Alessandro Bucciol (University of Amsterdam); Marco Piovesan (Department of Economics, University of Copenhagen)
    Abstract: We ran an experiment with children to study the development of honesty with age. We asked each child to toss a fair coin in private and to record the outcome (white or black) in a paper sheet. We rewarded only those who reported white. We found a fraction of reported whites signifi…cantly larger than 50%, uniformly across age groups. This suggests that some children cheat when cheating is profi…table and they are not observed. In a second treatment we told children not to cheat. This reminder reduced the probability of reporting white by 18% on average, and signifi…cantly more in girls.
    Keywords: honesty; children; fi…eld experiment
    JEL: C93 J13
    Date: 2008–11
  12. By: Urs Fischbacher; Franziska Heusi
    Abstract: In this paper we present a new design which allows us to draw inferences on the distribution of lying behavior among the population. Participants received a dice in order to determine their payoff anonymously. Whatever they reported to have rolled, they received as payoff. 39% of the subjects were honest and maximally 22% of them were lying completely. Interestingly we found subjects who lied but who did not maximize their income by doing so. Using additional experiments, we can show that a compelling explanation for this behavior is the desire to maintain a favorable self-concept, including honesty and non-greediness.
    Keywords: Lie detection, honesty, deception, experimental design
    Date: 2008

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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