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on Cognitive and Behavioural Economics |
| By: | Vanessa Mertins (Institute for Labour Law and Industrial Relations in the EC, University of Trier) |
| Abstract: | While economists have neglected procedures for a long time, other social scientists early established a substantial research program. By now, there exists a large gap between a sheer bulk of empirical, experimental, and theoretical studies by non-economists and the fact that there is hardly any economic research on procedures. We argue that due to clear evidence for procedures in uencing human decision-making, economists can not remain silent about procedural aspects of strategic interactions any longer. There is an important research agenda to be developed. This survey article is intended to discuss an important approach by which the standard economic model, which is based on consequentialist preferences, needs to be enriched: not only outcomes shape human behavior but also the way in which decisions are taken. Behavioral economics may serve as an important link. Its aim is to integrate insights of cognitive and social psychologists as well as experimental economists with neoclassical economic theory. We argue that experimental economics should increase its efforts to identify procedural effects and that these experiments should be more incorporated in the theoretical literature as part of an ongoing dialogue between theorists and experimentalists. Among procedural aspects, procedural fairness suggests itself to become an integrative part. To highlight the need for rethinking the standard economic approach we review social science literature on procedural effects, with a special focus on experimental economics and inspired theory-building. |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:wpaper:200806&r=cbe |
| By: | Abeler, Johannes (University of Nottingham); Falk, Armin (University of Bonn); Goette, Lorenz (University of Geneva); Huffman, David (Swarthmore College) |
| Abstract: | A key open question for theories of reference-dependent preferences is what determines the reference point. One candidate is expectations: what people expect could affect how they feel about what actually occurs. In a real-effort experiment, we manipulate the rational expectations of subjects and check whether this manipulation influences their effort provision. We find that effort provision is significantly different between treatments in the way predicted by models of expectation-based reference-dependent preferences: if expectations are high, subjects work longer and earn more money than if expectations are low. |
| Keywords: | reference points, expectations, loss aversion, risk aversion, disappointment, experiment |
| JEL: | C91 D01 D84 J22 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3939&r=cbe |
| By: | Vanessa Mertins (Institute for Labour Law and Industrial Relations in the EC, University of Trier) |
| Abstract: | By reporting data from a laboratory experiment, we provide clear evidence that people value procedures apart from their effects on consequences. We implement a game with one proposer who has distributive power over a pie and four responders who can invest in resistance against the proposer's demand. The proposer is appointed by the use of one of two feasible appointment procedures. We elicit participants' preferences and fairness evaluations over both procedures and study whether responders' resistance against various demands are affected by their procedural judgments. Although the fair process effect, describing the finding that people are more likely to accept outcomes when they feel that they are made via fair procedures, is said to be exceedingly robust, we do not find support for any significant behavioral dfferences according to people's fairness evaluations. In contrast, we show that procedural satisfaction matters. Surprisingly, responders whose procedural preferences are satiffed offer significantly more resistance than those whose procedural preferences are violated. |
| Keywords: | experiment, fair process effect, frustration effect, procedural fairness, procedural preferences, resistance, threshold public good |
| JEL: | C72 C91 J52 D23 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:wpaper:200807&r=cbe |
| By: | Abele, Susanne (Miami University, Department of Psychology); Vaughan-Parsons, Sandra I. (Howard Community College, Columbia); Stasser, Garold (Miami University, Department of Psychology) |
| Abstract: | If decision-relevant information is distributed among team members, the group is inclined to focus on shared information and to neglect unshared information, resulting often in suboptimal decisions. This classical finding is robust in experimental settings, in which the distribution of information is created artificially by an experimenter. The current paper looks at information sharing effects when access to information is not restricted, and decision makers are very familiar with the decision task. We analyzed archival search and discussion data obtained from business executives completing a personnel selection exercise. Information popularity in the population from which groups were composed predicted number of group members accessing items during information searches and whether the group discussed the items. The number of group members who accessed an item predicted whether information was repeated during discussion, and repetition predicted which items were included on an executive summary. Moreover, cognitively central group members were more influential than cognitively peripheral members. One implication is that collective decision making amplifies what is commonly known at the expense of disseminating what is not. |
| Keywords: | Information Sharing, Cognitive Centrality, Group Decision Making, Collective Choice, Archival Data |
| JEL: | D23 D83 M51 L84 |
| Date: | 2008–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:xrs:sfbmaa:08-38&r=cbe |
| By: | Rowthorn, Robert E.; Guzmán, Ricardo Andrés; Rodríguez-Sickert, Carlos |
| Abstract: | Gratuitous cooperation (in favour of non-relatives and without repeated interaction) eludes traditional evolutionary explanations. In this paper we survey the various theories of cooperative behaviour, and we describe our own effort to integrate these theories into a self-contained framework. Our main conclusions are as follows. First: altruistic punishment, conformism and gratuitous cooperation co-evolve, and group selection is a necessary ingredient for the co-evolution to take place. Second: people do not cooperate by mistake, as most theories imply; on the contrary, people knowingly sacrifice themselves for others. Third: in cooperative dilemmas conformism is an expression of preference, not a learning rule. Fourth, group-mutations (e.g., the rare emergence of a charismatic leader that brings order to the group) are necessary to sustain cooperation in the long run. |
| Keywords: | Cooperation; altruism; altruistic punishment; conformism; group-selection |
| JEL: | H41 Z13 |
| Date: | 2009–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12574&r=cbe |
| By: | Lucy F. Ackert; Ann B. Gillette; Jorge Martinez-Vazquez; Mark Rider |
| Abstract: | We use an experimental method to investigate whether systematic relationships exist across distinct aspects of individual preferences: risk aversion in monetary outcomes, altruism in a twoperson context, and social preferences in a larger group context. Individual preferences across these three contexts are measured, and there is no possibility for risk sharing, wealth effects, or updating expectations of the population choices. We find that social preferences are related to demographic variables, including years of education, gender, and age. Perhaps most importantly, self allocation in a two-person dictator game is related to social preferences in a group context. Participants who are more generous in a dictator game are more likely to vote against their selfinterest in a group decision-making task which we interpret to be expressions of social preferences. |
| JEL: | C91 C92 D63 H21 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2009-04&r=cbe |
| By: | Christiane Schwieren (University of Heidelberg); Doris Weichselbaumer |
| Abstract: | In this paper we experimentally test whether competing for a desired reward does not only affect individuals’ performance, but also their tendency to cheat. Recent doping scandals in sports as well as forgery and plagiarism scandals in academia have been partially explained by „competitive pressures“, which suggests a link between competition and cheating. In our experiment subjects conduct a task where they have the possibility to make use of illegitimate tools to better their results. We find that women react much stronger to competitive pressure by increasing their cheating activity while there is no overall sex difference in cheating. However, the effect of competition on women’s cheating behavior is entirely due to the fact that women, on average, are doing worse with respect to the assigned task. Indeed we find that it is the ability of an individual to conduct a particular task and not sex that crucially affects the reaction to competition. Poor performers significantly increase their cheating behavior under competition which may be a face-saving strategy or an attempt to retain a chance of winning. |
| Keywords: | competition, tournament, piece rate, cheating, experiment |
| JEL: | C91 J24 J31 M52 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:jku:nrnwps:2008_05&r=cbe |
| By: | Kene Boun My; Benoît Chalvignac |
| Abstract: | We study the effect of voluntary participation in the context of a collective-good experiment. We investigate whether the freedom to participate in the game or not increases contribution levels and enhances their evolution. The analysis of two voluntary participation treatments supports a positive effect of an attractive exit option on both contribution levels and their sustainability. We conclude that the voluntary contribution mechanism can provide sustainable cooperation levels and that the usually observed decay of average contribution levels can be counteracted by voluntary participation in the game.. |
| Keywords: | Collective Goods; Cooperation; Voluntary participation ; Laboratory experiments. |
| JEL: | H41 C92 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2009-01&r=cbe |
| By: | Brams, Steven J.; Kilgour, D. Marc; Klamler, Christian |
| Abstract: | We propose a procedure for dividing indivisible items between two players in which each player ranks the items from best to worst and has no information about the other player’s ranking. It ensures that each player receives a subset of items that it values more than the other player’s complementary subset, given that such an envy-free division is possible. We show that the possibility of one player’s undercutting the other’s proposal, and implementing the reduced subset for himself or herself, makes the proposer “reasonable” and generally leads to an envy-free division, even when the players rank items exactly the same. Although the undercut procedure is manipulable, each player’s maximin strategy is to be truthful. Applications of the undercut procedure are briefly discussed. |
| Keywords: | Fair division; allocation of indivisible items; envy-freeness; ultimatum game |
| JEL: | D63 D74 C72 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12774&r=cbe |
| By: | Björn Frank (University Kassel, Nora-Platiel-Str. 4, 34109 Kassel, Germany) |
| Abstract: | The notion of face-to-face contacts has recently become very popular in regional economics and in economic geography. This is the most obvious way to explain why firms still locate in proximity to others after the "death of distance", i.e., the shrinking costs for transportation, especially transportation of messages' pure information content. While this is intuitive, controlled laboratory experiments provide much more direct and reliable evidence on the importance of face-to-face contacts. They tackle the question what personal contacts are good for, and in which cases their effects are negligible. To the best of my knowledge, regional economists and geographers are not aware of this new and developing string of literature; it is the purpose of this paper to survey and to organize the relevant experimental research with a special focus on its importance for regional economics. However, the paper might also serve to alert more experimentalists to the importance of their work for current regional science, of which they seem not to be aware either. |
| Keywords: | Cooperation, death of distance, face-to-face, localized spillovers, trust |
| JEL: | C90 D83 R19 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:200904&r=cbe |