nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2009‒03‒28
eleven papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Social Preferences under Risk - An Experimental Analysis By Christiane Bradler
  2. A new cosmology of risks and crises time for a radical shift in paradigm and practice By Patrick Lagadec
  3. A cognitive psychological approach of analyzing preference uncertainty in contingent valuation By Akter, Sonia; Bennett, Jeff
  4. Portfolio diversification: an experimental study By Zulia Gubaydullina; Markus Spiwoks
  5. Shedding Light into Preference Heterogeneity: Why Players of Traveller’s Dilemma Depart from Individual Rationality? By Leonardo Becchetti; Giacomo Degli Antoni; Marco Faillo
  6. Individual Heterogeneity, Group Interaction, and Co-operative Behaviour: Evidence from a Common-Pool Resource Experiment in South Africa and Namibia By Bernd Hayo; Björn Vollan
  7. Can intentions spoil the kindness of a gift? - An experimental study By Strassmair, Christina
  8. Measuring Trust : Experiments and Surveys in Contrast and Combination By Michael Naef; Jürgen Schupp
  9. Generosity, Greed and Gambling: What difference does asymmetric information in bargaining make? By Charlotte Klempt; Kerstin Pull
  10. The Role of Psychological Traits for the Gender Gap in Full-time Employment and Wages : Evidence from Germany By Nils Braakmann
  11. The mobile decision maker By Heijden, van der, Hans; Sangstad Sørensen, Lotte

  1. By: Christiane Bradler (Friedrich-Schiller-University Jena)
    Abstract: The literature on social preferences provides overwhelming evidence of departures from pure self-interest of individuals. Experiments show that people care about others' well-being and their relative standing. This paper investigates whether this type of behavior persists when risk comes into play. I devise an experiment which sheds light on the interrelation of risk and social preferences by measuring (1) individual risk preferences, (2) interpersonal risk preferences, and (3) social preferences under certainty. The results reveal that a large share of subjects choose to accept more risk or less potential gain than individually preferred in order to increase another subject’s payoff. Further, the willingness to do so appears to be influenced by the "need" of the other person and her potential relative standing. Surprisingly, the results do not suggest that a subject’s social behavior under risk is related to his exhibited social concerns exhibited under certainty.
    Keywords: social preferences, risk, other-regarding behavior, inequality aversion
    JEL: D81 D63 C91
    Date: 2009–03–23
  2. By: Patrick Lagadec (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
    Abstract: Crisis management theory and practice was in the main elaborated in the late 70s and 80s and developed and implemented in the 90s. We now have a rich knowledge of crisis intelligence and best practices. But, even if we can be proud of that advance, a further challenge remains: crises in the 21st century differ?structurally? from those we had to deal with in the last century. By way of example, the disparity between now and then is equivalent to that which existed between the end of the Second World War and the beginning of the First. Thus, if we stick to former paradigms ?we are bound to be defeated in every battle?. Even if it is extremely difficult to forge new routes into Terrae Incognitae, it is vital to do so ? or at least to try.
    Keywords: Crises, emerging crises, discontinuity, decision-making
    Date: 2008–08
  3. By: Akter, Sonia; Bennett, Jeff
    Abstract: The sources of preference uncertainty in contingent valuation (CV) studies have rarely been investigated from a theoretical standpoint. This paper proposes a holistic theoretical framework of preference uncertainty that combines microeconomic theory with the theories of cognitive psychology. Empirical testing of the proposed theoretical model was carried out in Australia in the context of a national ‘Carbon Pollution Reduction Scheme (CPRS)’ to be introduced in 2010. Two separate ordered probit models for a certainty score associated with CV ‘Yes’ and ‘No’ responses were estimated. The results of the estimated regression models provide evidence supporting the hypotheses drawn from the theoretical model.
    Keywords: Contingent valuation, preference uncertainty, cognitive uncertainty, climate change, Australia,
    Date: 2009
  4. By: Zulia Gubaydullina (University of Göttingen); Markus Spiwoks (Wolfsburg University of Applied Sciences)
    Abstract: The paper analyses on an experimental basis the phenomenon of non-optimal under-diversification in portfolio choice decisions and investigates the reasons behind it. The most important obstacles for optimal diversification are studied – the correlation neglect hypothesis and the overconfidence which both lead to suboptimal diversification decisions. The investment alternatives are constructed in a way that the Markowitz’ efficiency frontier is reduced to a single point in the return-risk diagram so that unambiguous interpretation of the results is possible: the subjects neglect the correlation between the assets, use naïve diversification strategies and take irrelevant information as a foundation for their investment decisions, the first effect being stronger than the second.
    Keywords: experimental economics; portfolio choice; investment decisions; correlation neglect; overconfidence
    JEL: C91 D81 G11
    Date: 2009–03–20
  5. By: Leonardo Becchetti (University of Rome Tor Vergata); Giacomo Degli Antoni (EconomEtica); Marco Faillo (University of Trento - Faculty of Economics)
    Abstract: We analyse the experimental outcome of the Traveller's Dilemma under three different treatments - baseline (BT), compulsory ex post players' meeting (CET) and voluntary ex post players' meeting (VET) - to evaluate the effects of removal of anonymity (without preplay communication) in a typical one shot game in which there is a dilemma between individual rationality and aggregate outcome. We show that deviations from the Nash equilibrium outcome are compatible with the joint presence in the sample of individually rational, team-rational, (gift giving), "irrational" and (opportunistic) "one-shot-cooperator" types. The two main factors affecting deviations from the standard individually rational behaviour are male gender and the interaction of generalised trust with the decision of meeting the counterpart in the VET design.
    Keywords: Traveller’s Dilemma, Team Preferences, Social Distance, Generalised Trust, Relational Goods
    JEL: C72 C91 A13
    Date: 2009–03
  6. By: Bernd Hayo (Philipps-University Marburg, Faculty of Business Administration & Economics, Universitaetsstr. 24, D-35037 Marburg, Germany); Björn Vollan (University of Mannheim, Department of Economics, L7, 3-5, D-68131 Mannheim, Germany)
    Abstract: We present econometric evidence on the influence of an individual’s sociodemographic characteristics, economic background, and dynamic personal and group interactions on co-operative behaviour in a social dilemma situation. The data are from a framed common-pool resource experiment conducted in Namibian and South African farming communities. Our paper helps to better understand the discrepancy between the fact that people seem to care about advancing their relative position in real life but tend to act to reduce inequality in a laboratory setting. We analyse the first move in the game, the cumulated amount of resources gained by the players and, by taking into account the temporal dimension of the game in a panel context, each individual move.
    Keywords: Common-pool resources, field experiment, group interaction, relative income position, Southern Africa
    JEL: Q24
    Date: 2009
  7. By: Strassmair, Christina
    Abstract: Consider a situation where person A undertakes a costly action that benefits person B. This behavior seems altruistic. However, if A expects a reward in return from B, then A's action may be motivated by the expected rewards rather than by pure altruism. The question we address in this experimental study is how B reacts to the intentions of A. We vary the probability, with which the second mover in a trust game can reciprocate, and analyze effects on second mover behavior. Our results suggest that the perceived kindness and its rewards are not spoiled by expected rewards.
    Keywords: social preferences; intentions; beliefs; psychological game theory; experiment
    JEL: D02 C91 D64
    Date: 2009–03–20
  8. By: Michael Naef; Jürgen Schupp
    Abstract: Trust is a concept that has attracted - significant attention in economic theory and research within the last two decades: it has been applied in a number of contexts and has been investigated both as an explanatory and as a dependent variable. In this paper, we explore the questions of what exactly is measured by the diverse survey-derived scales and experiments claiming to measure trust, and how these different measures are related. Using nationally representative data, we test a commonly used experimental measure of trust for robustness to a number of interferences, finding it to be mostly unsusceptible to stake size, the extent of strategy space, the use of the strategy method, and the characteristics of the experimenters. Inspired by criticism of the widespread trust question used in many surveys, we created a new, improved survey trust scale consisting of three short statements. We show that the dimension of this scale is distinct from trust in institutions and trust in known others. Our new scale is a valid and reliable measure of trust in strangers. The scale is valid in the sense that it correlates with trusting behaviour in the experiment. Furthermore, we demonstrate that the test-retest reliability of six weeks is high. The experimental measure of trust is, on the other hand, not significantly correlated with trust in institutions nor with trust in known others. We therefore conclude that the experimental measure of trust refers not to trust in a general sense, but specifically to trust in strangers.
    Keywords: Trust, experiment, survey, representativity, SOEP
    JEL: C91 D63 Z13
    Date: 2009
  9. By: Charlotte Klempt (Max Planck Institute of Economics, Jena); Kerstin Pull (University of Tübingen, Faculty of Economics and Business Administration)
    Abstract: We analyze the effects of asymmetric information concerning the size of a pie on proposer behavior in three different bargaining situations: the ultimatum game, the Yes-No-game and the dictator game. Our data show that (a) irrespective of the information condition, proposer generosity increases with responder veto power, (b) informed proposers in the ultimatum game try to exploit their superior information and hide their greed by a seemingly fair offer, and (c) uninformed proposers in the dictator game exhibit gambling behavior by asking for more than potentially is at stake. While the results of our experimental analysis are interesting as such, they may also yield interesting practical implications.
    Keywords: Bargaining, Information, Experimental Games
    JEL: C72 C91
    Date: 2009–03–23
  10. By: Nils Braakmann
    Abstract: This paper shows that differences in various non-cognitive traits, specifically the ¿big five¿, positive and negative reciprocity, locus of control and risk aversion, contribute to gender inequalities in wages and employment. Using the 2004 and 2005 waves of the German Socio-Economic Panel, evidence from regression and decomposition techniques suggests that gender differences in psychological traits are more important for inequalities in wages than in employment. Differences in the ¿big five¿, in particular in agreeableness, conscientiousness and neurocitism matter for both wages and employment. For the latter, the results also show a large effect of differences in external locus of control.
    Keywords: Gender wage gap, non-cognitive traits, decomposition
    JEL: J24 J31
    Date: 2009
  11. By: Heijden, van der, Hans (Department of Informatics, Copenhagen Business School); Sangstad Sørensen, Lotte (Department of Informatics, Copenhagen Business School)
    Abstract: na
    Keywords: na
    JEL: H00
    Date: 2009–03–18

This nep-cbe issue is ©2009 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.