nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2009‒04‒18
eleven papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Homo Aequalis: A Cross-Society Experimental Analysis of Three Bargaining Games By Abigail Barr; Chris Wallace; Jean Ensminger; Joseph Henrich; Clark Barrett; Alexander Bolyanatz; Juan Camilo Cardenas; Michael Gurven; Edwins Gwako; Carolyn Lesorogol; Frank Marlowe; Richard McElreath; David Tracer; John Ziker
  2. Insurance Demand for Disaster-type Risks and the Separation of Attitudes toward Risk and Ambiguity: an Experimental Study By Marielle Brunette; Laure Cabantous; Stéphane Couture; Anne Stenger
  3. A Model of Non-Informational Preference Change By Dietrich Franz; List Christian
  4. Leading with(out) Sacrifice? A Public-Goods Experiment with a Super-Additive Player By Andreas Glöckner; Bernd Irlenbusch; Sebastian Kube; Andreas Nicklisch; Hans-Theo Normann
  5. Do Women Supply more Public Goods than Men? By Andersen, Steffen; Bulte, Erwin; Gneezy, Uri; List, John A.
  6. Everyone is a Winner: Promoting Cooperation through All-Can-Win Intergroup Competition By Reuben, Ernesto; Tyran, Jean-Robert
  7. Social norms, third-party observation and third-party reward By Matthias Sutter; Peter Lindner; Daniela Platsch
  8. Revisiting Strategic versus Non-Strategic Cooperation By Reuben, Ernesto; Suetens, Sigrid
  9. Occupational Choice: Personality Matters By Ham, Roger; Junankar, Pramod N. (Raja); Wells, Robert
  10. What Inspires Leisure Time Invention? By Davis, Lee N.; Davis, Jerome; Hoisl, Karin
  11. School tracking and development of cognitive skills By Pekkarinen, Tuomas; Uusitalo, Roope; Kerr, Sari

  1. By: Abigail Barr; Chris Wallace; Jean Ensminger; Joseph Henrich; Clark Barrett; Alexander Bolyanatz; Juan Camilo Cardenas; Michael Gurven; Edwins Gwako; Carolyn Lesorogol; Frank Marlowe; Richard McElreath; David Tracer; John Ziker
    Abstract: Data from three bargaining games - the Dictator Game, the Ultimatum Game, and the Third-Party Punishment Game - played in 15 societies are presented. The societies range from US undergraduates to Amazonian, Arctic, and African hunter-gatherers. Behaviour within the games varies markedly across societies. The paper investigates whether this behavioural diversity can be explained solely by variations in inequality aversion. Combining a single parameter utility function with the notion of subgame perfection generates a number of testable predictions. While most of these are supported, there are some telling divergencies between theory and data: uncertainty and preferences relating to acts of vengeance may have influenced play in the Ultimatum and Third-Party Punishment Games; and a few subjects used the games as an opportunity to engage in costly signalling.
    Keywords: Bargaining games, Cross-cultural experiments, Inequality aversion
    JEL: C72 C9 Z13
    Date: 2009
  2. By: Marielle Brunette; Laure Cabantous (Nottingham University Business School); Stéphane Couture (Laboratoire d'Economie Forestière, INRA - AgroParisTech); Anne Stenger (Laboratoire d'Economie Forestière, INRA - AgroParisTech)
    Abstract: This article presents the results of an experiment designed to test theoretical predictions about the impact of public compensation schemes and ambiguity on insurance and self-insurance decisions. Consistent with theory, we find that government assistance significantly reduces willingness to pay (WTP) for insurance and self-insurance (compared with a free insurance market). As expected, we also find significant differences between WTPs for insurance under different types of government compensation programs. For example, results from our experiment confirm the prediction that the WTP for insurance is smaller under a “Fixed Help” program than under a “Contingent Fixed Help” program where the government assistance is conditioned to the purchase of an insurance policy. Thirdly, we find that ambiguity, i.e., uncertainty about probability, significantly increases WTPs for insurance. This result, which indicates that decision-makers are ambiguity averse, is in line with previous results on the impact of ambiguity on insurance demand for low probability risks. Lastly, our experiment provides a clear support for the hypothesis that attitude to risk and attitude to ambiguity are two independent phenomena. In fact in this experiment, decision-makers are both risk-seekers (i.e., the mean WTP for insurance is on average smaller than the expected value of the loss) and ambiguity averse (i.e., the mean WTP for insurance is on average higher for an ambiguous risk than for a ’risky’ risk).
    Keywords: Experimental Economics, Insurance, Self-Insurance, Public Policy, Forest, Ambiguity, Risk
    JEL: C91 D81 Q23
    Date: 2008–10
  3. By: Dietrich Franz; List Christian (METEOR)
    Abstract: According to standard rational choice theory, as commonly used in political science and economics, an agent''s fundamental preferences are exogenously fixed, and any preference change over decision options is due to Bayesian information learning. Although elegant and parsimonious, this model fails to account for preference change driven by experiences or psychological changes distinct from information learning. We develop a model of non-informational preference change.Alternatives are modelled as points in some multidimensional space, only some of whose dimensions play a role in shaping the agent''s preferences.Any change in these `motivationally salient'' dimensions can change the agent''s preferences. How it does so is described by a new representation theorem. Our model not only captures a wide range of frequently observed phenomena, but also generalizes some standard representations of preferences in political science and economics.
    Keywords: mathematical economics;
    Date: 2009
  4. By: Andreas Glöckner (Max Planck Institute for Research on Collective Goods); Bernd Irlenbusch (Max Planck Institute for Research on Collective Goods); Sebastian Kube (Max Planck Institute for Research on Collective Goods); Andreas Nicklisch (Max Planck Institute for Research on Collective Goods); Hans-Theo Normann (Max Planck Institute for Research on Collective Goods)
    Abstract: We analyse two team settings in which one member in a team has stronger incentives to contribute than the others. If contributions constitute a sacrifice for the strong player, the other team members are more inclined to cooperate than if contributions are strictly dominant for the strong player.
    Keywords: Experiments, Leadership, Reciprocity, Voluntary Contribution Mechanism
    JEL: C91 C92 H40 H41
    Date: 2009–03
  5. By: Andersen, Steffen (Department of Economics, Copenhagen Business School); Bulte, Erwin (Department of Economics, Copenhagen Business School); Gneezy, Uri (Department of Economics, Copenhagen Business School); List, John A. (Department of Economics, Copenhagen Business School)
    Abstract: na
    Keywords: na
    JEL: G10
    Date: 2009–04–06
  6. By: Reuben, Ernesto (Northwestern University); Tyran, Jean-Robert (University of Copenhagen)
    Abstract: We test if cooperation is promoted by rank-order competition between groups in which all groups can be ranked first, i.e. when everyone can be a winner. This type of rank-order competition has the advantage that it can eliminate the negative externality a group's performance imposes on other groups. However, it has the disadvantage that incentives to outperform others are absent if groups perform at the same level and it therefore does not eliminate low-cooperation equilibria. We find that all-can-win competition produces a universal increase in cooperation and benefits a majority of individuals if incentives to compete are strong.
    Keywords: intergroup competition, cooperation, public goods, experiment
    JEL: H41 M52 C92
    Date: 2009–04
  7. By: Matthias Sutter; Peter Lindner; Daniela Platsch
    Abstract: This paper examines the influence of third-party observation and third-party reward on behavior in an experimental prisoner’s dilemma (PD) game. Whereas the existing literature on third-party intervention as a means to sustain social norms has dealt almost exclusively with third-party punishment, we show that both third-party observation and third-party reward have positive effects on cooperation rates, compared to a treatment where no third party is involved. Third-party reward is more effective in increasing cooperation than third-party observation. However, rewards are given too late to prevent a steady downward trend of cooperation rates.
    Keywords: Social norms, third-party reward, third-party observation, prisoner’s dilemma experiment
    JEL: C72 C91
    Date: 2009–04
  8. By: Reuben, Ernesto (Northwestern University); Suetens, Sigrid (Tilburg University)
    Abstract: We use a novel experimental design to disentangle strategically- and non-strategically-motivated cooperation. By using contingent responses in a repeated sequential prisoners' dilemma with a known probabilistic end, we differentiate end-game behavior from continuation behavior within individuals while controlling for expectations. This design allows us to determine the extent to which strategically-cooperating individuals are responsible for the so-called end-game effect. Experiments with two different subject pools indicate that the most common motive for cooperation in repeated games is strategic and that the extent to which end-game effects are driven by strategically-cooperating individuals depends on the profitability of cooperation.
    Keywords: reputation building, strong reciprocity, conditional cooperation, strategic cooperation
    JEL: C91 D01 D74
    Date: 2009–04
  9. By: Ham, Roger (University of Western Sydney); Junankar, Pramod N. (Raja) (University of Western Sydney); Wells, Robert (University of Western Sydney)
    Abstract: In modern societies, people are often classified as "White Collar" or "Blue Collar" workers: that classification not only informs social scientists about the kind of work that they do, but also about their social standing, their social interests, their family ties, and their approach to life in general. This analysis will examine the effect of an individual's psychometrically derived personality traits and status of their parents on the probability of attaining a white collar occupation over the baseline category of a blue collar occupation; controlling for human capital and other factors. The paper uses data from the Household Income and Labour Dynamics in Australia (HILDA) survey to estimate a random effects probit model to capture the effects on the probability of being in a white collar occupation. The results are then examined using the average marginal effects of the different conditioning variables over the whole sample. The analysis confirms the previous findings of human capital theory, but finds that personality and parental status also have significant effects on occupational outcomes. The results suggest that the magnitude of the average marginal effect of parental status is small and the effect of the personality trait "conscientiousness" is large and rivals that of education. Finally, estimates of separate models for males and females indicate that effects differ between the genders for key variables, with personality traits in females having a relatively larger effect on their occupational outcomes due to the diminished effects of education.
    Keywords: occupational choice, personality, human capital, dynasty hysteresis
    JEL: J24
    Date: 2009–04
  10. By: Davis, Lee N.; Davis, Jerome; Hoisl, Karin
    Abstract: This paper seeks to understand the intriguing but only sparsely explored phenomenon of “leisure time invention,” where the main underlying idea for the new product or process occurs when the inventor is away from the workplace. We add to previous research by focussing on the inventive creativity of the individual researcher, and reassessing the image of researchers inventing during unpaid time – who have often been dispatched as “hobbyists”. Based on the responses from a survey of over 3,000 German inventors, we tested hypotheses on the conditions under which leisure time invention is likely to arise. Results suggest that the incidence of leisure time invention is positively related to exposure to a variety of knowledge inputs – but, surprisingly, not to the quality of prior inventive output. Leisure time inventions are more frequently observed in conceptual-based technologies than in science-based technologies, in smaller R&D projects, and in externally financed R&D projects.
    Keywords: Leisure Time; Inventiveness; Organizational Creativity
    JEL: O31 O32 O34 J22
    Date: 2009–01–01
  11. By: Pekkarinen, Tuomas (Helsinki School of Economics); Uusitalo, Roope (Government Institute for Economic Research (VATT)); Kerr, Sari (Charles River Associates)
    Abstract: The Finnish comprehensive school reform replaced the old two-track school system with a uniform nine-year comprehensive school and significantly reduced the degree of heterogeneity in the Finnish primary and secondary education. We estimate the effect of this reform on the test scores in the Finnish Army Basic Skills test. The identification strategy relies on a differences-in-differences strategy and exploits the fact that the reform was implemented gradually across the country during a six-year period between 1972 and 1977. We find that the reform had a small positive effect on the verbal test scores but no effect on the mean performance in the arithmetic or logical reasoning tests. Still in all tests the reform improved the scores of students from families where parents had only basic education.
    Keywords: Education; school system; tracking; comprehensive school; test scores
    JEL: H52 I21
    Date: 2009–03–03

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