nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2009‒06‒10
six papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Two's Company, Three's a Group: The impact of group identity and group size on in-group favouritism By Donna Harris; Benedikt Herrmann; Andreas Kontoleon
  2. What Is an Award Worth? An Econometric Assessment of the Impact of Awards on Employee Performance By Susanne Neckermann; Reto Cueni; Bruno S. Frey
  3. Gender Differences in Risk Aversion and Ambiguity Aversion By Borghans Lex; Golsteyn Bart; Heckman James; Meijers Huub
  4. Optimal Categorization By Mohlin, Erik
  5. Is Novelty always a good thing? Towards an Evolutionary Welfare Economics By Christian Schubert
  6. How does tacit knowledge transfer influence innovation speed? The case of science based entrepreneurial firms By Knockaert, M.; Ucbasaran, D.; Wright, M.; Clarysse, B.

  1. By: Donna Harris (Environmental Economy and Policy Research Group, Department of Land Economy, University of Cambridge, 19 Silver Street, Cambridge, UK, CB3 9EP.); Benedikt Herrmann (CeDEx, School of Economics, University of Nottingham, UK, NG7 2RD.); Andreas Kontoleon (Department of Land Economy, University of Cambridge)
    Abstract: In this study, we use an allocation game to study the effects of group identity and group size on in-group favouritism when the person's own payoff is not affected by her decision. We first show that in a triadic setting when the subjects are asked to allocate a fixed amount of resource between two other anonymous individuals, the majority of the subjects choose to allocate equal amounts to both the in-group and the out-group members. Contrary to previous studies, when group identity is induced artificially by simply telling the subjects that they belong to the same `group', it does not appear to significantly increase the amount allocated to the in-group member relative to the out-group member in a triadic setting. However, once the number of the in-group recipients is increased from one to three, the same artificial group identity triggers a sharp increase in in-group favouritism. Our results suggest that in order for favouritism to be clearly observed, not only that group identity has to be present, but also the group needs to consist of more than two members.
    Keywords: Favouritism, Group Identity, Group Behaviour, Group Size, Design of Laboratory Experiment
    Date: 2009
  2. By: Susanne Neckermann; Reto Cueni; Bruno S. Frey
    Abstract: Behavioral economics documents the importance of status and self-image concerns in the workplace, but is largely silent about how to instrumentalize them to induce effort. Awards|widespread in the corporate sector and elsewhere are motivators that derive their value from such social concerns. Panel data from the call center of a large international bank allow us to estimate the impact of receiving an award on e ort. The performance of winners proves to be signi cantly higher than that of comparable nonrecipients after the award has been presented. This increase in work e ort is sizeable, robust, and not driven by reverse causation.
    Keywords: Awards; Motivation; Non-monetary Compensation; Event-Study; Incentives
    JEL: C23 J33 M52
    Date: 2009–05
  3. By: Borghans Lex; Golsteyn Bart; Heckman James; Meijers Huub (ROA rm)
    Abstract: This paper demonstrates gender differences in risk aversion and ambiguityaversion. It also contributes to a growing literature relating economic preferenceparameters to psychological measures by asking whether variations in preferenceparameters among persons, and in particular across genders, can be accounted forby differences in personality traits and traits of cognition. Women are more riskaverse than men. Over an initial range, women require no further compensationfor the introduction of ambiguity but men do. At greater levels of ambiguity,women have the same marginal distaste for increased ambiguity as men.Psychological variables account for some of the interpersonal variation in riskaversion. They explain none of the differences in ambiguity.
    Keywords: education, training and the labour market;
    Date: 2009
  4. By: Mohlin, Erik (Dept. of Economics, Stockholm School of Economics)
    Abstract: The importance of categorical reasoning in human cognition is well-established in psychology and cognitive science, and it is generally acknowledged that one of the most important functions of categorization is to facilitate prediction. This paper provides a model of optimal categorization. In the beginning of each period a subject observes a two-dimensional object in one dimension and wants to predict the object's value in the other dimension. The subject partitions the space of objects into categories. She has a data base of objects that were observed in both dimensions in the past. The subject determines what category the new object belongs to on the basis of observation of its first dimension. The average value in the second dimension, of objects in this category in the data base, is used as prediction for the object at hand. At the end of each period the second dimension is observed and the observation is stored in the data base. The main result is that the optimal number of categories is determined by a trade-off between (a) decreasing the size of categories in order to enhance category homogeneity, and (b) increasing the size of categories in order to enhance category sample size.
    Keywords: Categorization; Priors; Prediction; Similarity-Based Reasoning.
    JEL: C72
    Date: 2009–05–31
  5. By: Christian Schubert
    Abstract: Schumpeter’s and Hayek’s view of market coordination as being not about efficiency, but about endogenous change and never-ending discovery has been increasingly recognized even by the mainstream of economics. Underlying this view is the notion of creative learning agents who bring about novelty. We argue that apart from the challenges it poses for positive theorizing, novelty (be it technological, institutional or commercial) also has a complex normative dimension that standard welfare economics is unsuited to deal with. We show that welfare economics has to be reconstructed on the basis of evolutionary-naturalistic insights into the way human agents bring about, value and respond to novelty-induced change.
    Keywords: Novelty, Endogenous Change, Preference Formation, Welfare, Justice Length 28 pages
    JEL: D63 O12
    Date: 2009–05
  6. By: Knockaert, M.; Ucbasaran, D.; Wright, M.; Clarysse, B. (Vlerick Leuven Gent Management School)
    Abstract: The increased pressure put on public research institutes to commercialize their research results has given rise to an increased academic interest in technology transfer in general and science based entrepreneurial firms specifically. By building on innovation speed and knowledge literatures, this paper aims to improve understanding of how tacit knowledge can be effectively transferred from the research institute to the science based entrepreneurial firm. More specifically, we assess under which conditions tacit knowledge contributes to the generation of innovation speed, which is a crucial success parameter for technology based ventures. Using an inductive case study approach, we show that tacit knowledge can only be transferred effectively when a substantial part of the original research team joins the new venture as founders. Our analysis also reveals that the mere transfer of tacit knowledge is insufficient to ensure the successful commercialization of technology. Commercial expertise is also required on the condition that the cognitive distance between the scientific researchers and the person responsible for market interaction is not too large. Our findings have implications for science based entrepreneurs, technology transfer officers, venture capitalists, policy makers and the academic community.
    Keywords: science based entrepreneurial firms; tacit knowledge; technology transfer; innovation speed; cognitive distance
    Date: 2009–04–04

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.