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on Cognitive and Behavioural Economics |
| By: | Giovanni Dosi; Richard R. Nelson |
| Abstract: | This work prepared for B. Hall and N. Rosenberg (eds.) Handbook of Innovation, Elsevier (2010), lays out the basic premises of this research and review and integrate much of what has been learned on the processes of technological evolution, their main features and their effects on the evolution of industries. First, we map and integrate the various pieces of evidence concerning the nature and structure of technological knowledge the sources of novel opportunities, the dynamics through which they are tapped and the revealed outcomes in terms of advances in production techniques and product characteristics. Explicit recognition of the evolutionary manners through which technological change proceed has also profound implications for the way economists theorize about and analyze a number of topics central to the discipline. One is the theory of the firm in industries where technological and organizational innovation is important. Indeed a large literature has grown up on this topic, addressing the nature of the technological and organizational capabilities which business firms embody and the ways they evolve over time. Another domain concerns the nature of competition in such industries, wherein innovation and diffusion affect growth and survival probabilities of heterogeneous firms, and, relatedly, the determinants of industrial structure. The processes of knowledge accumulation and diffusion involve winners and losers, changing distributions of competitive abilities across different firms, and, with that, changing industrial structures. Both the sector-specific characteristics of technologies and their degrees of maturity over their life cycles influence the patterns of industrial organization ? including of course size distributions, degrees of concentration, relative importance of incumbents and entrants, etc. This is the second set of topics which we address. Finally, in the conclusions, we briefly flag some fundamental aspects of economic growth and development as an innovation driven evolutionary process. |
| Keywords: | Innovation, Technological paradigms, Technological regimes and trajectories, Evolution, Learning, Capability-based theories of the firm, Selection, Industrial dynamics, Emergent properties, Endogenous growth |
| Date: | 2009–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2009/07&r=cbe |
| By: | Alessandro Innocenti; Antonio Nicita |
| Abstract: | In this paper we compare - in the laboratory - stoppage and virtual strike. Our experiment confirms that higher wages offered by an employer lead to considerably more costly effort provision. The number of strikes, the level of efforts and average total payoffs are higher under virtual strike than under standard strike. However, when standard strike is associated with reciprocal externalities, it induces higher effort levels, higher payoffs and an extremely reduced number of strikes than virtual strike. It is unclear whether this behavior re?ects reciprocity or other forms of social preferences. However our results might explain why standard strikes rather than virtual ones are generally adopted by workers. |
| Keywords: | virtual strike, cooperation, reciprocity, fairness, experiments |
| JEL: | C91 D74 D78 J52 K31 M55 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:usi:labsit:026&r=cbe |
| By: | Coneus, Katja; Gernandt, Johannes; Saam, Marianne |
| Abstract: | We analyse the determinants of dropout from secondary and vocational education in Germany using data from the Socio-Economic Panel from 2000 to 2007. In addition to the role of classical variables like family background and school achievements, we examine the effect of noncognitive skills. Both, better school grades and higher noncognitive skills reduce the risk to become an educational dropout. The influence of school achievements on the dropout probability tends to decrease and the influence of noncognitive skills tends to increase with age. |
| Keywords: | Noncognitive skills,school grades,secondary education,vocational training |
| JEL: | I21 J13 J24 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09019&r=cbe |
| By: | Coneus, Katja; Sprietsma, Maresa |
| Abstract: | It is a well-known fact that the level of parents' education is strongly correlated with the educational achievement of their children. In this paper,we shed light on the potential channels through which human capital is transmitted from mothers to their children in early childhood. The main channels through which maternal human capital benefits the child's verbal and social skills are birth weight and father's support. Moreover,reading stories to the child is most relevant for the transmision of verbal skills whereas for social skills, a crucial channel for maternal human capital is the attendance of institutional childcare. |
| Keywords: | early childhood,skills,intergenerational transmission |
| JEL: | I20 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:09038&r=cbe |
| By: | Fioretti, Guido |
| Abstract: | A novel decision theory is emerging out of sparse findings in economics, mathematics and, most importantly, psychology and computational cognitive science. It rejects a fundamental assumption of the theory of rational decision-making, namely, that uncertain belief rests on independent assessment of utility and probability, and includes envisioning possibilities within its scope. Several researchers working with these premises, independently of one another, arrived at the conclusion that decision is made by highlighting the positive features of the alternative that will be chosen while opposing it to a loosing alternative, whose unpleasant aspects have been stressed. This article frames together contributions from different disciplines, often unknown to one another, with the hope of improving the coordination of research efforts. Furthermore, it discusses the status of the novel theory with respect to our current idea of rationality. |
| Keywords: | Rationality; Shackle; Shafer; Search for Dominant Structure; Differentiation -- Consolidation; Constraint Satisfaction Networks; Construction of Narratives. |
| JEL: | D89 D80 |
| Date: | 2009–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12897&r=cbe |
| By: | David Marsden |
| Abstract: | This paper considers one of the paradoxes of incentive pay used in Britain's public services,namely that despite much evidence that it does not motivate employees, it continues to bewidely used. It is argued that behind this evidence, there are significant examples in which itsuse has been associated with improved performance. A good part of this is to be explained bythe way performance pay links pay and appraisal, and the pressure this puts on line managersto set clearer goals for their staff. There is also some evidence that the goal setting is theoutcome of a form of integrative, or positive sum, negotiation between individual employeesand their managers, and that it is not just 'top down'. |
| Keywords: | pay for performance, public sector pay |
| JEL: | J33 M52 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0946&r=cbe |
| By: | Tuckett, David |
| Abstract: | The author suggests the 2008 financial crisis was the culmination of an accelerating process of financial market evolution that is inherently unstable. From his viewpoint markets are not well organized to manage the power financial assets have to generate emotion and their wider effect on human imagination and judgement, anchored in neurobiology. Judgements and so decisions about risk, reward and the evaluation of success can become systematically compromised because the excitement of potential gain is disconnected from the anxiety of potential consequences; producing groupthink and bubbles. When anxiety breaks through a catastrophic loss of confidence is inevitable. In the aftermath the emotional pain of accepting responsibility prevents lessons being learned. The author´s theoretical framework is influenced by modern psychoanalysis drawing on an interview study of international fund managers in 2007. He suggests underlying psychological conflicts have influenced the way market institutions have evolved to compete by selling the promise of exceptional performance. To cope with the expectations upon them, agents are impelled to base their actions on stories which overvalue opportunities and underestimate risks; creating agency issues and facilitating the very process of disconnecting anxiety from excitement which creates bubble potential. Policy implications go well beyond improving regulation and transparency. |
| Keywords: | Financial bubbles,financial crises,group functioning,groupthink,market instability,financial regulation,psychoanalysis,psychology |
| JEL: | G18 G28 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:200937&r=cbe |
| By: | José Luiz Barros Fernandes; Juan Ignacio Peña; Benjamin Miranda Tabak |
| Abstract: | The objective of this paper is twofold. The first is to incorporate mental accounting, loss-aversion, asymmetric risk-taking behavior, and probability weighting in a multi-period portfolio optimization for individual investors. While these behavioral biases have previously been identified in the literature, their overall impact during the determination of optimal asset allocation in a multi-period analysis is still missing. The second objective is to account for the estimation risk in the analysis. Considering 26 daily index stock data over the period from 1995 to 2007, we empirically evaluate our model (BRATE – Behavior Resample Adjusted Technique) against the traditional Markowitz model. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:184&r=cbe |
| By: | Christiane Ernst; Christian Thöni |
| Abstract: | We report results from experimental first-price, sealed-bid, all-pay auctions for a good with a common and known value. We observe bidding strategies in groups of two and three bidders and under two extreme information conditions. As predicted by the Nash equilibrium, subjects use mixed strategies. In contrast to the prediction under standard assumptions bids are drawn from a bimodal distribution: very high and very low bids are much more frequent than intermediate bids. Standard risk preferences cannot account for our results. However, bidding behavior is consistent with the predictions of a model with reference dependent preferences as proposed by the prospect theory. |
| Keywords: | All-pay Auction; Prospect Theory, Experiment |
| JEL: | D44 D72 D80 C91 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2009:2009-25&r=cbe |