nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2010‒01‒23
twelve papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. The effects of enforced reflection in three simple experiments By Björn Frank
  2. Can intentions spoil the kindness of a gift? - An experimental study By Christina Strassmair
  3. An Exploration of the Content of Social Norms using Simple Games By López-Pérez, Raúl; Vorsatz, Marc
  4. On the Descriptive Value of Loss Aversion in Decisions under Risk By Eyal Ert; Ido Erev
  5. Sticks and Carrots in Procurement By Maria Bigoni; Giancarlo Spagnolo; Paola Valbonesi
  6. Do wage cuts damage work morale? Evidence from a natural field experiment By Sebastian Kube; Michel André Maréchal; Clemens Puppe
  7. Reexamination of Individual Knowledge and Common Behavior Rules: A Cross-disciplinary View Based on Empirical Evidences By Liang, Zhao
  8. Are Turkish migrants altruistic? Evidence from the macro data By Sule Akkoyunlu
  9. Public Goods and Voting on Formal Sanction Schemes: An Experiment By Louis Putterman; Jean-Robert Tyran; Kenju Kamei
  10. Free-riding on altruistic punishment? An experimental comparison of third-party-punishment in a stand-alone and in an in-group environment. By Lewisch Peter; Ottone, Stefania; Ponzano, Ferruccio
  11. On Probation. An Experimental Analysis By Christoph Engel; Heike Hennig-Schmidt; Bernd Irlenbusch; Sebastian Kube
  12. Dynamics of work disability reporting in Europe By Viola Angelini; Danilo CAVAPOZZI; Luca CORAZZINI; Omar PACCAGNELLA

  1. By: Björn Frank (University of Kassel, Nora-Platiel-Straße 4, D-34127 Kassel)
    Abstract: Rubinstein (2007) has recently found that the frequency of (types of) decisions made in Internet experiments are related to the time taken for these decisions. Other authors have investigated this relationship by exerting some time pressure. In this paper, I report on an attempt to do the opposite, i.e., to enforce a longer reflection time. To ensure that subjects do not just wait but actually think for five minutes, they had to perform a five minutes focused free writing task. Free writing is a standard method adopted from creative writing courses; subjects are asked to write up everything that currently runs through their minds, without pausing. Enforced reflection significantly decreases the number chosen in beauty contest experiments, thus increasing the winning probability, and it increases the amount given in the solidarity game. For women, this increase is economically and statistically significant. The average amount offered in the ultimatum game is not higher for those who had performed the free writing task. However, after free writing, the share of 50:50 offers is significantly higher, which is in conflict with Rubinstein's conjecture that 50:50 offers take less time because they are instinctive (as opposed to cognitive).
    Keywords: free writing, decision time, beauty contest, solidarity game, ultimatum game
    JEL: C90
    Date: 2010
  2. By: Christina Strassmair (University of Munich)
    Abstract: Consider a situation where person A undertakes acostly 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 expected rewards rather than by pure altruism. The question we address in this experimental study is how B reacts to A's intentions. We vary the probability that the second mover in a trust game can reciprocate and analyze effects on second mover behavior. Our results suggest that expected rewards do not spoil the perceived kindness of an action and the action's rewards.
    Keywords: social preferences, intentions, beliefs, psychological game theory, experiment
    JEL: C91 D64
    Date: 2009–10
  3. By: López-Pérez, Raúl (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Vorsatz, Marc (Fundación de Estudios de Economía Aplicada–FEDEA)
    Abstract: The literature on social norms stresses that compliance with norms is approved while deviance is disapproved. Based on this, we explore the content of social norms using experimental data from five dictator games with a feedback stage. Our data suggests that subjects either care about a reciprocity or an efficiency norm.
    Keywords: approval; disapproval; dictator game; experiment; social Norms.
    JEL: A13 C72 D64 Z13
    Date: 2010–01
  4. By: Eyal Ert (Harvard Business School); Ido Erev (Faculty of Industrial Engineering and Management, Technion - Israel Institute of Technology.)
    Abstract: Five studies are presented that explore the assertion that losses loom larger than gains. The first two studies reveal equal sensitivity to gains and losses. For example, half of the participants preferred the gamble "1000 with probability 0.5; -1000 otherwise" over "0 with certainty." Studies 3, 4, and 5 address the apparent discrepancy between these results and the evidence for loss aversion documented in previous research. The results reveal that only under very specific conditions does the pattern predicted by the loss aversion assertion emerge. This pattern does not emerge in short experiments or in the first 10 trials of long experiments. Nor does it emerge in long experiments with two-outcome symmetric gambles, or in long experiments with asymmetric multi-outcome gambles. The observed behavior, in these settings, reflects risk neutrality in choice among low-magnitude mixed gambles.
    JEL: C91 D01
    Date: 2010–01
  5. By: Maria Bigoni (University of Padua); Giancarlo Spagnolo; Paola Valbonesi (University of Padua)
    Abstract: We study differently framed incentives in dynamic laboratory buyer-seller relationships with multi-tasking and endogenous matching. The experimental design tries to mitigate the role of social preferences and intrinsic motivation. Absent explicit incentives, effort is low in both tasks. Their introduction boosts efficiency substantially increasing effort in the contractible task, mildly crowding it out in the non-contractible one, and increasing buyer surplus. Bonuses and penalties are equivalent for efficiency and crowding-out, but dierent in distributional effects: sellers' surplus increases with bonuses as buyers' offers become more generous. Buyers tend to prefer penalties, which may explain why they are dominant in procurement.
    Keywords: bonuses, business-to-business, contract choice, experiment, framing, explicit incentives, incomplete contracts, loss-aversion, motivation, penalties, procurement, multi-tasking, relational contracts, rewards.
    JEL: H57 C92 L14 M52
    Date: 2010–01
  6. By: Sebastian Kube; Michel André Maréchal; Clemens Puppe
    Abstract: Contractual incompleteness characterizes many employment relations. High work morale is therefore fundamental for sustaining voluntary cooperation within the firm. We conducted a natural field experiment testing to what extent wages affect work morale. The results provide clear-cut evidence showing that wage cuts have a detrimental impact on work morale. An equivalent wage increase, however, does not result in any productivity gains. Theses results highlight a strongly asymmetric response of work morale to wage variations.
    Keywords: Morale, reciprocity, gift exchange, field experiment
    JEL: C93 J30
    Date: 2010–01
  7. By: Liang, Zhao
    Abstract: Based on evidences from empirical disciplines, the paper offers three different basic assumptions and one simplified framework on individual behavior when dealing with signals from uncertain environments. On the basis of these, the paper defines individual knowledge and shows its hierarchical state, the connatural- and the acquired-shared-knowledge among individuals. Furthermore, the paper describes and explains the sources and general mechanisms of changing of these kinds of knowledge, and stresses that human connatural knowledge is the most stable level in the entire knowledge, which constitutes the fundamental prerequisite for mutually recognizing signals (or events) and interactions among individuals; The acquired-shared-knowledge, however, is the common anticipation owned among individuals about behavioral response of other individuals facing a signal; it derives from interacting experiences between individuals and circumstances or among individuals; and stable accumulation of the knowledge is one of key foundations on which the stable anticipation of individual behavior, commonly behavioral beliefs and rules will can be formed in a group.
    Keywords: individual assumptions; simplified behavior-framework; individual knowledge; knowledge hierarchy; shared knowledge; common behavior rules; empirical evidences
    JEL: B52 A12 D01
    Date: 2009–12–20
  8. By: Sule Akkoyunlu (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: We investigate in this paper whether the stable pattern of remittances over the last three decades can be explained by the altruistic behaviour. This possibility is tested by means of cointegration analysis, which is applied to Turkish remittances from Germany over the period 1962-2005. A single cointegrating relationship is found between the remittances of Turkish workers in Germany and the real Turkish GDP per capita, the real German GDP per capita, the stock of Turkish migrants in Germany, the real exchange rate, and the government instability. The negative coefficient associated with Turkish income and positive coefficients on the real exchange rate and political instability support the claim that Turkish remittances from Germany are altruistically motivated. In addition, we find that the coefficient on the stock of Turkish migrants to be equal to one.
    Keywords: Migration, Remittances, Alturism, Cointegration
    JEL: C22 F22 F24
    Date: 2010–01
  9. By: Louis Putterman (Department of Economics, Brown University); Jean-Robert Tyran (Department of Economics, University of Copenhagen); Kenju Kamei (Department of Economics, Brown University)
    Abstract: The burgeoning literature on the use of sanctions to support public goods provision has largely neglected the use of formal or centralized sanctions. We let subjects playing a linear public goods game vote on the parameters of a formal sanction scheme capable both of resolving and of exacerbating the free-rider problem, depending on parameter settings. Most groups quickly learned to choose parameters inducing efficient outcomes. But despite uniform money payoffs implying common interest in those parameters, voting patterns suggest significant influence of cooperative orientation, political attitudes, and of gender and intelligence.
    Keywords: public good; voluntary contribution; formal sanction; experiment; penalty; voting
    JEL: C91 C92 D71 D72 H41
    Date: 2010–01
  10. By: Lewisch Peter; Ottone, Stefania; Ponzano, Ferruccio
    Abstract: This paper deals with the subject of third-party punishment. The paper compares, by means of an economic experiment, punishment by a third party (Stand-Alone case) with punishment by third parties (In-Group environment). This deliberate introduction of a second potential punisher is neither subtle nor marginal. Shifting punishment choices into this "enlarged environment" allows us to study, in a systematic way, the complex relationship between the punisher's expectations about her/his peer's punishment decisions and her/his own punishment choices. In particular, we aim to examine whether, on average, individual punishment is systematically lower in an In-Group environment compared with the Stand-Alone case.
    Keywords: Third-Party Punishment, Collective Punishment
    JEL: C91 C92 K42
    Date: 2010–01
  11. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Heike Hennig-Schmidt (University of Bonn, Dept. of Economics); Bernd Irlenbusch (London School of Economics and Max Planck Institute for Research on Collective Goods); Sebastian Kube (University of Bonn, Dept. of Economics and Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Does probation pay a double dividend? Society saves the cost of incarceration, and convicts preserve their liberty. But does probation also reduce the risk of recidivism? In a meta-study we show that the field evidence is inconclusive. Moreover it struggles with an identification problem: those put on probation are less likely to recidivate in the first place. We therefore complement the field evidence by a lab experiment that isolates the definitional feature of probation: the first sanction is conditional on being sanctioned again during the probation period. We find that probationers contribute less to a joint project; punishment cost is higher; efficiency is lower; inequity is higher. While experimental subjects are on probation, they increase their contributions to a joint project. However, once the probation period expires, they reduce their contributions. While in the aggregate these two effects almost cancel out, critically those not punished themselves do trust the institution less if punishment does not become effective immediately.
    Keywords: probation, recidivism, public goods, punishment, experimental economics
    JEL: C91 H41 K14 K42
    Date: 2009–11
  12. By: Viola Angelini (University of Padua); Danilo CAVAPOZZI (University of Padua); Luca CORAZZINI; Omar PACCAGNELLA (University of Padua)
    Abstract: In this paper we investigate the role of response styles in the dynamics of work disability reporting. Using the 2004 and 2006 waves of the Survey of Health, Ageing and Retirement in Europe (SHARE), we document that in Europe surprisingly large fractions of individuals change their self-reported disability status within two years. We find that this dynamics can be largely explained by the fact that respondents change the way they evaluate the severity of work disability problems over time.
    Keywords: Work disability, vignettes, reporting heterogeneity.
    JEL: I10 J14 C33
    Date: 2010–01

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