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on Cognitive and Behavioural Economics |
| By: | Black, Sandra E. (University of Texas at Austin); Devereux, Paul (University College Dublin); Salvanes, Kjell G. (Norwegian School of Economics and Business Administration) |
| Abstract: | A variety of public campaigns, including the "Just Say No" campaign of the 1980s and 1990s that encouraged teenagers to "Just Say No to Drugs", are based on the premise that teenagers are very susceptible to peer influences. Despite this, very little is known about the effect of school peers on the long-run outcomes of teenagers. This is primarily due to two factors: the absence of information on peers merged with long-run outcomes of individuals and, equally important, the difficulty of separately identifying the role of peers. This paper uses data on the population of Norway and idiosyncratic variation in cohort composition within schools to examine the role of peer composition in 9th grade on longer-run outcomes such as IQ scores at age 18, teenage childbearing, post-compulsory schooling educational track, adult labor market status, and earnings. We find that outcomes are influenced by the proportion of females in the grade, and these effects differ for men and women. Other peer variables (average age, average mother's education) have little impact on the outcomes of teenagers. |
| Keywords: | education, peer effects |
| JEL: | I2 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4946&r=cbe |
| By: | Drouvelis, Michalis (University of York); Metcalfe, Robert (University of Oxford); Powdthavee, Nattavudh (University of York) |
| Abstract: | Research on public goods mainly focuses its attention on the ability of incentives, beliefs and group structure to affect behaviour in social dilemma interactions. This paper investigates the pure effects of a rather subtle mechanism on social preferences in a one-shot linear public good game. Using priming techniques from social psychology, we activate the concept of cooperation and explore the extent to which this intervention brings about changes in people’s voluntary contributions to the public good and self-reported emotional responses. Our findings suggest that priming cooperation increases contribution levels, controlling for subjects' gender. Our priming effect is much stronger for females than for males. This difference can be explained by a shift in subjects' beliefs about contributions. We also find a significant impact of priming on mean positive emotional responses. |
| Keywords: | priming, contributions, beliefs, emotional responses, public goods experiments |
| JEL: | C92 D01 H41 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4963&r=cbe |
| By: | Smith, John |
| Abstract: | Measures of preferences are primarily useful in that they are helpful in predicting behavior. We perform an experiment which demonstrates that the timing of the measurement of social preferences can affect such a measure. Researchers often measure social preferences by posing a series of dictator game allocation decisions; we use a particular technique, Social Value Orientation (SVO). We vary the order of the SVO measurement and a lager stakes dictator game. In our first study, we find that subjects with prosocial preferences act even more prosocially when the SVO measurement is administered first, whereas those with selfish preferences are unaffected by the order. In our second study we vary the order of the SVO measurement and a nonstandard dictator game. We do not find the effect found in the first study. This suggests that the effect found in the first study is driven by choices involving the size of surplus. |
| Keywords: | experimental economics; social values; dictator game; social value orientation |
| JEL: | D64 Z13 C91 |
| Date: | 2010–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23282&r=cbe |
| By: | Simon Gaechter (University of Nottingham); Daniele Nosenzo (University of Nottingham); Martin Sefton (University of Nottingham) |
| Abstract: | This paper investigates how social comparison information about referent others (i.e. learning what similar others do and how they are treated) affects reciprocal relationships. Using a three-person gift-exchange game we study how employees’ reciprocity towards an employer is affected by exposure to pay comparison information (what co-workers earn) and effort comparison information (how co-workers perform). We find that pay comparison information does not affect reciprocity. Effort comparison information, however, influences reciprocal relationships in important ways: the ability to observe reciprocal behavior on the part of others strongly affects employees’ reciprocity towards the employer. While our data show that social information in principle may either erode or amplify reciprocal relationships, we find that, on average, social comparisons have a detrimental impact on reciprocity. |
| Keywords: | Reciprocity, gift-exchange, social information, social comparisons, pay comparisons |
| JEL: | A13 C92 J31 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2010-10&r=cbe |
| By: | Simon Gaechter (Centre of Decision Research and Experimental Economics, School of Economics, University of Nottingham); Benedikt Herrmann (Centre of Decision Research and Experimental Economics, School of Economics, University of Nottingham); Christian Thoeni (University of St. Gallen) |
| Abstract: | Does the cultural background influence the success with which genetically unrelated individuals cooperate in social dilemma situations? In this paper we provide an answer by analyzing the data of Herrmann et al. (Science 2008, pp. 1362-1367), who study cooperation and punishment in sixteen subject pools from six different world cultures (as classified by Inglehart & Baker (American Sociological Review 2000, pp. 19-51)). We use analysis of variance to disentangle the importance of cultural background relative to individual heterogeneity and group-level differences in cooperation. We find that culture has a substantial influence on the extent of cooperation, in addition to individual heterogeneity and group-level differences identified by previous research. The significance of this result is that cultural background has a substantial influence on cooperation in otherwise identical environments. This is particularly true in the presence of punishment opportunities. |
| Keywords: | human cooperation; punishment; culture; experimental public good games |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2010-09&r=cbe |
| By: | Kimberly Rollins (Department of Resource Economics, University of Nevada, Reno); Mimako Kobayashi (Department of Resource Economics, University of Nevada, Reno) |
| Abstract: | This paper contributes towards the development of an empirical approach applicable to contingent valuation to accommodate non-expected utility risk preferences. Combining elicitation approaches used in field experiments with contingent valuation, we embed an experimental design that systematically varies probabilities and losses across a survey sample in a willingness to pay elicitation format. We apply the proposed elicitation and estimation approaches to estimate the risk preferences of a representative homeowner who faces probabilistic wildfire risks and an investment option that reduces losses due to wildfire. Based on prospect theory, we estimate parameters of probability weighting, risk preferences and use individual characteristics as covariates for these parameters and as utility shifters. We find that risk preferences are consistent with prospect theory. We find that probability weighting may offer an explanation for respondents’ observed under investment in measures to reduce losses due to wildfire. |
| Keywords: | Prospect theory; Contingent valuation; Field experiment, Wildfire risk |
| JEL: | Q51 C93 D81 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:unr:wpaper:10-003&r=cbe |
| By: | Kuhn, Peter J. (University of California, Santa Barbara); Kooreman, Peter (Tilburg University); Soetevent, Adriaan R. (University of Amsterdam); Kapteyn, Arie (RAND) |
| Abstract: | Each week, the Dutch Postcode Lottery (PCL) randomly selects a postal code, and distributes cash and a new BMW to lottery participants in that code. We study the effects of these shocks on lottery winners and their neighbors. Consistent with the life-cycle hypothesis, the effects on winners’ consumption are largely confined to cars and other durables. Consistent with the theory of in-kind transfers, the vast majority of BMW winners liquidate their BMWs. We do, however, detect substantial social effects of lottery winnings: PCL nonparticipants who live next door to winners have significantly higher levels of car consumption than other nonparticipants. |
| Keywords: | social interactions, natural experiments |
| JEL: | D12 C21 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4950&r=cbe |
| By: | Siddiqi, Hammad |
| Abstract: | People think by analogies and comparisons. Such way of thinking, termed coarse thinking by Mullainathan et al [Quarterly Journal of Economics, May 2008] is intuitively very appealing. We derive a new option pricing formula based on the assumption that the market consists of coarse thinkers as well as rational investors. The new formula, called the behavioral option pricing formula is a generalization of the Black-Scholes formula. The new formula not only provides explanations for the implied volatility skew and term structure puzzles in equity index options but is also consistent with the observed negative relationship between contemporaneous equity price shocks and implied volatility. |
| Keywords: | Coarse Thinking; Option Pricing; Implied Volatility; Implied Volatility Skew; Implied Volatility Smile; Implied Volatility Term Structure |
| JEL: | G12 G13 |
| Date: | 2010–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23261&r=cbe |
| By: | Lundberg, Shelly (University of Washington) |
| Abstract: | This paper uses data from the German Socio-economic Panel Study to examine the relationship between psychological traits, in particular personality, and the formation and dissolution of marital and cohabiting partnerships. Changing patterns of selection into and out of relationships indicate that the determinants of marital surplus have altered between older cohorts who were born in the years after World War II and younger cohorts born in the 1960s. For younger cohorts, relationships between personality traits and the probability of marriage are identical for men and women, which is consistent with returns to marriage that are based on joint consumption. Tastes for marital public goods are negatively related to openness to experience (a desire for change and variety) and positively related to conscientiousness for both men and women. Selection into marriage is associated with distinctly different personality profiles for older men and older women, suggesting that gender-specialized contributions to household public goods were an important source of marital surplus for these cohorts. |
| Keywords: | personality, marriage, divorce |
| JEL: | J12 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4945&r=cbe |
| By: | Negrusa, Brighita (RAND); Oreffice, Sonia (University of Alicante) |
| Abstract: | We analyze how sexual orientation is related to household savings using 2000 US Census data, and find that gay and lesbian couples own significantly more retirement income than heterosexuals, while cohabiting heterosexuals save more than their married counterparts. In a household savings model, we interpret this homosexual-specific differential as due to the extremely low fertility of same-sex couples, in addition to the precautionary motives driving cohabiting households to save more than married ones. Evidence from homeowners' ratio of mortgage payments to house value exhibits the same pattern of savings differentials by sexual orientation and cohabiting status. |
| Keywords: | sexual orientation, household savings, retirement, housing |
| JEL: | D1 D12 J15 J16 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4961&r=cbe |
| By: | J. V. Meenakshi (Department of Economics, Delhi School of Economics, Delhi, India); Abhijit Banerji (Department of Economics, Delhi School of Economics, Delhi, India); Victor Manyong (International Institute of Tropical Agriculture); Keith Tomlins (Natural Resources Institute, University of Greenwich); Priscilla Hamukwala (University of Zambia); Nitya Mittal (Department of Economics, Delhi School of Economics, Delhi, India) |
| Abstract: | Using a discrete choice experiment, this paper estimates the willingness to pay for biofortified orange maize in rural Zambia. The study design has five treatment arms, which enable an analysis of the impact of nutrition information, comparing the use of simulated radio versus community leaders in transmitting the nutrition message, on willingness to pay, and to account for possible novelty effects in the magnitude of premiums or discounts. The estimation strategy also takes into account lexicographic preferences of a subset of our respondents. The results suggest that (a) orange maize is well liked and can compete with white maize in the absence of a nutrition campaign, (b) there is a premium for orange maize with nutrition information, and (c) the mode of nutritional-message dissemination does not have a large impact on consumer acceptance, and (d) novelty effects do not translate into higher willingness to pay for orange maize. |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:186&r=cbe |
| By: | van Ours, Jan C. (Tilburg University); van Tuijl, Martin A. (Tilburg University) |
| Abstract: | This paper investigates whether there are country-specific characteristics in goal-scoring in the final stage of important international football matches. We examine goal-scoring from 1960 onwards in full 'A' international matches of six national teams: Belgium, Brazil, England, Germany, Italy and the Netherlands. We analyze qualifying matches for the European Championship and World Cup and the matches at the final tournaments of these two events, the Copa America and the Confederations Cup. We find that the national teams of Germany, England and the Netherlands are more likely than the three other national teams to score in the last minute – including stoppage time. However, for Germans this comes at a cost. Germany is more likely to concede a goal in the dying seconds of a match than other countries. During our period of analysis, the national teams of Brazil and Italy only conceded one goal in the last minute. As to winning penalty shootouts, Germany outperforms the other five countries. |
| Keywords: | football, goal-scoring, national team matches, full ‘A’ international matches |
| JEL: | J44 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4970&r=cbe |
| By: | Tommy E. Murphy |
| Abstract: | Recent developments in endogenous growth theory suggest fertility decline in the context of the demographic transition was crucial for achieving long-term growth, and that it was triggered by forces eminently economic in nature. It is then somewhat puzzling that France, which was not as industrialised as other parts of Europe, lead that decline. Taking advantage of the considerable internal heterogeneity, this paper looks within France for some answers. Using département level data for the last quarter of the nineteenth century, it studies the correlates of fertility estimating a 2SLS fixed-effects model. Results confirm the importance of some of the forces suggested by standard fertility choice models. Nevertheless, certain non-economic factors (such as secularisation) –for which I provide new measurements– also explain part of the variation. Spatial dependence turns out as well to be significant in all specifications of the model, suggesting some sort of diffusion was indeed taking place. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:364&r=cbe |