nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2010‒06‒26
nine papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Sequential vs. Simultaneous Schelling Models: Experimental Evidence By Juan Miguel Benito; Pablo Brañas-Garza; Penelope Hernandez; Juan A. Sanchis
  2. At the Mercy of the Prisoner Next Door. Using an Experimental Measure of Selfishness as a Criminological Tool By Thorsten Chmura; Christoph Engel; Markus Englerth; Thomas Pitz
  3. Imperfect Recall and Time Inconsistencies: An experimental test of the absentminded driver "paradox" By Vittoria M. Levati; Matthias Uhl; Ro'i Zultan
  4. Behavioral Effects in Individual Decisions of Network Formation: Complexity Reduces Payoff Orientation and Social Preferences By Harmsen - van Hout, Marjolein J.W.; Dellaert, Benedict G.C.; Herings, P. Jean-Jacques
  5. On the Prevalence of Framing Effects Across Subject-Pools in a Two- Person Cooperation Game By Sebastian J. Goerg; Gari Walkowitz
  6. Social preferences in childhood and adolescence – A large-scale experiment By Matthias Sutter; Francesco Feri; Martin G. Kocher; Peter Martinsson; Katarina Nordblom; Daniela Rützler
  7. An Experimental Contribution to the Theory of Customary (International) Law By Christoph Engel
  8. Gender differences in competition emerge early in life By Matthias Sutter; Daniela Rützler
  9. Socially-embedded investments: Explaining gender differences in job-specific skills By Javier G. Polavieja

  1. By: Juan Miguel Benito (Universidad Publica de Navarra); Pablo Brañas-Garza (GLOBE: Universidad de Granada); Penelope Hernandez (ERI-CES); Juan A. Sanchis (ERI-CES)
    Abstract: This paper shows the results of experiments where subjects play the Schelling's spatial proximity model (1969, 1971a). Two types of experiments are conducted; one in which choices are made sequentially, and a variation of the first where the decision-making is simultaneous. The results of the sequential experiments are identical to Schelling's prediction: subjects finish in a segregated equilibrium. Likewise, in the variant of the simultaneous decision experiment the same result is reached: segregation. Subjects’ heterogeneity generates a series of focal points in the first round. In order to locate themselves, subjects use these focal points immediately, and as a result, the segregation takes place again. Furthermore, simultaneous experiments with commuting costs allow us to conclude that introducing positive moving costs does not affect segregation.
    Keywords: Schelling models, economic experiments, segregation
    Date: 2010–06
  2. By: Thorsten Chmura (University of Bonn); Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Markus Englerth (Max Planck Institute for Research on Collective Goods, Bonn); Thomas Pitz (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Do criminals maximise money? Are criminals more or less selfish than the average subject? Can prisons apply measures that reduce the degree of selfishness of their inmates? Using a tried and tested tool from experimental economics, we cast new light on these old criminological questions. In a standard dictator game, prisoners give a substantial amount, which calls for more refined versions of utility in rational choice theories of crime. Prisoners do not give less than average subjects, not even than subjects from other closely knit communities. This speaks against the idea that people commit crimes because they are excessively selfish. Finally those who receive better marks at prison school give more, as do those who improve their marks over time. This suggests that this correctional intervention also reduces selfishness.
    Keywords: experiment, Crime, Prison, Dictator Game, Hurdle Model
    JEL: K42 C91 K14 C34
    Date: 2010–06
  3. By: Vittoria M. Levati (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); Matthias Uhl (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); Ro'i Zultan (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany)
    Abstract: Absentmindedness is a special case of imperfect recall which according to Piccione and Rubinstein (1997a) leads to time inconsistencies. Aumann, Hart and Perry (1997a) question their argument and show how dynamic inconsistencies can be resolved. The present paper explores this issue from a descriptive point of view by examining the behavior of absentminded individuals in a laboratory environment. Absentmindedness is manipulated in two ways. In one treatment, it is induced by cognitively overloading participants. In the other, it is imposed by randomly matching decisions with decision nodes in the information set. The results provide evidence for time inconsistencies in all treatments. We introduce a behavioral principal, which best explains the data.
    Keywords: imperfect recall, absentmindedness, dynamic inconsistency, experiment
    JEL: C72 C91 D81 D83
    Date: 2010–06–16
  4. By: Harmsen - van Hout, Marjolein J.W. (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Dellaert, Benedict G.C. (Department of Business Economics / Marketing Section, Erasmus School of Economics, Erasmus University Rotterdam); Herings, P. Jean-Jacques (Department of Economics, School of Business and Economics, Maastricht University)
    Abstract: Network formation constitutes an important part of many social and economic processes, but relatively little is known about how individuals make their linking decisions in networks. This article provides an experimental investigation of behavioral effects in individual decisions of network formation. Our findings demonstrate that the inherent complexity of the network setting makes individuals’ choices systematically less payoff-guided and also strongly reduces their social orientation. Furthermore, we show that specific network complexity features aggravate the former effect. These behavioral effects have important implications for researchers and managers working in areas that involve network formation.
    Keywords: network formation; individual decision making; behavioral effects; network complexity; payoff orientation; social preferences; choice experiments; mixed logit
    JEL: A14 C91 D85
    Date: 2010–05
  5. By: Sebastian J. Goerg (Max Planck Institute for Research on Collective Goods, Bonn); Gari Walkowitz (Department of Management, University of Cologne)
    Abstract: In this experimental study, involving subjects from Abu-Dis (West Bank), Chengdu (China), Helsinki (Finland), and Jerusalem (Israel), we test for a presentation bias in a two-person cooperation game. In the positive frame of the game, a transfer creates a positive externality for the opposite player, and in the negative frame, a negative one. Subjects in Abu-Dis and Chengdu show a substantially higher cooperation level in the positive externality treatment. In Helsinki and Jerusalem, no framing effect is observed. These findings are also reflected in associated first-order beliefs. We argue that comparisons across subject-pools might lead to only partially meaningful and opposed conclusions if only one treatment condition is evaluated. We therefore suggest a complementary application and consideration of different presentations of identical decision problems within (cross-cultural) research on subject-pool differences.
    Keywords: framing of decision problems, methodology, subject-pool differences
    JEL: A13 C72 C91 F51 Z13
    Date: 2010–06
  6. By: Matthias Sutter; Francesco Feri; Martin G. Kocher; Peter Martinsson; Katarina Nordblom; Daniela Rützler
    Abstract: Social preferences have been shown to be an important determinant of economic decision making for many adults. We present a large-scale experiment with 883 children and adolescents, aged eight to seventeen years. Participants make decisions in eight simple, one-shot allocation tasks, allowing us to study the distribution of social preference types across age and across gender. Our results show that when children and teenagers grow older, inequality aversion becomes a gradually less prominent motivating force of allocation decisions. At the same time, efficiency concerns increase in importance for boys, and maximin-preferences turn more important in shaping decisions of girls.
    Keywords: Social preferences, children, age, gender, experiment
    JEL: C91 D63 D64
    Date: 2010–06
  7. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: In their majority, public international lawyers postulate that for a new rule of customary law to originate, two conditions must be fulfilled: there must be consistent practice, and it must be shown that this practice is motivated by the belief that such behaviour is required in law. Maurice Mendelson (Recueil des Cours 272 (1998) 155) has challenged this view. He believes that the majority view ignores the fundamentally incomplete nature of public international law. He claims that the new rule emerges because mere practice leads to convergent expectations. This paper uses data from student experiments with a linear public good to show that behaviour con-verges even absent verbal communication; that convergence is guided by mean contributions in the previous round, which serve as an implicit norm; that freeriding on this implicit norm is re-garded as illegitimate; that cooperation can be stabilised at a high level if “reprisals” are permitted. Hence the mechanism of norm formation proposed by Maurice Mendelson is fully borne out by the experimental data.
    Keywords: experiment, customary international law, opinio iuris, linear public good
    JEL: H41 K33 D23 C91 F53
    Date: 2010–04
  8. By: Matthias Sutter; Daniela Rützler
    Abstract: We study gender differences in the willingness to compete in a large-scale experiment with 1,035 children and teenagers, aged three to eighteen years. Using an easy math task for children older than eight years and a running task for the younger ones we find that boys are much more likely to enter a tournament than girls across the whole age spectrum considered here. This gender gap is observed already with three-year olds, indicating that gender differences in competitiveness emerge very early in life. The gap is robust to controlling for gender differences in risk attitudes and overconfidence.
    Keywords: Competition, gender gap, experiment, children, teenagers
    JEL: C91
    Date: 2010–06
  9. By: Javier G. Polavieja (IMDEA)
    Abstract: Gender-differences in post-schooling skill investments play a central role in stratification processes.Yet little research has been devoted to explaining how these differences come about. This paperhelps to fill this gap by proposing and testing a job-investment model with social-interaction effectsthat melds substantive ideas of sociology and economics. Firms use strategic compensation profilesin order to protect their job-specific skill investments and this shifts the weight of the investmentdecision to the supply side. Employees consider the tenure-reward profiles of different job-specificinvestment options and chose rationally on the basis of their expected survival probabilities in eachof them. Given uncertainty, actors are likely to inform their job-survival expectations by observingtheir social context. Three different forms of social influence are distinguished: social-learning,social norms and role identification. It is further argued that social influences on job-survivalexpectations can be identified empirically by blocking individuals\' work and family preferences.Several hypotheses are derived and tested to a subsample of approximately 2,700 young singlewage-earners nested in 261 different European regions and 24 different European countries.Results show that young women\'s job-investment decisions are significantly correlated with 1) thesocial visibility of women in highly specialized jobs in the preceding generation; 2) the proportionof men who do housework in their potential marriage markets, and 3) the existing fertility norms.
    Keywords: gender;job-specific investments;social interactions;strategic compensation;social learning;social norms;role identification;prefrences;european social survey
    JEL: D8 D13 J10 J16 J22 J24 M52 M53 Z10 Z13
    Date: 2010–06–15

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