nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2010‒11‒20
fifteen papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Punishment and cooperation: the "old" theory By Ortona, Guido
  2. BSocial preferences during childhood and the role of gender and age – An experiment in Austria and Sweden By Peter Martinsson; Katarina Nordblom; Daniela Rützler; Matthias Sutter
  3. The Truth, the Whole Truth, and Nothing but the Truth A Multiple Country Test of an Oath Script By Fredrik Carlsson; Mitesh Kataria; Alan Krupnick; Elina Lampi; Asa Löfgren; Ping Qin; Thomas Sterner; Susie Chung
  4. Moral Judgments in Social Dilemmas: How Bad is Free Riding? By Robin P. Cubitt; Michalis Drouvelis; Simon Gaechter; Ruslan Kabalin
  5. Does consistency predict accuracy of beliefs?: Economists surveyed about PSA By Berg, Nathan; Biele, Guido; Gigerenzer, Gerd
  6. Inconsistency Pays?: Time-inconsistent subjects and EU violators earn more By Berg, Nathan; Eckel, Catherine; Johnson, Cathleen
  7. Visibility of Contributions and Cost of Information: An Experiment on Public Goods By Anya Savikhin; Roman Sheremeta
  9. Role Induced Bias in Court: An Experimental Analysis By Andreas Glöckner; Christoph Engel
  10. Do I really want to know? A cognitive dissonance-based explanation of other-regarding behavior By Astrid Matthey; Tobias Regner
  11. How does investor sentiment affect stock market crises? Evidence from panel data By M. Zouaoui; G. Nouyrigat; F. Beer
  12. ARE GOOD-LOOKING PEOPLE MORE EMPLOYABLE? By Bradley J. Ruffle; Ze’ev Shtudiner
  13. Does the Endowment of Contributors Make a Difference in Threshold Public Good Games? By Federica Alberti; Edward J. Cartwright
  14. The message framing of health communications : how to elicit higher intention to get an annual pap test ? By L. Balbo
  15. The perception of small crime By Douhou, S.; Magnus, J.R.; Soest, A.H.O. van

  1. By: Ortona, Guido
    Abstract: The so-called problem of the spontaneous cooperation has been substantially resolved through a mix of biology and economics. All the elements of the solution had been discovered by 1980s, yet they went somehow unnoticed. This "old" solution is the subject of this review. Its most relevant feature was the discovery that the adoption of punishment as an equilibrium-enforcing device makes a cooperative solution in a repeated prisoner's dilemma possible. This opened the way to a biological (or anthropological) explanation otherwise logically inconsistent.
    Keywords: norms, cooperation, punishment
    JEL: A12
    Date: 2010–11
  2. By: Peter Martinsson; Katarina Nordblom; Daniela Rützler; Matthias Sutter
    Abstract: We examine social preferences of Swedish and Austrian children and adolescents using the experimental design of Charness and Rabin (2002). We find that difference aversion decreases while social-welfare preferences increase with age.
    Keywords: social preferences; children; adolescents; distributional experiment; Austria; Sweden.
    JEL: C91 D63 D64
    Date: 2010–11
  3. By: Fredrik Carlsson (Department of Economics, University of Gothenburg); Mitesh Kataria (Max Planck Institute of Economics, Jena); Alan Krupnick (Resources for the Future, Washington); Elina Lampi (Department of Economics, University of Gothenburg); Asa Löfgren (Department of Economics, University of Gothenburg); Ping Qin (Peking University, College of Environmental Sciences and Engineering); Thomas Sterner (Department of Economics, University of Gothenburg); Susie Chung (Resources for the Future, Washington)
    Abstract: Hypothetical bias is one of the main issues bedeviling the field of nonmarket valuation. The general criticism is that survey responses reflect how people would like to behave, rather than how they actually behave. In our study of climate change and emissions reductions, we took advantage of the increasing bulk of evidence from psychology and economics that addresses the effects of making promises, in order to investigate the effect of an oath script in a contingent valuation survey. The survey was conducted in Sweden and China, and its results indicate that an oath script has significant effects on respondent behavior in answering willingness-to-pay (WTP) questions, some of which vary by country. In both countries, the share of zero WTP responses and extremely high WTP responses decreases when an oath script is used, which also results in lower variance. In China, the oath script also reduces the average WTP, cutting it by half in certain instances. We also found that the oath script has different impacts on various respondent groups. For example, without the oath script, Communist party members in China are more likely than others to have a positive WTP for emissions reductions, but with the oath script, there is no longer any difference between the groups.
    Keywords: Oath script, hypothetical bias, willingness to pay
    JEL: D61 Q5
    Date: 2010–11–09
  4. By: Robin P. Cubitt (University of Nottingham); Michalis Drouvelis (University of Birmingham); Simon Gaechter (University of Nottingham); Ruslan Kabalin (University of Lancaster)
    Abstract: In the last thirty years, economists and other social scientists have investigated people’s normative views on distributive justice. Here we study people’s normative views in social dilemmas, which underlie many situations of economic and social significance. Using insights from moral philosophy and psychology we provide an analysis of the morality of free riding. We use experimental survey methods to investigate people’s moral judgments empirically. We vary others’ contributions, the framing (“give-some” vs. “take-some”) and whether contributions are simultaneous or sequential. We find that moral judgments of a free rider depend strongly on others’ behaviour; and that failing to give is condemned more strongly than withdrawing all support.
    Keywords: moral judgments, moral psychology, framing effects, public goods experiments, free riding
    Date: 2010–10
  5. By: Berg, Nathan; Biele, Guido; Gigerenzer, Gerd
    Abstract: Subjective beliefs and behavior regarding the Prostate Specific Antigen (PSA) test for prostate cancer were surveyed among attendees of the 2006 meeting of the American Economic Association. Logical inconsistency was measured in percentage deviations from a restriction imposed by Bayes’ Rule on pairs of conditional beliefs. Economists with inconsistent beliefs tended to be more accurate than average, and consistent Bayesians were substantially less accurate. Within a loss function framework, we look for and cannot find evidence that inconsistent beliefs cause economic losses. Subjective beliefs about cancer risks do not predict PSA testing decisions, but social influences do.
    Keywords: logical consistency; predictive accuracy; elicitation; non-Bayesian; ecological rationality
    Date: 2010
  6. By: Berg, Nathan; Eckel, Catherine; Johnson, Cathleen
    Abstract: Experimental choice data from 881 subjects based on 40 time-tradeoff items and 32 risky choice items reveal that most subjects are time-inconsistent and most violate the axioms of expected utility theory. These inconsistencies cannot be explained by well-known theories of behavioral inconsistency, such as hyperbolic discounting and cumulative prospect theory. Aggregating expected payoffs and the risk associated with each subjects’ 72 choice items, the statistical links between inconsistency and total payoffs are reported. Time-inconsistent subjects and those who violate expected utility theory both earn substantially higher expected payoffs, and these positive associations survive largely undiminished when included together in total payoff regressions. Consistent subjects earn lower than average payoffs because most of them are consistently impatient or consistently risk averse. Positive payoffs from inconsistency cannot, however, be fully explained by greater risk taking. Controlling for the total risk of each subject’s risk choices as well as for socio-economic differences among subjects, time inconsistent subjects earn significantly more money, in statistical and economic terms. So do expected utility violators. Positive returns to inconsistency extend outside the domain in which inconsistencies occurs, with time-inconsistent subjects earning more on risky choice items, and expected utility violators earning more on time-tradeoff items. The results seem to call into question whether axioms of internal consistency—and violations of these axioms that behavioral economists frequently focus on—are economically relevant criteria for evaluating the quality of decision making in human populations.
    Keywords: behavioral economics; hyperbolic discounting; hypobolic; normative; coherence; correspondence; consistency; irrationality; rationality
    Date: 2010
  7. By: Anya Savikhin (Becker Center on Chicago Price Theory, The University of Chicago); Roman Sheremeta (Argyros School of Business and Economics, Chapman University)
    Abstract: We experimentally investigate the impact of visibility of information about contributors on contributions in the public goods game. We systematically consider several treatments that are similar to a wide range of situations in practice. First, we vary the cost of viewing identifiable information about contributors. Second, we vary recognizing all, top or bottom contributors. We find that recognizing all contributors significantly increases contributions relative to the baseline. Recognizing only the top contributors is not significantly different from not recognizing contributors, but recognizing only the bottom contributors is as effective as recognizing all contributors. When viewing information about contributors is costly, there is no significant difference in contributions as compared to the case where all contributors are displayed by default. This effect holds even though the identities of contributors are viewed less than ten percent of the time.
    Keywords: public-goods, information, competition
    JEL: C72 C91
    Date: 2010
  8. By: Maria De Poala; Vincenzo Scoppa (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: We carry out a randomized experiment involving undergraduate students enrolled at an Italian University attending an introductory economics class to evaluate the impact on achievement of examination frequency and interim feedback provision. Students in the treated group were allowed to undertake an intermediate exam and were informed about the results obtained, while students in the control group could only take the final exam. It emerges that students undertaking the intermediate exam perform better both in terms of probability of passing the exams and of grades obtained. High ability students appear to benefit more from the treatment. The experiment design allows us to disentangle “workload division or commitment” effects from “feedback provision” effects. We find that the estimated treatment impact is due exclusively to the first effect, while the feedback provision has no positive effect on performance. Finally, the better performance of treated students in targeted examinations seems not to be obtained at the expenses of results earned in other examinations.
    Keywords: Education Production Function, Student Effort, Work Organization, Feedback Provision, Higher Education, Randomized Evaluation
    JEL: I21 J31 D82
    Date: 2010–11
  9. By: Andreas Glöckner (Max Planck Institute for Research on Collective Goods, Bonn); Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Criminal procedure is organized as a tournament with predefined roles. We show that assuming the role of a defense counsel or prosecutor leads to role induced bias even if people are highly motivated to give unbiased judgments. In line with parallel constraint satisfaction models for legal decision making, findings indicate that role induced bias is driven by coherence effects (Simon, 2004), that is, systematic information distortions in support of the favored option. These distortions seem to stabilize interpretations, and people do not correct for this bias. Implications for legal procedure are briefly discussed.
    Date: 2010–09
  10. By: Astrid Matthey (Max Planck Institute of Economics, Jena, Germany); Tobias Regner (Max Planck Institute of Economics, Jena, Germany)
    Abstract: We investigate to what extent genuine social preferences can explain observed other-regarding behavior. In a dictator game variant subjects can choose whether to learn about the consequences of their choice for the receiver. We find that a majority of subjects showing other-regarding behavior when the payoffs of the receiver are known, choose to ignore these consequences if possible. This behavior is inconsistent with preferences about outcomes. Other-regarding behavior may also be explained by avoiding cognitive dissonance as in Konow (2000). Our experiment's choice data is in line with this approach. In addition, we successfully relate individual behavior to proxies for cognitive dissonance.
    Keywords: social preferences, other-regarding behavior, experiments, social dilemma, cognitive dissonance
    JEL: C72 D01 C91 D80
    Date: 2010–11–11
  11. By: M. Zouaoui (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II); G. Nouyrigat (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II); F. Beer (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II)
    Abstract: We test the impact of investor sentiment on a panel of international stock markets. Specifically, we examine the influence of investor sentiment on the probability of stock market crises. We find that investor sentiment increases the probability of occurrence of stock market crises within a one-year horizon. The impact of investor sentiment on stock markets is more pronounced in countries that are culturally more prone to herd-like behavior and overreaction or in countries with low institutional involvement. Results also suggest that investors' sentiment is not a reliable predictor of stock market reversal points
    Keywords: Investor sentiment ; stock market crises ; reversal points
    Date: 2010
  12. By: Bradley J. Ruffle (Department of Economics, Ben-Gurion University of the Negev, Israel); Ze’ev Shtudiner (Department of Economics, Ariel University Center, Israel)
    Abstract: Job applicants in Europe and in Israel increasingly imbed a headshot of them- selves in the top corner of their CVs. We sent 5312 CVs in pairs to 2656 advertised job open- ings. In each pair, one CV was without a picture while the second, otherwise almost identical CV contained a picture of either an attractive male/female or a plain-looking male/female. Employer callbacks to attractive men are significantly higher than to men with no picture and to plain-looking men, nearly doubling the latter group. Strikingly, attractive women do not enjoy the same beauty premium. In fact, women with no picture have a significantly higher rate of callbacks than attractive or plain-looking women. We explore a number of explanations and provide evidence that female jealousy of attractive women in the workplace is a primary reason for the punishment of attractive women.
    Keywords: beauty, discrimination, experimental economics.
    JEL: C93 J71
    Date: 2010
  13. By: Federica Alberti; Edward J. Cartwright
    Abstract: We investigate experimentally whether the endowment of potential contributors changes the success rate of providing threshold public goods. We find a U shaped relationship in which the success rate is relatively high when the endowment is either relatively small or large. We also find an inverted U shaped relationship in terms of the variance of contributions. This suggests that people find it hardest to coordinate and provide threshold public goods when endowments are of ‘intermediate’ size. By this we mean that the endowment is small enough that people do need to contribute relatively a lot to fund the good, but is also large enough that no one person is critical in providing the good. Coordinating is difficult in this case because there is an incentive to free ride and the possibility to do so creating a conflict of interest.
    Keywords: Public Good; Threshold; Endowment
    JEL: C72 H41
    Date: 2010–10
  14. By: L. Balbo (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre Mendès-France - Grenoble II)
    Abstract: In an online experiment, women (N=209) were randomly exposed to a pamphlet promoting Pap test. The pamphlet was either gain- or loss-framed and emphasized either the prevention or detection function of the Pap. We hypothesized that the fit between framing and function (i.e. gain-prevention and loss-detection) will result in higher intention to follow the recommendation. Moreover, we predicted that under the non-fit condition (i.e. gain-detection and loss-prevention); people higher in perceived vulnerability will have higher intention to follow the recommendation. Analyses revealed that our hypotheses were partially supported
    Keywords: Marketing of health, health communication, message framing
    Date: 2010
  15. By: Douhou, S.; Magnus, J.R.; Soest, A.H.O. van (Tilburg University, Center for Economic Research)
    Abstract: Violations of social norms can be costly to society and they are, in the case of large crimes, followed by prosecution. Minor misbehaviors — small crimes — do not usually result in legal proceedings. Although the economic consequences of a single small crime can be low, such crimes generate substantial losses in the aggregate. In this paper we measure perceptions of incorrect behavior or ‘small crime’, based on a questionnaire administered to a large representative sample from the Dutch population. In the questionnaire we ask the respondents to rate the severity and justifiability of a number of small crimes. We present short questions that only state the nature of the small crime, as well as vignette questions, describing in detail the fictitious person committing the small crime and other factors related to the circumstances in which the small crime is committed. We find that the perceived severity of small crimes varies systematically with characteristics of the respondent as well as of the person committing the crime. Small crimes are considered less serious if committed by someone with lower income. Also, the association between respondent characteristics and perceived seriousness changes if the respondents are given more information about the offender and the circumstances of the offense.
    Keywords: Crime seriousness;Social norms;Vignettes
    JEL: K42 K14
    Date: 2010

This nep-cbe issue is ©2010 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.