nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2011‒01‒30
nine papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Organizational identities and institutions: Dynamics of the organizational core as a question of path dependence By Kirchner, Stefan
  2. Modeling Routines and Organizational Learning. A Discussion of the State-of-the-Art By Giovanni Dosi; Marco Faillo; Luigi Marengo; Daniele Moschella
  3. Meaning and function in the theory of consumer choice: dual selves in evolving networks By Herrmann-Pillath, Carsten
  4. Cognitive abilities and behavior in strategic-form games.* By Ralph-C. Bayer; Ludovic Renou
  5. Group Identity and Relation-Specific Investment: An Experimental Investigation By Hodaka Morita; Maroš Servátka
  6. Dominance and Submission: Social Status Biases Economic Sanctions By von Essen, Emma; Ranehill, Eva
  7. Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education By Hryshko, Dmytro; Luengo-Prado, Maria Jose; Sorensen, Bent
  8. Leadership in Public Good Provision: a Timing Game Perspective By Grégoire Rota-Graziosi; Hubert Kempf
  9. Sketching Envy from Philosophy to Psychology By Jérémy Celse

  1. By: Kirchner, Stefan
    Abstract: Organizational identity is a mechanism that mediates between external pressures and internal demands on continuity. The concept of organizational identity is considered to be central to solving the research problem addressed of combining the effects of an institutional environment with the continuity of organizational core structures. In the course of feedback processes between organizational identity and activities, a path dependent development of organizational identity can be triggered. In this situation, organizations are restrained in their ability to adapt core structures to changing environmental conditions. -- Die Organisationsidentität beschreibt einen Mechanismus, der zwischen externem Druck und internen Anforderungen an Kontinuität vermittelt. Das Konzept der Organisationsidentität wird als zentral angesehen, um die gestellte Forschungsfrage nach der Verbindung zwischen institutioneller Umwelt und der Kontinuität von Kernbestandteilen der Organisation zu klären. Infolge von Feedbackprozessen zwischen der Organisationsidentität und den Aktivitäten in einer Organisation kann eine pfadabhängige Entwicklung der Organisationsidentität ausgelöst werden. In einer solchen Situation sind Organisationen erheblich in ihrer Fähigkeit beeinträchtigt, Kernbestandteile an veränderte Umweltbedingungen anzupassen.
    Date: 2010
  2. By: Giovanni Dosi; Marco Faillo; Luigi Marengo; Daniele Moschella
    Abstract: This paper presents a critical overview of some recent attempts at building formal models of organizations as information-processing and problem-solving entities. We distinguish between two classes of models according to two distinct objects of analysis. The first class includes models mainly addressing information processing and learning; the second class includes models focusing upon the relationship between the division of cognitive labor and search process in some problem-solving space. The results begin to highlight important comparative properties regarding the impact on problem-solving efficiency and learning of different forms of hierarchical governance, the dangers of lock-in associated with specific forms of adaptive learning, the relative role of "online" vs. "offline" learning, the impact of the "cognitive maps" which organizations embody, the possible trade-offs between accuracy and speed of convergence associated with different "decomposition schemes", the (ambiguous) role of organizational memory in changing environments. We argue that these are important formal tools towards the development of a comparative institutional analysis focusing on the distinct properties of different forms of organization and accumulation of knowledge
    Keywords: Information processing, Problem-solving, Organizational structure
    JEL: D23 D83 L22
    Date: 2010–01–24
  3. By: Herrmann-Pillath, Carsten
    Abstract: Building on the philosophy of Charles Sanders Peirce, recent advances in biosemiotics have resulted into a concise framework for the analysis of signs in living systems. This paper explores the potential for economics and shows how biosemiotics can integrate two different research agendas, each of which are also connected with biological theories, namely neuroeconomics and the theory of networks. I introduce the triadic conceptual framework established by Peirce which distinguishes between object, sign and interpretant and the corresponding causal forces in evolving hierarchical systems. This framework is used to systematize recent results of neuroeconomics in the form of the dual selves approach, following early contributions of James Coleman, partitioning the individual into the acting self and the object self. This distinction implies that there is a fundamental information asymmetry between the two selves. Against this background, the semeiotic process is an information generating and processing dynamics, which is driven by the internal selection of classificatory schemes of actions chosen and the population level dynamics of sign selection, with mimetic behavior as a driver. This can be further analyzed by means of the theory of signal selection. A central insight is that the internal information gap between acting self and object self implies a systematic role of sign processing in social networks for any kind of consumer choice. I exemplify my approach with empirical references to food consumption as a most universal and simple form of consumer choice. --
    Keywords: consumer choice,biosemiotics,dual selves,networks,signal selection
    JEL: B52 D80 Q57
    Date: 2010
  4. By: Ralph-C. Bayer; Ludovic Renou
    Abstract: This paper investigates the relation between cognitive abilities and behavior in strategic-form games with the help of a novel experiment. The design allows us first to measure the cognitive abilities of subjects without confound and then to evaluate their impact on behaviour in strategic-from games. We find that subjects with better cognitive abilities show more sophisticated behavior and make better use of information on cognitive abilities and preferences of opponents. Although we do not find evidence for Nash behavior, observed behaviour is remarkably sophisticated, as almost 80% of subjects behave near optimal and outperform Nash behavior with respect to expected pay-offs.
    Keywords: cognitive ability; behaviours; strategic-form games; experiments; preferences; sophistication
    JEL: C70 C91
    Date: 2011–01
  5. By: Hodaka Morita; Maroš Servátka (University of Canterbury)
    Abstract: The hold-up problem has played a central role in the study of firm boundaries that originated with the pathbreaking essay by Coase (1937). This paper studies a previously unexplored mechanism through which integration could resolve the hold-up problem. Based on Tajfel and Turner’s (1979) social identification theory, we conjecture that team membership increases the degree of altruism towards another team member, and this in turn helps resolving the hold-up problem. We test this conjecture in a laboratory experiment. Our subjects are randomly divided into two teams and given their respective team uniforms to wear. In Task 1 they answer two trivia questions and can use a chat program to help their team members. In Task 2 the subjects play a standard hold-up game with a member of their own team (representing integration) or with a member of the other team (non-integration). We find that team membership significantly increases the investment rate as well as the share of the surplus offered back to the investor and thus mitigates the hold-up problem.
    Keywords: altruism; experiment; hold-up problem; identity; integration; other-regarding preferences; relation-specific investment; team membership
    JEL: C91 D20 L20
    Date: 2011–01–19
  6. By: von Essen, Emma (Department of Economics, Stockholm university); Ranehill, Eva (Dept. of Economics, Stockholm School of Economics)
    Abstract: Social hierarchy is persistent in all almost all societies. Social norms and their enforcement are part of sustaining hierarchical systems. This paper combines social status and norm enforcement, by introducing status in a dictator game with third party punishment. Status is conveyed by surname; half of the third parties face dictators with a noble name and half face dictators with a common name. Receivers all have common names. We find that social status has an impact on behavior. Our results indicate that low status men are punished to a greater extent than low status women, high status men, or high status women. Interestingly, discrimination occurs only in male to male interaction. For offers below half, or almost half of the allocated resource, male third parties punish male dictators with common names almost twice as much as their noble counterparts. We find no support for female discrimination. This result suggests that social status has important implications for men’s decisions to use economic punishment, and that this holds true in situations where reputation or strategic concerns have no importance.
    Keywords: Status; punishment; discrimination
    JEL: C91 D63
    Date: 2011–01–11
  7. By: Hryshko, Dmytro (University of Alberta, Department of Economics); Luengo-Prado, Maria Jose (Northeastern University); Sorensen, Bent (University of Houston)
    Abstract: We study the determinants of individual attitudes towards risk and,in particular,why some individuals exhibit extremely high risk aversion. Using data from the Panel Study of Income Dynamics we find that policy induced increases in high school graduation rates lead to significantly fewer individuals being highly risk averse in the next generation. Other significant determinants of risk aversion are age, sex, and parents' risk aversion. We verify that risk aversion matters for economic behavior in that it predicts individuals' volatility of income.
    Keywords: schooling reforms; risk attitudes; intergenerational persistence
    JEL: E21 I29
    Date: 2011–01–01
  8. By: Grégoire Rota-Graziosi (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Hubert Kempf (Paris School of Economics - Université Panthéon-Sorbonne - Paris I)
    Abstract: We address in this paper the issue of leadership when two governments provide public goods to their constituencies with cross border externalities as both public goods are valued by consumers in both countries. We study a timing game between two different countries: before providing public goods, the two policymakers non-cooperatively decide their preferred sequence of moves. We establish conditions under which a first- or second-mover advantage emerges for each country, highlighting the role of spillovers and the strategic complementarity or substitutability of public goods. As a result we are able to prove that there is no leader when, for both countries, public goods are substitutable. When public goods are complements for both countries, both countries may emerge as the leader in the game. Hence a coordination issue arises. We use the notion of risk-dominance to select the leading government. Lastly, in the mixed case, the government for whom public goods are substitutable becomes the leader.
    Keywords: public good;Spillovers;Subgame Perfect Equilibrium;Strategic Complements;Stackelberg;Pareto Dominance;Risk Dominance
    Date: 2011–01–18
  9. By: Jérémy Celse
    Abstract: What is envy and how can we define it so as to incorporate the emotion in economic models? Through referring on philosophical and psychological researches, this paper aims at deriving a stable and concise definition of the emotion of envy. Philosophy allows us to define the elements that form envy and to disentangle the latter from other emotions. Researches on psychology help us in understanding the affective and behavioural responses of the emotion. We conclude that envy arises from any unflattering social comparison that threatens individual self-evaluation and includes a depressive and a hostile dimension. We also discuss whether the behaviour induced by envy results in destructive or in emulative actions. We will disentangle the elements that might explain why envy does not always exert the subject to adopt a hostile attitude toward the envied.
    Date: 2010

This nep-cbe issue is ©2011 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.
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