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on Cognitive and Behavioural Economics |
| By: | Jan-Erik Lönnqvist (Faculty of Behavioural Sciences, University of Helsinki, Finland); Markku Verkasalo (Faculty of Behavioural Sciences, University of Helsinki, Finland); Gari Walkowitz (Department of Management, University of Cologne, Germany); Philipp C. Wichardt (Institute of Economic Theory 3, University of Bonn, Germany) |
| Abstract: | This paper compares two prominent empirical measures of individual risk attitudes - the Holt and Laury (2002) lottery-choice task and the multi-item questionnaire advocated by Dohmen, Falk, Huffman, Schupp, Sunde and Wagner (forthcoming) - with respect to (a) their within-subject stability over time (one year) and (b) their correlation with actual risk-taking behaviour in the lab - here the amount sent in a trust game (Berg, Dickaut, McCabe, 1995). As it turns out, the measures themselves are uncorrelated (both times) and, most importantly, only the questionnaire measure exhibits test-re-test stability (Ï = .78), while virtually no such stability is found in the lottery-choice task. In addition, only the questionnaire measure shows the expected correlations with a Big Five personality measure and is correlated with actual risk-taking behaviour. The results suggest that the questionnaire measure is a better measure of individual risk attitudes than the lottery-choice task. Moreover, with respect to trust, the high re-test stability of trust transfers (Ï = .70) further supports the conjecture that trusting behaviour indeed has a component which itself is a stable individual characteristic (Glaeser, Laibson, Scheinkman and Soutter, 2000). |
| Keywords: | Risk Attitudes, Trust, Personality, Lab Experiments |
| JEL: | D81 C91 Z10 |
| Date: | 2011–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:02-03&r=cbe |
| By: | Fehr, Ernst (University of Zurich); Rützler, Daniela (University of Innsbruck); Sutter, Matthias (University of Innsbruck) |
| Abstract: | We study how the distribution of other-regarding preferences develops with age. Based on a set of allocation choices, we can classify each of 717 subjects, aged 8 to 17 years, as either egalitarian, altruistic, or spiteful. Varying the allocation recipient as either an in-group or an out-group member, we can also study how parochialism develops with age. We find a strong decrease in spitefulness with increasing age. Egalitarianism becomes less frequent, and altruism much more prominent, with age. Women are more frequently classified as egalitarian than men, and less often as altruistic. Parochialism first becomes significant in the teenage years. |
| Keywords: | other-regarding preferences, egalitarianism, altruism, spite, parochialism, experiments with children and adolescents |
| JEL: | C91 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5530&r=cbe |
| By: | Robin Cubitt (School of Economics, University of Nottingham); Robert Sugden (School of Economics, University of East Anglia) |
| Abstract: | The game-theoretic assumption of ‘common knowledge of rationality’ leads to paradoxes when rationality is represented in a Bayesian framework as cautious expected utility maximisation with independent beliefs (ICEU). We diagnose and resolve these paradoxes by presenting a new class of formal models of players’ reasoning, inspired by David Lewis’s account of common knowledge, in which the analogue of common knowledge is derivability in common reason. We show that such models can consistently incorporate any of a wide range of standards of decision-theoretic practical rationality. We investigate the implications arising when the standard of decision-theoretic rationality so assumed is ICEU. |
| Keywords: | Common reasoning; common knowledge; common knowledge of rationality; David Lewis; Bayesian models of games |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2011-01&r=cbe |
| By: | Axel Ockenfels; Peter Werner |
| Abstract: | We conduct an Internet dictator game experiment in collaboration with the popular German Sunday paper "Welt am Sonntag", employing a wider and more representative subject pool than standard laboratory experiments. Recipients either knew or did not know the size of the cake distributed by the dictator. We find that, in case of incomplete information, some dictators 'hide behind the small cake', supporting the notion that some agents' beliefs directly enter the social utility function. |
| Keywords: | dictator game, psychological games, incomplete information, newspaper experiment |
| Date: | 2011–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:kls:series:0051&r=cbe |
| By: | Rebecca Morton (Department of Politics, New York University); Jean-Robert Tyran (Department of Economics, University of Vienna); Erik Wengström (Department of Economics, University of Copenhagen) |
| Abstract: | We find that cognitive abilities, educational attainment, and some personality traits indirectly affect ideological preferences through changes in income. The effects of changes in personality traits on ideology directly and indirectly through income are in the same direction. However, the indirect effects of cognitive abilities and education often offset the direct effects of these variables on ideological preferences. That is, increases in cognitive abilities and education significantly increase income, which reduces the tendency of individuals to express leftist preferences. These indirect effects are in some cases sizeable relative to direct effects. The indirect effects of cognitive abilities through income overwhelm the direct effects such that increasing IQ increases rightwing preferences. For ideological preferences over economic policy the indirect effects of advanced education also overwhelm the direct effects, such that individuals with higher education are more likely to express rightwing preferences than those with lower education. |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1108&r=cbe |
| By: | Klein, Daniel (George Mason University, Ratio Institute); Pan, Xiaofei (George Mason University); Houser, Daniel (George Mason University); Schwarz, Gonzalo (George Mason University) |
| Abstract: | The idea of political community is appealing on a gut-level. Hayek suggested that certain genes and instincts still dispose us toward the ethos and mentality of the hunter-gatherer band, and that modern forms of political collectivism have, in part, been atavistic reassertions of such tendencies. Picking up on Hayek, Klein (2005) has suggested a combination of yearnings: 1) a yearning for coordinated sentiment (like Smithian sympathy); and 2) a yearning that the sentiment encompass the whole group. This paper reports on an experiment designed to explore the demand for encompassment by having subjects sing together. In each trial, one person in the room was designated not to sing unless every one of the others in the room had made a payment sufficient so as to have that person sing. Subjects chose to sacrifice money to achieve encompassment 47.4 percent of the time, with 59.6 percent of the subjects doing so in at least one trial. An exit questionnaire showed that subjects’ chief reason for making such a sacrifice was a belief that the singing would be more enjoyable if it encompassed the whole group, and reported enjoyment is significantly higher with encompassment. We discuss the experiment as a parable for a penchant toward political collectivism. |
| Keywords: | Encompassment; political psychology; Hayek; the people’s romance |
| JEL: | A13 H89 Z10 |
| Date: | 2011–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0163&r=cbe |
| By: | Marco Mantovani; Georg Kirchsteiger; Ana Mauleon; Vincent Vannetelbosch |
| Abstract: | Pairwise stability (Jackson and Wolinsky, 1996) is the standard stability concept in network formation. It assumes myopic behavior of the agents in the sense that they do not forecast how others might react to their actions. Assuming that agents are farsighted, related stability concepts have been proposed. We design a simple network formation experiment to test these theories. Our results provide support for farsighted stability and strongly reject the idea of myopic behavior. |
| Keywords: | Network fomation; Experiment; Myopic and farsighted stability |
| JEL: | D85 C91 C92 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/76051&r=cbe |
| By: | Steven J. Humphrey (Fachbereich Wirtschaftwissenschaften, Universitaet Osnabrueck); Elke Renner (School of Economics, University of Nottingham) |
| Abstract: | We use an experimental lottery choice task and public goods game to examine if responsibility for the financial welfare of others affects decisionmaking behaviour in two different types of decision environments. We find no evidence that responsibility affects individual risk preferences. Responsibility does, however, crowd-out cooperation in a public goods game. |
| Keywords: | responsibility, risk attitudes, social preferences, public goods game |
| JEL: | C72 C91 D74 H41 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2011-02&r=cbe |
| By: | Leibbrandt, Andreas (Department of Economics, University of Chicago); López-Pérez, Raúl (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.) |
| Abstract: | We design experiments to study the extent to which individuals differ in their motivations behind costly punishment and rewarding. Our findings qualify existing evidence and suggest that the largest fraction of players is motivated by a mixture of both inequity-aversion and reciprocity, while smaller fractions are primarily motivated by pure inequity-aversion and pure reciprocity. These findings provide new insights into the literature on other-regarding preferences and may help to reconcile important phenomena reported in the experimental literature on punishment and reward. |
| Keywords: | Heterogeneity; inequity aversion; monetary punishment/reward; reciprocity; social norms. |
| JEL: | C70 C91 D63 D74 Z13 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:uam:wpaper:201101&r=cbe |