nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2011‒05‒07
ten papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Are nurses more altruistic than real estate brokers? By Jacobsen, Karin; H. Eika, Kari; Helland, Leif; Thori Lind, Jo; Nyborg, Karine
  2. Learning to trust strangers: an evolutionary perspective By Pierre Courtois; Tarik Tazdaït
  3. Transcending the Limitations of Environmental Economic Framing: Toward a Metaeconomics of Environmental Choice By Czap, Natalia V.; Czap, Hans J.; Khachaturyan, Marianna; Lynne, Gary D.; Burbach, Mark E.
  4. Smiley or Frowney: The effect of emotions and framing in a downstream water pollution game By Czap, Hans; Czap, Natalia; Khachaturyan, Marianna; Burbach, Mark; Lynne, Gary
  5. Carrots without Bite: On the Ineffectiveness of 'Rewards' in sustaining Cooperation in Social Dilemmas By Stoop, Jan; van Soest, Daan; Vyrastekova, Jana
  6. Satisfaction and adaptation in voting behavior: an empirical exploration By Martorana, Marco; Mazza, Isidoro
  7. The Willingness to Pay-Willingness to Accept Gap Revisited: The Role of Emotions and Moral Satisfaction By Biel, Anders; Johansson-Stenman, Olof; Nilsson, Andreas
  8. Negative recency, randomization device choice, and reduction of compound lotteries By Kaivanto, Kim; Kroll, Eike B.
  9. Evidence of homo economicus? Findings from experiment on evolutionary prisoners' dilemma game By Pradiptyo, Rimawan; Sasmitasiwi, Banoon; Sahadewo, Gumilang Aryo
  10. Subsidy Incidence in Agricultural Land Markets: An Experimental Investigation By Nagler, Amy M.; Menkhaus, Dale J.; Bastian, Christopher; Ehmke, Mariah D.

  1. By: Jacobsen, Karin (Dept. of Economics, University of Oslo); H. Eika, Kari (The Royal Ministry of Health and Care Services); Helland, Leif (Department of Economics, BI Norwegian School of Management); Thori Lind, Jo (Dept. of Economics, University of Oslo); Nyborg, Karine (Dept. of Economics, University of Oslo)
    Abstract: We report results from a dictator game experiment with nurse students and real estate broker students as dictators, and Amnesty International as the recipient. Although brokers contributed substantial amounts, nurses contributed significantly more, on average 76 percent of their endowment. In a second part, subjects chose between a certain repetition of the experiment and a 50-50 chance of costly exit. About one third of the brokers and half of the nurses chose the exit option. While generosity was indeed higher among nurses, even when taking exits into account, the difference cannot readily be attributed to different degrees of altruism.
    Keywords: Dictator game; exit option; generosity; occupational differences
    JEL: D10 D64
    Date: 2011–04–28
  2. By: Pierre Courtois; Tarik Tazdaït
    Abstract: What if living in a relatively trustworthy society was sufficient to blindly trust strangers? In this paper we interpret generalized trust as a learning process and analyse the trust game paradox in light of the replicator dynamics. Given that trust inevitably implies doubts about others, we assume incomplete information and study the dynamics of trust in buyer-supplier purchase transactions. Considering a world made of “good” and “bad” suppliers, we show that the trust game admits a unique evolutionarily stable strategy: buyers may trust strangers if, on the whole, it is not too risky to do so. Examining the situation where some players may play, either as trustor or as trustee, we show that this result is robust.
    Date: 2011–02
  3. By: Czap, Natalia V.; Czap, Hans J.; Khachaturyan, Marianna; Lynne, Gary D.; Burbach, Mark E.
    Abstract: This paper further tests dual interest theory and the metaeconomics approach to environmental choice, recognizing a possible role for empathy-sympathy (the basis for an internalized, shared other-interest) in tempering and conditioning the more fundamental tendency to pursue self-interest. To test, we focus on rivers flowing through agricultural areas carrying sediments, chemicals, and fertilizers which are making their way into downstream rivers and lakes. We use data from a framed experiment. Farmers decide on the usage of conservation technology to lessen impacts on the water quality in downstream areas, which is more costly. The results confirm our hypotheses, demonstrating that upstream farmers who practice conservation are tempering profit maximization with empathy-based, environmentally conscious behavior that better serves the farmersâ own-interest, and thus also serves downstream users. Environmental economics models need to explicitly include empathy-sympathy and the moral-ethical context it produces, providing a more scientific basis for conservation policy and programs.
    Keywords: dual-interest model, metaeconomics, empathy, sympathy, selfism, environmental experiment, behavioral economics, water quality, conservation tillage, conservation policy, Environmental Economics and Policy, Institutional and Behavioral Economics, C9, D03, Q25, Q53, Q57.,
    Date: 2011
  4. By: Czap, Hans; Czap, Natalia; Khachaturyan, Marianna; Burbach, Mark; Lynne, Gary
    Abstract: Common-pool resources and other shared resources frequently suffer from overextraction/overuse and associated negative externalities. In this paper we design a framed laboratory experiment on downstream water pollution to investigate (a) the importance of framing in determining the behavior of upstreamers regarding the negative externalities, and (b) the potential of downstreamers to influence the choices of upstreamers using non-monetary sanctions and rewards, alleviating the need for intervention by the local governments and regulatory institutions. Our results show that framing has a significant impact on the behavior of subjects. Subjects behaved more profit-oriented in the self-interest framing and more egalitarian in the empathy framing. In addition, we show that nudging subjects to âwalk in the shoes of othersâ significantly increased empathetic behavior. Lastly, negative emotional feedback is a powerful tool for changing behavior of subjects towards more environmentally friendly and empathetic behavior. Interestingly, positive emotional feedback is counterproductive in that it instead decreases environmentally friendly and empathetic behavior. In general our results indicate that explicit emotional feedback, even though not expressed by everyone, works similarly to the implicit appeal to emotions through framing.
    Keywords: empathy framing, self-interest framing, emotions, water pollution, environmental experiment, reward and punishment., Environmental Economics and Policy, Institutional and Behavioral Economics, Land Economics/Use, C9, D03, Q25, Q53, Q57,
    Date: 2011
  5. By: Stoop, Jan; van Soest, Daan; Vyrastekova, Jana
    Abstract: Peer-to-peer sanctions increase cooperation in multi-person social dilemmas (Fehr & Gachter (2000)), but not when subjects have the option to retaliate (Nikiforakis (2008)). One-shot peer-to-peer rewards have been found to enhance efficiency too (Vyrastekova & van Soest (2008), Rand et al. (2009a)), but it is an open question whether the positive impact on cooperation is weakened or strengthened when we allow for counterrewarding. We examine the impact of possible reciprocity in rewarding on cooperation in a non-linear public bad game, and find that efficiency in the social dilemma is equally low as absent any reward options. We hypothesize that subjects are unwilling to sever mutually profitable bilateral exchanges of reward tokens to induce cooperation in the social dilemma, and identify the underlying mechanism by comparing behavior across three matching protocols.
    Keywords: Social dilemmas; economic experiments; rewards.
    JEL: C92 D74 C72
    Date: 2011–03–11
  6. By: Martorana, Marco (University of Catania, Department of Economics and Quantitative Methods); Mazza, Isidoro (University of Catania, Department of Economics and Quantitative Methods)
    Abstract: Dynamic models of learning and adaptation have provided realistic predictions in terms of voting behavior. This study aims at contributing to their scant empirical verification. We develop a learning algorithm based on bounded rationality estimating the pattern of learning process through a two-stage econometric model. The analysis links voting behavior to past choices and economic satisfaction derived from previous period election and state of the economy. This represents a novelty in the literature on voting that assumes given voter preferences. Results show that persistence is positively affected by the combination of income changes and past behavior and by union membership.
    Keywords: voting; bounded rationality; learning; political accountability
    JEL: C23 C25 D72
    Date: 2010–12–01
  7. By: Biel, Anders (Department of Psychology); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Nilsson, Andreas (Department of Psychology)
    Abstract: While many earlier studies have found that people’s maximum willingness to pay for having a good is often substantially lower than their minimum willingness to accept not having it, more recent experimental evidence suggests that this discrepancy vanishes for standard consumption goods when an incentive-compatible design without misconceptions is used. This paper hypothesises that there is nevertheless a discrepancy for goods with a perceived moral character, such as contributions to a good cause, and moreover that the reason for this discrepancy can largely be explained by differences in emotions and moral perceptions. The results from a real-money dichotomous-choice experiment, combined with measurements of emotions and morality, are consistent with these hypotheses.<p>
    Keywords: Willingness to pay-Willingness to accept gap; Endowment effect; Emotions; Ethics; Experiments
    JEL: C91 H41
    Date: 2011–04–28
  8. By: Kaivanto, Kim; Kroll, Eike B.
    Abstract: We report an experiment in which subjects are not indifferent between real-money lotteries implemented with randomization devices that are equivalent under the Reduction Axiom. Instead choice behavior is consistent with subjective distortion of conditional probability, and this persists in treatment conditions that control for (i) computational limitations and (ii) possible confounding by ratio bias. --
    Keywords: reduction of compound lotteries,negative recency effect,gambler's fallacy,law of small numbers,randomization devices,instruments and materials,design of experiments,St. Petersburg paradox
    JEL: D81 C91
    Date: 2011
  9. By: Pradiptyo, Rimawan; Sasmitasiwi, Banoon; Sahadewo, Gumilang Aryo
    Abstract: This paper aims to analyze subjects’ behavior in an experiment on evolutionary process of prisoners’ dilemma game. The experiment has been designed by using sixteen one-shot prisoners’ dilemma games with payoffs perturbation and random matching players under perfect information. The subjects of the experiment were students and staff in Universitas Gadjah Mada, Indonesia. In contrast to previous studies, for instance Selten and Stoecker’s (1986) Cooper’s, (1991, 1996), the majority of the subjects in this experiment tend to choose Nash equilibrium strategy consistently from the first game. The result showed that the proportion of the Nash equilibrium outcome was consistently in the range of 85%-88%, whereas the tacit cooperation or Pareto optimum outcome was about 1%-2%. There were evidence that payoffs perturbation influences players’ decision. In contrast to the previous studies above, the results from this study revealed that the vast majority of the subjects tend to choose the dominant strategy as prescribed in Game Theory.
    Keywords: Prisoners' dilemma; experiment; random-matching players; payoffs perturbation; framing effect
    JEL: C92 C73
    Date: 2011–02–09
  10. By: Nagler, Amy M.; Menkhaus, Dale J.; Bastian, Christopher; Ehmke, Mariah D.
    Abstract: We use laboratory market experiments to control for market power and social norms in order to evaluate market outcomes associated with subsidy incidence. We estimate the incidence of a stylized agricultural subsidy in laboratory land rental negotiations and compare the market behavior of university students to agricultural professionals. In separate sessions with both subject groups, 21.5 percent of a per-unit subsidy paid to the buyer (tenant) was passed on to sellers (landlords). The consistent treatment effect between students and professionals is encouraging, particularly in the use of experimental laboratory methods for ex ante analyses of agricultural policy impacts.
    Keywords: agricultural subsidies, ex ante policy analysis, laboratory market experiments, land market, professional versus student subject pools, subsidy incidence, Agricultural and Food Policy, Institutional and Behavioral Economics, Q1, Q18, C92,
    Date: 2011

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