nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2011‒06‒11
nine papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Unseen But not Unsolved: Doing Arithmetic Non-Consciously By Asael Y. Sklar; Ran R. Hassin
  2. Non Cognitive Skills and Personality Traits: Labour Market Relevance and their Development in Education & Training Systems By Brunello, Giorgio; Schlotter, Martin
  3. Violence, social capital and economic development: Evidence of a microeconomic vicious circle By Leonardo Becchetti; Pierluigi Conzo; Alessandro Romeo
  4. A Genuine Foundation for Prospect Theory By Ulrich Schmidt; Horst Zank
  5. Cooperative Attitudes in Nonprofit Firms. Evidence from An Artefactual Field Experiment with Workers of Social Cooperatives By Luigi Mittone; Matteo Ploner
  6. Social Exchange and Risk and Ambiguity Preferences By John Engle; Jim Engle-Warnick; Sonia Laszlo
  7. Painful Regret and Elation at the Track By Adi Schnytzer; Barbara Luppi
  8. Community Matters: How the Volunteering of Others Affects One's Likelihood of Engaging in Volunteer Work By Theodoros M. Diasakos; Florence Neymotin
  9. Loss aversion, social comparison and physical abilities at younge age By Nakamoto, Yasuhiro; Sato, Masayuki

  1. By: Asael Y. Sklar; Ran R. Hassin
    Abstract: The modal view in the cognitive sciences holds that consciousness is necessary for abstract, symbolic and rule-following computations. Hence, mathematical thinking in general, and doing arithmetic more specifically, are widely believed to require consciousness. In the current paper we use continuous flash suppression to expose participants to extremely long-duration (up to 2000 milliseconds) subliminal arithmetic equations. The results of three experiments show that the equations were solved without ever reaching consciousness. In other words, they show that arithmetic can be done unconsciously. These findings imply that the modal view of the unconscious needs to be significantly updated, to include symbolic processes that were heretofore considered to be uniquely conscious.
    Date: 2011–06
  2. By: Brunello, Giorgio (University of Padova); Schlotter, Martin (Ifo Institute for Economic Research)
    Abstract: This paper reviews the empirical economic literature on the relative importance of non cognitive skills for school and labour market outcomes, with a focus on Europe. There is evidence that high cognitive test scores are likely to result not only from high cognitive skills but also from high motivation and adequate personality traits. This suggests that part of the contribution of cognitive skills to economic growth could be due to personality traits. Across large parts of the literature, there is consensus that non cognitive skills have important effects both on school attainment and on labour market outcomes. These effects might be as important as the effects of cognitive skills. Less consensus exists on the malleability of non cognitive skills, with some arguing that these skills can be altered until the end of teenage years and others claiming that emotional intelligence can be changed at any age. Most of what economists know about the technology of non cognitive skill formation concerns early educational levels, such as preschools and schools. While it is difficult to argue that all relevant skill formation ends before labour market entry, there is scant evidence on the role of the workplace in the maintenance and development of existing skills. Clearly, more research in this area is needed.
    Keywords: non cognitive skills, Europe
    JEL: J24
    Date: 2011–05
  3. By: Leonardo Becchetti (University of Rome Tor Vergata); Pierluigi Conzo (University of Rome Tor Vergata & EIEF); Alessandro Romeo (University of Rome Tor Vergata & World Bank)
    Abstract: We test with a randomized experiment in the slums of Nairobi whether violence suffered during the 2007 political outbreaks affects trustworthiness learning when participants live group experiences and face opportunism and free riding in public good games (PGGs) between two subsequent trust games (TGs). Our findings document that participants move toward balanced reciprocity after the PGG with the exception of those who have experienced directly or indirectly physical violence and/or forced relocation who exhibit significantly less trustworthiness in the second TG round. Results are robust to several robustness checks controlling for selection into victimization. Since in a framework of asymmetric information and incomplete contracts, trust games mimic sequential economic exchanges whose functioning is crucial to economic growth, we argue that our results identify a microeconomic nexus among socio-political instability, violence and growth helping to solve identification problems of the cross-country literature on the subject.
    Keywords: trust games, public good games, randomized experiment, social capital, socioeconomic instability and development.
    JEL: O12 C93 Z13
    Date: 2011
  4. By: Ulrich Schmidt; Horst Zank
    Date: 2011
  5. By: Luigi Mittone; Matteo Ploner
    Abstract: We investigate strategic choices of individuals working for social cooperatives in Italy. Specifically, a 2-players Prisoner’s Dilemma is administered as an attachment to a nationwide survey of nonprofit organizations. We experimentally manipulate social proximity of the participants and efficiency of cooperation. We show that higher efficiency of cooperation has a significant positive impact on the cooperation rate in the game, while closer social proximity does not significantly affect choices. In addition, a positive correlation between perceived organizational fairness and self–reported intrinsic motivation is identified in the sample under investigation. This finding provides stimulating insights on the interplay between organizational features and workers’ motivational factors.
    Keywords: Cooperation, Field Experiments, Social Dilemmas, Nonprofit Organizations
    Date: 2011
  6. By: John Engle; Jim Engle-Warnick; Sonia Laszlo
    Abstract: We present an experiment in which we test for the effect of participating in a social exchange exercise on revealed risk and ambiguity preferences. In our experiments, subjects make choices over lotteries that reveal their risk and ambiguity preferences. They then participate with a small group in an unstructured on-line chat. After the chat, they reconsider their choices in the risk and ambiguity instruments. In a control session, different subjects view, but do not participate in, past chats. Through a content analysis we investigate the role of chat content and chat participation on changes in revealed preferences. We compare our results to the “Discovered Preferences Hypothesis” (Plott, 1996) and “Fact-Free Learning” (Aragones, Gilboa, Postlewaite, and Schmeidler, 2005). <P>Nous présentons une expérience en laboratoire dans laquelle nous testons l'effet de participer à un exercice d'échange social sur l'aversion au risque et à l'ambiguïté. Dans notre expérience, les participants jouent à une loterie où ils révèlent leurs préférences face au risque et à l'ambiguïté. Ils participent ensuite à une discussion de groupe déstructurée dans une salle de causette. Après la discussion, les participants peuvent reconsidérer leurs choix dans les instruments de risque et d'ambiguïté. Cependant, dans une session contrôle, d'autres participants observent, sans y participer, une discussion d'une session antérieure. Une analyse de contenu nous informe sur le rôle du contenu de la discussion et de la participation elle-même sur le changement des préférences révélées. Nous comparons nos résultats aux hypothèses de « Discovered Preferences » (Plott, 1996) et de « Fact-Free Learning » (Aragones, Gilboa, Postlewaite, and Schmeidler, 2005).
    Keywords: Risk and ambiguity preference measurement instruments, experimental economics, development economics, participatory development; social learning., Instruments de mesure de la préférence vis-à-vis le risque et l'ambiguïté, économie expérimentale, développement économique, développement participatif, apprentissage social
    Date: 2011–05–01
  7. By: Adi Schnytzer (Bar-Ilan University); Barbara Luppi (University of Modena and Reggio Emilia)
    Abstract: We present an empirical study of loss aversion in the Hong Kong horse betting market. We provide evidence of the presence of loss aversion in a context of complete absence of the favourite-longshot bias. This would suggest that, since loss aversion is a psychological bias, the favourite-longshot bias may not necessarily be caused by psychological issues and may be due, for instance, to informational asymmetry. We investigate different types of bettors and their attitude towards loss aversion. Our data set enables us to distinguish approximately among insiders, unsophisticated outsiders and sophisticated outsiders. The results show clearly that even sophisticated bettors are beset by loss aversion, while even unsophisticated outsiders display no favourite-longshot bias. Thus, our paper provides evidence that loss aversion may be an attitude innate rather than learned, regardless of the level of sophistication in designing economic behaviour or the extent of information asymmetry. Chen et al (2006) show that capuchin monkeys display biases when faced with gambles, including loss aversion, and provide evidence that loss aversion extends beyond humans. The present work supports the idea that loss aversion may be a more universal bias, arising regardless of experience and culture and demonstrates that loss aversion is displayed even by those bettors regarded in the market as “smart money”. Further, we find that more sophisticated and experienced bettors display a higher level of loss aversion. This result is consistent with the findings of Haigh and List (2005), who show that professional traders in financial markets exhibit more loss aversion than do students.
    Date: 2011–03
  8. By: Theodoros M. Diasakos; Florence Neymotin
    Abstract: We investigate the effect of the volunteering of others on the likelihood that an individual will also engage in volunteering activities. The theoretical part of our analysis is based on a sequential signaling framework, in which the decisions of others to volunteer are informative as to the benefit from volunteering. In this framework, the interaction between one's private information and the public belief when she is called upon to act makes it more likely that she will volunteer, given a higher average level of contributions by her predecessors. To test this empirically, we measure the effect of average volunteering in the community on the likelihood that an individual will volunteer, controlling for individual and community characteristics. We use Census 2000 Summary File 3 and Current Population Survey (CPS) 2004-2007 September supplement files. Our results are robust to various choices of sample, by years analyzed, working status, and whether or not the volunteering included religious activities. We account for reflection bias by means of an instrumental variables strategy which further verifies the pattern of our results.
    Keywords: volunteer; public good; signaling; community characteristics
    JEL: H4 D8
    Date: 2011
  9. By: Nakamoto, Yasuhiro; Sato, Masayuki
    Abstract: We examine how physical abilities affect individuals' preferences. In particular, by incorporating social comparison into prospect theory, we directly estimate the degree of loss aversion from social comparison, a concept we term `ALJ' (\textit{Avoiding Loss relative to the Joneses}). Our main findings are as follows: (i) the participants who choose the physical education as the best subject exhibit a greater degree of ALJ than others; (ii) physical fitness influences the degree of ALJ; (iii) gender influences social comparison preferences; (iv) participants with a greater degree of ALJ do not respond to voluntary questionnaire; (v) the form of participants' ALJ is affected by the voluntary behavior of their parents. A comparison of ALJ with loss aversion in the original prospect theory reveals that they have different characteristics.
    Keywords: Loss aversion; Risk aversion; Social Comparison; Physical fitness; Voluntary participation
    JEL: D12 C90 C93
    Date: 2011–06–01

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