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on Cognitive and Behavioural Economics |
| By: | Karol Jan BOROWIECKI (Department of Economics, Trinity College Dublin); Georgios KAVETSOS (Cass Business School, City University, London) |
| Abstract: | We investigate the impact of peer competition on longevity using a unique historical data set of classical composers. We measure the geographic concentration of peers by the number of composers located in the same area and the time spent in one of the main geographic clusters for classical music. Using instrumental variables, we find a significant negative effect of geographic concentration. An additional composer based in the same location decreases longevity by 2.3 years, on average. Besides the widely known economic benefits associated with competition, these findings suggest that significant negative welfare externalities exist as well. |
| Keywords: | geographic concentration, well-being, mortality, culture |
| JEL: | D12 I12 N90 R11 Z19 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:tcd:tcduee:tep1111&r=cbe |
| By: | Caliendo, Marco (IZA); Kritikos, Alexander S. (DIW Berlin) |
| Abstract: | What makes the entrepreneurial personality is the key question we seek to answer in the special issue of the Journal of Economic Psychology on "Personality and Entrepreneurship". The contributions are clustered around questions regarding the linkage between personality, socio-economic factors and entrepreneurial development. Results further explain the gender puzzle, while, at the same time, it is clear that stereotypes of what makes the ideal entrepreneur must be revisited. This conclusion is based on new insights into the effects that variables, such as risk tolerance, trust and reciprocity, the value for autonomy and also external role models, have on entrepreneurial decision making. On a more general note, it is clear that more informative longitudinal data sets at the individual level are needed in order to find conclusive answers. In an ideal world researchers would have access to data that includes personality characteristics and psychological traits, motivational factors and cognitive skills. In this respect the research community needs to find new ways to collect these data and make them available for entrepreneurship research. |
| Keywords: | trust, entrepreneurship, personality characteristics, risk aversion, autonomy |
| JEL: | D81 J23 L26 M13 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5790&r=cbe |
| By: | Caliendo, Marco (IZA); Lee, Wang-Sheng (RMIT University) |
| Abstract: | This paper focuses on estimating the magnitude of any potential weight discrimination by examining whether obese job applicants in Germany get treated or behave differently from non-obese applicants. Based on two waves of rich survey data from the IZA Evaluation dataset, which includes measures that control for education, demographic characteristics, labor market history, psychological factors and health, we estimate differences in job search behavior and labor market outcomes between obese/overweight and healthy weight individuals. Unlike other observational studies which are generally based on obese and non-obese individuals who might already be at different points in the job ladder (e.g., household surveys), in our data, individuals are newly unemployed and all start from the same point. The only subgroup we find in our data experiencing any possible form of labor market discrimination is obese women. Despite making more job applications and engaging more in job training programs, we find some indications that they experienced worse (or at best similar) employment outcomes than healthy weight women. Obese women who found a job also had significantly lower wages than healthy weight women. |
| Keywords: | obesity, discrimination, employment, labor demand |
| JEL: | I10 I12 J23 J70 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5795&r=cbe |
| By: | L. Becchetti; Vittorio Pelligra |
| Abstract: | We run a modified dictator game experiment to investigate the determinants of donation choices to philanthropic organizations. We find experimentally that the adoption of a simple form of accountability such as the disclosure of information on the ranking of aggregate contributions received bythe organizations has important redistributive effects on donations, leading donors to reallocate significantly their giving from top to bottom performers. Our findings support the hypothesis that individuals have preferences on total donations and their “ideal” distribution and not just on their own giving. Policy consequences of our findings in terms of public and private contribution disclosure rules arediscussed. |
| JEL: | D64 H00 C91 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201111&r=cbe |
| By: | Kontek, Krzysztof |
| Abstract: | Cumulative Prospect Theory (Kahneman, Tversky, 1979, 1992) holds that the value function is described using a power function, and is concave for gains and convex for losses. These postulates are questioned on the basis of recently reported experiments, paradoxes (gain-loss separability violation), and brain activity research. This paper puts forward the hypothesis that perception utility is generally logarithmic in shape for both gains and losses, and only happens to be convex for losses when gains are not present in the problem context. This leads to a different evaluation of mixed prospects than is the case with Prospect Theory: losses are evaluated using a concave, rather than a convex, utility function. In this context, loss aversion appears to be nothing more than the result of applying a logarithmic utility function over the entire outcome domain. Importantly, the hypothesis enables a link to be established between perception utility and Portfo-lio Theory (Markowitz, 1952A). This is not possible in the case of the Prospect Theory value function due its shape at the origin. |
| Keywords: | Prospect Theory; value function; perception utility; loss aversion; gain-loss separability violation; neuroscience; Portfolio Theory; Decision Utility Theory. |
| JEL: | D81 G11 D87 C91 |
| Date: | 2011–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:31715&r=cbe |
| By: | Emmanuel PETIT (GREThA, CNRS, UMR 5113); Anna TCHERKASSOF (LIP/PC2S); Xavier GASSMANN (INRA) |
| Abstract: | Our experiment aims at studying the impact of self-esteem on risk-prone choices in an Allais-type decision context using hypothetical money. We use an Internet protocol in order to reach a large heterogeneous student population sample. An anticipated regret explanation for the certainty effect implies that self-esteem is a crucial psychological variable in what concerns risky decision, but only when the choice is between a safe option and a risky option. Thus, in our experiment, we hypothesize that low self-esteem people will choose more frequently the safe option (rather than the risky-prone option) than high self-esteem people, whereas low self-esteem and high self-esteem individuals will show the same pattern of choices between two different risk-based options. Our data confirm our hypothesis. Regarding risky choices preferences, we also observe that females, non economists and older people significantly exhibit safer choice preferences than other participants. We find also that men and students in economics are more likely to conform to expected utility theory than females and other social science students respectively. We then discuss what these findings mean for economic regret theory, and suggest that a complete theory of decision-making under risk should introduce both situational and motivational explanations of individual behaviour. |
| Keywords: | Allais paradox; Risk; Regret aversion; Self-esteem; Internet experiment; Gender differences |
| JEL: | C91 D81 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2011-25&r=cbe |
| By: | Jérémy CELSE |
| Abstract: | We explore the behavioural and affective differences between subjects practicing sport activities and subjects not practicing sport. Are athletes more distressed by unfavourable social comparisons and more prone to engage in hostile behaviour than non-athletes? Using experimental methods, we investigate the connection between sport practice and antisocial behaviour. In our experiment we capture the satisfaction subjects derive from unflattering social comparisons by asking them to evaluate their satisfaction after being informed of their own endowment and after being informed of their opponent’s endowment. Then subjects can decide to reduce their opponent’s endowment by incurring a cost. We observe that sport plays a key role on both individual well-being and behaviour: 1) sport practice amplifies the negative impact of unfavourable social comparisons on individual well-being and 2) sport practice exerts subjects to reduce others’ income. Besides the satisfaction sporty subjects report from social comparisons predicts their decisions to reduce others’ income. Finally we provide empirical evidences suggesting that envy affects significantly athletes’ satisfaction and behaviour. |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:16-11&r=cbe |
| By: | Michał Krawczyk (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | This study is a field experiment on loss aversion. The framing of scoring rules was differentiated in two exams at the University of Warsaw, with only half the students facing explicit penalty points in the case of giving an incorrect answer. Loss aversion predicts that less risk will be taken (less questions will be answered) when losses are possible but in fact, no treatment effect was observed. |
| Keywords: | loss aversion, framing, field experiments, gender differences |
| JEL: | C93 D81 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2011-13&r=cbe |
| By: | James A. Best |
| Abstract: | In this paper, I look at the interaction between social learning and cooperative behavior. I model this using a social dilemma game with publicly observed sequential actions and asymmetric information about payoffs. I find that some informed agents in this model act, individually and without collusion, to conceal the privately optimal action. Because the privately optimal action is socially costly the behavior of informed agents can lead to a Pareto improvement in a social dilemma. In my model I show that it is possible to get cooperative behavior if information is restricted to a small but non-zero proportion of the population. Moreover, such cooperative behavior occurs in a nite setting where it is public knowledge which agent will act last. The proportion of cooperative agents within the population can be made arbitrarily close to 1 by increasing the infinite number of agents playing the game. Finally, I show that under a broad set of conditions that it is a Pareto improvement on a corner value, in the ex-ante welfare sense, for an interior proportion of the population to be informed. |
| Keywords: | Asymmetric information, cooperation, efficiency, social learning, social dilemmas. |
| JEL: | C72 D62 D82 D83 |
| Date: | 2011–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:206&r=cbe |
| By: | Huck, Steffen; Zhou, Jidong |
| Abstract: | This is a survey of studies that examine competition in the presence of behaviourally biased or boundedly rational consumers. It will tackle questions such as: How does competition and pricing change when consumers are biased? Can inefficiencies that arise from consumer behavioural biases be mitigated by lowering barriers to entry? Do biased consumers make rational ones better or worse off? And will biased consumer behaviour be overcome through learning or education? |
| Keywords: | Behavioural Economics; Industrial Organization; Biased Consumers |
| JEL: | D21 D4 L1 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:31794&r=cbe |