nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2011‒07‒27
fifteen papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Stubborn Learning By Jean-François Laslier; Bernard Walliser
  2. Preferences for Consistency By Falk, Armin; Zimmermann, Florian
  3. Nudge to nobesity II: Menu positions influence food orders By Eran Dayan; Maya Bar-Hillel
  4. The Role of Decision-Making Biases in Ireland's Banking Crisis By Lunn, Pete
  5. Teams or Tournaments? A Field Experiment on Cooperation and Competition among University Students By Bigoni, Maria; Fort, Margherita; Nardotto, Mattia; Reggiani, Tommaso
  6. Social Status and Influence: Evidence from an Artefactual Field Experiment on Local Public Good Provision By d'Adda, Giovanni
  7. What drives failure to maximize payoffs in the lab ? A test of the inequality aversion hypothesis. By Nicolas Jacquemet; Adam Zylbersztejn
  8. Framing and Misperceptions in a Public Good Experiment By Toke Fosgaard; Lars Gårn Hansen; Erik Wengström
  9. Experimental Evidence on the 'Insidious' Illiquidity Risk By Damien Besancenot; Radu Vranceanu
  10. Procrastination in Teams, Contract Design and Discrimination By Philipp Weinschenk
  11. Time Inconsistency, Expectations and Technology Adoption: The Case of Insecticide Treated Nets By Alessandro Tarozzi; Aprajit Mahajan
  12. Risk attitude and risk behavior: Comparing Thailand and Vietnam By Gloede, Oliver; Menkhoff, Lukas; Waibel, Hermann
  13. Thinking the unthinkable: managerialization of work related suicides as a framing process By Pezé Stéphan
  14. Heterogeneous Worker Ability and Team-Based Production: Evidence from Major League Baseball, 1920-2009 By Bryson, Alex; Gomez, Rafael; Papps, Kerry L.
  15. Can Schooling and Socio-Economic Level Be a Millstone to a Student's Academic Success? By Christopher Bruffaerts; Catherine Dehon; Bertrand Guisset

  1. By: Jean-François Laslier (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X); Bernard Walliser (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: The paper studies a specific reinforcement learning rule in two-player games when each player faces a unidimensional strategy set. The essential feature of the rule is that a player keeps on incrementing her strategy in the same direction if and only if her utility increases. The paper concentrates on games on the square [0; 1] x [0; 1] with bilinear payoff functions such as the mixed extensions of 2 x 2 games. It studies the behavior of the system in the interior as well as on the borders of the strategy space. It precisely exhibits the trajectories of the system and the asymptotic states for symmetric, zero-sum, and twin games.
    Date: 2011–07–19
  2. By: Falk, Armin (University of Bonn); Zimmermann, Florian (University of Bonn)
    Abstract: This paper studies how a preference for consistency can affect economic decision-making. We propose a two-period model where people have a preference for consistency because consistent behavior allows them to signal personal and intellectual strength. We then present three experiments that study main predictions and implications of the model. The first is a simple principal-agent experiment that shows that consistency is valued by others and that this value is anticipated. The second experiment underlines the crucial role of early commitment for consistency preferences. Finally we show how preferences for consistency can be used to manipulate choices.
    Keywords: consistency preferences, experiments, early commitment, charitable giving, social influence
    JEL: C91 D64
    Date: 2011–07
  3. By: Eran Dayan; Maya Bar-Hillel
    Abstract: "Very small but cumulated decreases in food intake may be sufficient to have significant effects, even erasing obesity over a period of years" (Rozin et al., 2011). In two studies, one a lab study and the other a real-world study, we examine the effect of manipulating the position of different foods on a restaurant menu. Items placed at the beginning or the end of the list of their category options were up to twice as popular as when they were placed in the center of the list. Given this effect, placing healthier menu items at the top or bottom of item lists and less healthy ones in their center (e.g., sugared drinks vs. calorie-free drinks) should result in some increase in favor of healthier food choices.
    Date: 2011–07
  4. By: Lunn, Pete
    Abstract: This paper considers Ireland's banking crisis from the perspective of behavioural economics. It assesses whether known biases in judgement and decision-making were instrumental in the development and severity of the crisis. It investigates evidence that key decision-makers, including consumers, businesspeople, bankers and regulators, as well as parties such as civil servants, politicians, academics and journalists, were influenced by seven specific phenomena which have been identified previously via experiments and field studies. It concludes that evidence is consistent with the influence of these established phenomena. Ireland's long boom, rapid financial integration and lack of relevant past experience may have increased the vulnerability of decision-makers to economic and financial reasoning that proved disadvantageous. The analysis has potential implications for attempts to prevent future crises.
    Keywords: Ireland
    Date: 2011–05
  5. By: Bigoni, Maria (University of Bologna); Fort, Margherita (University of Bologna); Nardotto, Mattia (Telecom - Paris Tech); Reggiani, Tommaso (University of Bologna)
    Abstract: This paper assesses the effect of two stylized and antithetic non-monetary incentive schemes on students’ effort. We collect data from a field experiment where incentives are exogenously imposed, performance is monitored and individual characteristics are observed. Students are randomly assigned to a tournament scheme that fosters competition between coupled students, a cooperative scheme that promotes information sharing and collaboration between students and a control treatment in which students can neither compete, nor cooperate. In line with theoretical predictions, we find that competition induces higher effort with respect to cooperation and cooperation does not increase effort with respect to the baseline. However, this is true only for men, while women do not seem to react to non-monetary incentives.
    Keywords: education, field experiments, incentives, competition, cooperation
    JEL: A22 C93 I20
    Date: 2011–07
  6. By: d'Adda, Giovanni
    Abstract: I look at the effect of social status on transmission of pro-social behavior. In an artefactual field experiment conducted in northern Colombia I observe contribution to local biodiversity conservation. The design varies whether choice is observable or not and social status of observing/observed individuals. Status is derived from a social ranking exercise identifying formal and moral leaders within the community. I find that leaders have higher valuation of the common good and that their giving is less volatile in the face of exposure to participants contributing lower amounts. Social information on others giving is particularly effective when low status participants are able to observe leaders' choices. I interpret the results as evidence in favor of preference-based altruism and upward social comparison theories. The findings confirm those of laboratory experiments on status in a field setting and with naturally occurring leaders. The study has relevant policy implications in terms of targeting of development programs and questions the commonly held negative view of elites in developing countries. --
    Date: 2011
  7. By: Nicolas Jacquemet (Centre d'Economie de la Sorbonne - Paris School of Economics); Adam Zylbersztejn (Centre d'Economie de la Sorbonne)
    Abstract: In experiments based on the Beard and Beil (1994) game, second movers very often fail to select the decision that maximizes both players payoff. This note reports on a new experimental treatment, in which we neutralize the potential effect of inequality aversion on the likelihood of this behavior. We show this behavior is robust to this change, even after allowing for repetition-based learning.
    Keywords: Coordination failure, laboratory experiments, aversion to inequality.
    JEL: C72 D83
    Date: 2011–06
  8. By: Toke Fosgaard (Institute of Food and Resource Economics, University of Copenhagen); Lars Gårn Hansen (Institute of Food and Resource Economics, University of Copenhagen); Erik Wengström (Department of Economics, University of Lund; Department of Economics, University of Copenhagen)
    Abstract: Earlier studies have found that a substantial part of the contributions in public good games can be explained by subjects misperceiving the game's incentives. Using a large-scale public good experiment, we show that subtle changes in how the game is framed substantially affect such misperceptions and that this explains major parts of framing effect on subjects' behavior. When controlling for the different levels of misperception between frames, the framing effect on subjects' cooperation preferences disappears. This suggests that merely changing how tax-, fine- or subsidy systems are framed, without reducing complexity, could reduce welfare loss from misperception of incentives.
    Keywords: Public goods, Cooperation, Misperception, Game form recognition, Framing effects, Internet experiment
    JEL: C90 H41
    Date: 2011–07
  9. By: Damien Besancenot (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris-Nord - Paris XIII - CNRS : UMR7234); Radu Vranceanu (Economics Department - ESSEC Business School)
    Abstract: This paper brings experimental evidence on investors' behavior subject to an "illiquidity" constraint, where the success of a risky project depends on the participation of a minimum number of investors. The experiment is set up as a frameless coordination game that replicates the investment context. Results confirm the insidious nature of the illiquidity risk: as long as a first illiquidity default does not occur, investors do not seem able to fully internalize it. After several defaults, agents manage to coordinate on a default probability above which they refuse to participate to the project. This default probability is lower than the default probability of the first illiquidity default.
    Keywords: Coordination game ; Illiquidity risk ; Threshold strategy ; Experimental economics
    Date: 2011–06–01
  10. By: Philipp Weinschenk (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: We study a dynamic model of team production with moral hazard. We show that the players begin to invest effort only shortly before the time limit when the reward for solving the task is shared equally. We explore how the team can design contracts to mitigate this form of procrastination and show that the second-best optimal contract is discriminatory. We investigate how limited liability or the threat of sabotage influences the team’s problem. It is further shown that players who earn higher wages can be worse off than teammates with lower wages and that present-biased preferences can mitigate procrastination.
    Keywords: Moral Hazard, team production, partnerships, procrastination, contract design, discrimination
    JEL: D82 M52 L22 J71
    Date: 2011–07
  11. By: Alessandro Tarozzi; Aprajit Mahajan
    Abstract: Economists have recently argued that time inconsistency may play a central role in explaining inter-temporal behavior, particularly among poor households. However, time-preference parameters are typically not identified in standard dynamic choice models and little is known about the fraction of inconsistent agents in the population. We formulate a dynamic discrete choice model in an unobservedly heterogeneous population of possibly time-inconsistent agents motivated by specifically collected information combined with a field intervention in rural India. We identify and estimate all time-preference parameters as well as the population fractions of time-consistent and "naive" and "sophisticated" time-inconsistent agents. We estimate that time-inconsistent agents account for more than half of the population and that "sophisticated" inconsistent agents are considerably more present-biased than their "naive" counterparts. We also examine whether there are other differences across types (e.g. in risk and cost preferences) and find that these differences are small relative to the differences in time preferences.
    Keywords: Malaria, Expectations, Bednets, Identication, Dynamic Programming, Discrete Choice, Time Inconsistency
    JEL: I1 I3
    Date: 2011
  12. By: Gloede, Oliver; Menkhoff, Lukas; Waibel, Hermann
    Abstract: Are responses to a simple survey item sufficiently reliable in eliciting risk attitudes? Our angle in examining reliability is to conduct comparative research across Thailand and Vietnam. We find, first, that the survey item is informative about individual risk attitude because it is plausibly related to socio-demographic characteristics (including vulnerability), it is experimentally validated and has some predictive power. Second, however, we find major differences between both countries: whereas explained variances of regressions are tentatively higher in Vietnam, the predictive value of the survey item is much lower than in Thailand. Therefore, the survey item cannot be implemented across countries in an unreflected way. --
    Keywords: risk attitude,socio-economic survey,household behavior,field experiment
    JEL: O1 R2 C93 D81
    Date: 2011
  13. By: Pezé Stéphan (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX)
    Abstract: Managerialism has been studied in many ways, including diffusion of management techniques notably in public sectors, management ideology or the colonization of everyday life by management thought. However, the process leading to managerialism, namely managerialization, has been largely unexplored in this literature. This article draws upon framing theory to better understand managerialization processes. The article offers two case studies that investigate following theoretical assumptions: (1) managerialization acts as a framing process on every kind of issue; (2) managerialization has framing process characteristics. Two frame analysis based on newspaper articles about work related suicide show that one of the identified frames has strong managerial characteristics and suggest that managerialization took place as a set of framing processes. Taken together, these studies provide insight to characterize the process of managerialization. Research implications and limitations are discussed in order to highlight directions for futher researchs.
    Keywords: Work related suicide, Framing process, Frame analysis, Managerialism, Managerialization
    Date: 2011–07–07
  14. By: Bryson, Alex; Gomez, Rafael; Papps, Kerry L.
    Abstract: A detailed longitudinal dataset is assembled containing annual performance and biographical data for every player over the entire history of professional major league baseball. The data are then aggregated to the team level for the period 1920-2009 in order to test whether teams built on a more intermediate distribution of observed talent perform better than those teams with either too high or too low a mixture of highly able and less able players. The key dependent variable used in the regressions is the percentage of games a team wins each season. Our finding is that conditioning on average player ability, dispersion in team pitching and hitting talent prior to the start of a season is related in a non-linear way to subsequent team performance. This suggests that there is an optimum heterogeneity of ability at the team level that maximises joint output. This result is robust to the inclusion of team fixed effects as well as year dummies and after controlling for the potential endogeneity of skill dispersion. These findings have potentially important applications both inside and outside of the sporting world.
    Keywords: Baseball, Inequality, Team-based Performance
    JEL: J24 J21
    Date: 2011–03–29
  15. By: Christopher Bruffaerts; Catherine Dehon; Bertrand Guisset
    Abstract: By using data collected through a survey containing newly enrolled student in Management Engineering at the University of Brussels, we show that even if all students do not come with the same chance of success at university, their working/studying behavior may lessen the burden of the past. Unlike the majority of the literature focusing on deterministic vision of success, we propose a more balanced view of the determining factors of academic success where success is explained both by what the student controls and what he does not control. We indeed take into account by means of a multivariate analysis the background of the student(personal characteristics, schooling and human capital of the family) as well as variables that are related to the study methods and habits of the student such as class attendance, the regularity of study and the study capacity during the exam period. Our results show that the work/studying pays off: the two most relevant factors explaining success are the work/study regularity as well as the number of hours the student studies/works during the exam period. In addition and in contrast with the common belief, both class attendance and guidance courses do not seem to be important to succeed but are the keys in successfully completing the year with a grade.
    Keywords: academic achievement; management engineering; multivariate models; socioeconomic factors; study methods
    Date: 2011–07

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