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on Cognitive and Behavioural Economics |
| By: | Massimo Guidolin; Francesca Rinaldi |
| Abstract: | Empirical research suggests that investors’ behavior is not well described by the traditional paradigm of (subjective) expected utility maximization under rational expectations. A literature has arisen that models agents whose choices are consistent with models that are less restrictive than the standard subjective expected utility framework. In this paper we survey the literature that has explored the implications of decision-making under ambiguity for financial market outcomes, such as portfolio choice and equilibrium asset prices. We conclude that the ambiguity literature has led to a number of significant advances in our ability to rationalize empirical features of asset returns and portfolio decisions, such as the failure of the two-fund separation theorem in portfolio decisions, the modest exposure to risky securities observed for a majority of investors, the home equity preference in international portfolio diversification, the excess volatility of asset returns, the equity premium and the risk-free r ate puzzles, and the occurrence of trading break-downs. JEL codes: G10, G18, D81. Keywords: ambiguity, ambiguity-aversion, participation, liquidity, asset pricing.By Massimo Guidolin, Francesca Rinaldi |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:417&r=cbe |
| By: | Birkeland, Sigbjørn (Dept. of Economics, Norwegian School of Economics and Business Administration); Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | This paper studies the pro-social preferences of criminals by comparing the behavior of a group of prisoners in a lab experiment with the behavior of a benchmark group recruited from the general population. We find a striking similarity in the importance the two groups attach to pro-social preferences in both in strategic and non-strategic situations. This result also holds when the two groups interact. Data from a large internet experiment,matched with official criminal records, suggest that our main finding from the lab experiment is not influenced by the additional scrutiny experienced by participants in prison. |
| Keywords: | Pro-social preferences; Criminals; Lab experiment |
| JEL: | C91 D63 K40 |
| Date: | 2011–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2011_015&r=cbe |
| By: | Antoci, Angelo; Sabatini, Fabio; Sodini, Mauro |
| Abstract: | The objective of this paper is to theoretically analyze how human interaction may evolve in a world characterized by the explosion of online networking and other Web-mediated ways of building and nurturing relationships. The analysis shows that online networking yields a storage mechanism through which any individual contribution - e.g. a blog post, a comment, or a photo - is stored within a particular network and ready for virtual access by each member who connects to the network. When someone provides feedback, for example by commenting on a note, or by replying to a message, the interaction is finalized. These interactions are asynchronous, i.e. they allow individuals to relate in different moments, whenever they have time to. When the social environment is poor of participation opportunities and/or the pressure on time increases (for example due to the need to increase the working time), the stock of information and ties stored in the Internet can help individuals to defend their sociability. |
| Keywords: | Internet; computer-mediated communication; online networking; Facebook; social networks; social capital |
| JEL: | O33 D83 Z13 D85 |
| Date: | 2011–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34232&r=cbe |
| By: | Uwe Jirjahn; Vanessa Lange |
| Abstract: | Using unique survey data from the German Socio-Economic Panel, this study examines the influence of reciprocal inclinations on workers¿ sorting into codetermined firms. Employees with strong negative reciprocal inclinations are more likely to work in firms with a works council while employees with strong positive reciprocal inclinations are less likely to work in such firms. We argue that these findings conform to hypotheses derived from the experimental literature. Moreover, the results show striking gender differences in the relationship between reciprocity and taste for representation. These differences can be partially explained by gender-specific differences in the average degree of labor force attachment. |
| Keywords: | Works council, negative reciprocity, positive reciprocity, sorting, gender |
| JEL: | J52 J53 M50 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp402&r=cbe |
| By: | Paolo Crosetto (Max Planck Institute for Economics, Jena); Alexia Gaudeul (Graduate School "Human Behavior in Social and Economic Change" (GSBC), Friedrich Schiller University, Jena) |
| Abstract: | Consumers make mistakes when facing complex purchasing decision problems but if at least some consumers choose only among offers that are easy to compare with others then firms will adopt common ways to present their offers and thus make choice easier (Gaudeul and Sugden, 2011). We design an original experiment to identify consumers' choice heuristics in the lab. Subjects are presented with menus of offers and do appear to favour offers that are easy to compare with others in the menu. While not all subjects do so, this is enough to deter firms from introducing spurious complexity in the way they present products. |
| Keywords: | Bounded Rationality, Cognitive Limitations, Common Standards, Consumer Choice, Experimental Economics, Heuristics, Libertarian Paternalism, Pricing Formats, Spurious Complexity |
| JEL: | D83 L13 D18 |
| Date: | 2011–10–12 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2011-044&r=cbe |
| By: | Noussair, Charles; van Soest, Daan; Stoop, Jan |
| Abstract: | We report a framed field experiment, in which we study the effectiveness of punishment and reward in sustaining cooperation in a social dilemma. Punishments tend to be directed at non-cooperators and rewards are assigned by those who are relatively cooperative. In contrast to the results typically found in laboratory experiments, however, we find that punishments and rewards fail to increase cooperation. |
| Keywords: | Field experiment; public goods game; social preferences; punishment; reward |
| JEL: | C92 C93 C72 |
| Date: | 2011–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34067&r=cbe |