nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2011‒11‒07
nine papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Can religious priming induce truthful preference revelation? By Stachtiaris, Spiros; Drichoutis, Andreas; Nayga, Rodolfo; Klonaris, Stathis
  2. An experiment on experimental instructions By M. Bigoni; D. Dragone
  3. Too smart to be selfish? Measures of intelligence, social preferences, and consistency By Chen, Chia-Ching; Chiu, I-Ming; Smith, John; Yamada, Tetsuji
  4. Energy, the Environment and Behaviour Change: A survey of insights from behavioural economics By Baddeley, M.
  5. Coordination with Communication under Oath By Nicolas Jacquemet; Stephane Luchini; Jason Shogren; Adam Zylbersztejn
  6. The Effects of Tax Salience and Tax Experience on Individual Work Efforts in a Framed Field Experiment By Fochmann, Martin; Weimann, Joachim
  7. Group Size, Coordination, and the Effectiveness of the Punishment Mechanism in the VCM: An Experimental Investigation By Bin Xu; Bram Cadsby; Liangcong Fan; Fei Song
  8. The Effect of Financial Incentives and Task-specific Cognitive Abilities on Task Performance By Ondrej Rydval
  9. Do experts' SKU forecasts improve after feedback? By Legerstee, R.; Franses, Ph.H.B.F.

  1. By: Stachtiaris, Spiros; Drichoutis, Andreas; Nayga, Rodolfo; Klonaris, Stathis
    Abstract: We examine whether religious priming can induce more truthful preference revelation in valuation research. Using induced value second price Vickrey auctions in both hypothetical and non-hypothetical contexts, our results suggest that religious priming can indeed induce more truthful bidding and eliminate hypothetical bias in hypothetical contexts. In non-hypothetical contexts where there are real economic incentives, religious priming induces similar truthful bidding as the absence of religious priming, implying that the use of real economic incentives is sufficient in producing truthful valuations. Our findings have significant implications for the use of religious priming in stated preference or contingent valuation studies.
    Keywords: willingness-to-pay (WTP); Vickrey auction; hypothetical bias; religious priming
    JEL: D12 C90 C91
    Date: 2011–11–01
  2. By: M. Bigoni; D. Dragone
    Abstract: In this paper we treat instructions as an experimental variable. Using a public good game, we study how the instructions' format affects the participants' understanding of the experiment, their speed of play and their experimental behavior. We show that longer instructions do not significantly improve the subjects' understanding of the experiment; on-screen instructions shorten average decision times with respect to on-paper instructions, and requiring forced inputs reduces waiting times, in particular for the slowest subjects. Consistent with cognitive load theory, we find that short, on-screen instructions which require forced inputs improve on subjects' comprehension and familiarity with the experimental task, and they contribute to reduce both decision and waiting times without affecting the overall pattern of contributions.
    JEL: C72 C90 H41
    Date: 2011–10
  3. By: Chen, Chia-Ching; Chiu, I-Ming; Smith, John; Yamada, Tetsuji
    Abstract: Although there is an increasing interest in examining the relationship between cognitive ability and economic behavior, less is known about the relationship between cognitive ability and social preferences. We investigate the relationship between strongly incentivized measures of intelligence and measures of social preferences. We have data on a series of small-stakes dictator-type decisions, known as Social Value Orientation (SVO), in addition to choices in a larger-stakes dictator game. We also have access to the grade point averages (GPA) and Scholastic Aptitude Test (SAT) outcomes of our subjects. We find that subjects who perform better on the math portion of the SAT are more generous in both the dictator game and the SVO measure. By contrast we find that subjects with a higher GPA are more selfish in the dictator game and more generous according to the SVO. We also find that the consistency of the subjects is related to GPA but we do not find evidence that it is related to either portion of the SAT.
    Keywords: dictator game; Social Value Orientation; altruism; cognitive ability
    JEL: D64 C91
    Date: 2011–11–01
  4. By: Baddeley, M.
    Abstract: Evidence of climate change is largely undisputed but moderating the impacts not only of climate change but also of resource depletion is a complex, multi-faceted problem. Technical solutions will have a large role to play but engineering behaviour change within households and firms is essential to harnessing the potential for energy efficient consumption, production and investment. To inform debates about behavior change, this paper explores some insights from behavioural economics including analyses of bounded rationality, cognitive bias / heuristics, temporal discounting, social in uences, well-being and emotions.
    JEL: Q5 Q58
    Date: 2011–10–28
  5. By: Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Stephane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Jason Shogren (Departement of Economics and Finance, University of Wyoming - University of Wyoming); Adam Zylbersztejn (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: We study the simultaneous move version of a coordination game in which failures arise due to the use (and fear) of weakly dominated strategies. Existing evidence shows neither cheap talk communication between players nor historical information on past decisions nor even repetition-based learning are able to implement the efficient outcome. We study the effect of one addition to the design: subjects sign a truth-telling oath before participating to the game with cheap-talk communication. We find oath significantly improves the truthfulness of messages sent, as well as helps eliminating weakly dominated actions. This change however has very few consequences on coordination, because receivers do not adjust their own strategies for this change.
    Keywords: Coordination game; Cheap talk communication; Oath
    Date: 2011–10–26
  6. By: Fochmann, Martin (University of Magdeburg); Weimann, Joachim (University of Magdeburg)
    Abstract: We conduct a framed field experiment with 245 employed persons (no students) as subjects and a real tax, which is levied on the subjects' income from working in our real effort task. In our first three treatments, the net wage is constant but gross wages are subject to different constant marginal tax rates (0, 25%, 50%). It turns out that the effort is significantly higher under the tax than in the no tax treatment. Subjects perceive a too high net wage because they underestimate the tax. We conjecture that tax perception depends on the tax rate, the presentation of the tax and the experience subjects have with taxation. These conjectures are confirmed in four further treatments employing a direct and an indirect progressive tax scale. It turns out that simple at taxes are particularly prone to being misperceived because their simplicity reduces the tax salience.
    Keywords: field experiment, real effort experiment, tax perception, tax salience, tax experience, behavioral economics
    JEL: C91 D14 H24
    Date: 2011–10
  7. By: Bin Xu (Public Administration College, Zhejiang Gongshang University and Experimental Social Science Laboratory, Zhejiang University.); Bram Cadsby (Department of Economics, University of Guelph.); Liangcong Fan (College of Public Administration, Zhejiang University.); Fei Song (Ted Rogers School of Management, Ryerson University.)
    Abstract: In this study, we examine the effectiveness of the individual-punishment mechanism in larger groups, comparing groups of four to groups of 40 participants. We find that the individual punishment mechanism is remarkably robust when the MPCR is held constant despite the coordination problems inherent in an institution relying on decentralized individual punishment decisions in the context of a larger group. This reflects increased per-capita expenditures on punishment that offset the greater coordination difficulties in the larger group. However, if the marginal group return stays constant, resulting in an MPCR that shrinks with group size, no such offset occurs and punishment loses much but not all of its effectiveness at encouraging voluntary contributions to a public good.
    Keywords: Experiment, Public Good, Punishment, Large Groups
    JEL: C91 H41
    Date: 2011
  8. By: Ondrej Rydval (Max Planck Institute of Economics, Jena)
    Abstract: We extend evidence on the interaction between financial incentives and cognitive abilities by focusing on the effect of task-specific abilities. In a memory-intensive task situated in an accounting context, the effect of accounting education on performance is stronger under financial incentives as compared to flat rate pay. Subjects with more accounting education respond stronger to financial incentives. Hence using incentives efficiently may involve targeting them at high-ability individuals. More generally, taking into account the incentive-ability interaction seems important when interpreting observed behavior in cognitively demanding lab and field economic environments.
    Keywords: Financial incentives, Cognitive ability, Performance, Experiment
    JEL: C81 C91 C93 D83
    Date: 2011–11–03
  9. By: Legerstee, R.; Franses, Ph.H.B.F.
    Abstract: We analyze the behavior of experts who quote forecasts for monthlySKU-level sales data where we compare data before and after the momentthat experts received different kinds of feedback on their behavior. Wehave data for 21 experts located in as many countries who make SKUlevelforecasts for a variety of pharmaceutical products for October 2006to September 2007. We study the behavior of the experts by comparingtheir forecasts with those from an automated statistical program, and wereport the forecast accuracy over these 12 months. In September 2007these experts were given feedback on their behavior and they received atraining at the headquartersÂ’ office, where specific attention was given tothe ins and outs of the statistical program. Next, we study the behaviorof the experts for the 3 months after the training session, that is, October2007 to December 2007. Our main conclusion is that in the second periodthe expertsÂ’ forecasts deviated less from the statistical forecasts and thattheir accuracy improved substantially.
    Keywords: expert forecasts;model forecasts;cognitive process feedback;judgmental adjustment;outcome feedback;performance feedback;task properties feedback
    Date: 2011–09–22

This nep-cbe issue is ©2011 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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