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on Cognitive and Behavioural Economics |
| By: | Michèle Belot (School of Management, University of Edinburgh); Marina Schröder (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | We propose a novel experimental design to study counterproductive behaviour in a principal agent setting. The design allows us to study and derive clean measures of different forms of counterproductive behaviour in a controlled but non obtrusive manner. We ask participants to complete a specific task (identify euro coins) and report their output. Participants can engage in various forms of counterproductive behaviour, none of them being offered to them explicitly. They can make mistakes in the identification task, lie in their report or even steal coins. We present an application of the design to study the effects of different pay schemes (competition, fixed pay and piece rate) on counterproductive behaviour. On average counterproductive behaviour amounts to 10 percent of the average productivity, almost all arising through mistakes and overreporting of output. We find essentially no evidence of theft. Moreover, we find that both productive and counterproductive behaviour are significantly higher under competition than under the two other pay schemes. |
| Keywords: | counterproductive behaviour, compensation, experiment, competition, piece rate, ?fixed pay |
| JEL: | C91 J24 J30 M52 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:120018&r=cbe |
| By: | Noussair, C.N.; Stoop, J.T.R. (Tilburg University, Center for Economic Research) |
| Abstract: | Abstract: We report results from three well-known experimental paradigms, where we use time, rather than money, as the salient component of subjects’ incentives. The three experiments, commonly employed to study social preferences, are the dictator game, the ultimatum game and the trust game. All subjects in a session earn the same participation fee, but their choices affect the time at which they are permitted to leave the laboratory, with decisions typically associated with greater own payoff translating into an earlier departure. The modal proposal in both the dictator and ultimatum games is an equal split of the waiting time. In the trust game, there is substantial trust and reciprocity. Overall, social preferences are evident in time allocation decisions. Received laboratory results from dictator, ultimatum, and trust games are robust to the change in reward medium, though there is some suggestive evidence that decisions are even more prosocial with respect to time than money. |
| Keywords: | dictator game;ultimatum game;trust game;time. |
| JEL: | C70 C91 D63 D64 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2012068&r=cbe |
| By: | Andrea Leuermann; Benjamin Roth |
| Abstract: | Advice is important for decision making, especially in the financial sector. We investigate how individuals assess risk preferences of others given sociodemographic information or pictures. Both non-professionals and financial professionals participate in this artefactual field experiment. Subjects mainly rely on the other's self-assessment of risk preferences and on gender when forming the belief about someone else's risk preferences. On average, subjects consider themselves to be more risk-tolerant than the person they evaluate. Subjects use their own risk attitude as a reference point for predicting others' risk preferences. This false consensus effect is less pronounced for young professionals than for senior and non-professionals. Furthermore, financial professionals predict risk preferences more accurately compared to non-professionals. |
| Keywords: | Risk preferences, financial advice, artefactual field experiment, behavioral finance |
| JEL: | C91 D81 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp475&r=cbe |
| 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 consequential measures of cognitive ability 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 SAT (formerly referred to as the Scholastic Aptitude Test) 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 some evidence that the subjects with higher GPA and higher SAT outcomes offer more consistent responses. Our results involving GPA and social preferences complement previous work which employ measures of cognitive ability which are sensitive to the intrinsic motivation of the subject. Our results involving SAT scores are without precedent in the literature and suggest that measures of cognitive ability, which are less sensitive to the intrinsic motivation of the subject, are positively related to generosity. |
| Keywords: | dictator game; Social Value Orientation; altruism; intelligence |
| JEL: | D64 C91 |
| Date: | 2012–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:41078&r=cbe |
| By: | Zacharias Maniadis; Joshua Miller |
| Abstract: | We present an experiment to address the question of whether a piece of information is more influential if it comes from experience, rather than from another source. We employ a novel experimental design which controls for the value of information and other potentially important confounding factors present in related studies. Overall, our results show that an event that is personally experienced has a stronger influence on subsequent behavior than an observed event with equally valuable information content. Importantly, in early rounds when information is more valuable from a rational viewpoint, this overweighting of personal experience is not statistically significant. JEL Classification Numbers: C90; C91; Keywords: Experiments; Learning; Observation; Reinforcement Learning; Belief-Based Learning |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:452&r=cbe |
| By: | 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: | The paper reports from an experiment studying how the aversion to lying is affected by non-economic dimensions of the choice situation. Specifically, we study whether people are more or less likely to lie when the content of the lie is personal, when they base decisions on intuition, and when they are in a market context. We also study how aversion to lying depends on personal characteristics, including age, gender, cognitive ability, personality and social preferences. Our main finding is that non-economic aspects of the choice situation are crucial in understanding aversion to lying. In particular, we find that people are less likely to lie when the content of the message is personal. We also find large effects from priming the participants to rely on intuition, but, interestingly, in this case the effect only applies to males. Finally, we find that people who are highly motivated by social preferences are more averse to lying, but there is no significant relationship between lying behavior and other personal characteristics. |
| Keywords: | Experiment; lying; personal characteristics |
| JEL: | D63 |
| Date: | 2012–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2012_017&r=cbe |
| By: | Andrea Leuermann; Benjamin Roth |
| Abstract: | Recent studies have found correlations between risk attitudes and several sociodemographic characteristics. In this paper, we deploy an artefactual field experiment and study whether subjects - non-professionals and -financial professionals - are aware of these correlations. This is largely confirmed by our results for all subject groups. We show that the subjects attach informational value to sociodemographic information when assessing others' risk attitudes. This provides external validity to the correlations found between risk preferences and sociodemographics. A person's self-assessment of risk attitudes is the most helpful device for the subjects' assessments of others, although experienced professionals make use of it to a minor extent than all other subjects. |
| Keywords: | Risk preferences, financial advice, artefactual field experiment, behavioral finance |
| JEL: | C91 D81 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp474&r=cbe |
| By: | Hanan Shteingart; Tal Neiman; Yonatan Loewenstein |
| Abstract: | We quantified the effect of first experience on behavior in operant learning and studied its underlying computational principles. To that goal, we analyzed more than 200,000 choices in a repeated-choice experiment. We found that the outcome of the first experience has a substantial and lasting effect on participants' subsequent behavior, which we term outcome primacy. We found that this outcome primacy can account for much of the underweighting of rare events, where participants apparently underestimate small probabilities. We modeled behavior in this task using a standard, model-free reinforcement learning algorithm. In this model, the values of the different actions are learned over time and are used to determine the next action according to a predefined action-selection rule. We used a novel non-parametric method to characterize this action-selection rule and showed that the substantial effect of first experience on behavior is consistent with the reinforcement learning model if we assume that the outcome of first experience resets the values of the experienced actions, but not if we assume arbitrary initial conditions. Moreover, the predictive power of our resetting model outperforms previously published models regarding the aggregate choice behavior. These findings suggest that first experience has a disproportionately large effect on subsequent actions, similar to primacy effects in other fields of cognitive psychology. The mechanism of resetting of the initial conditions which underlies outcome primacy may thus also account for other forms of primacy. |
| Keywords: | reinforcement learning, operant conditioning, underweighting of rare events, risk aversion, primacy |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:huj:dispap:dp626&r=cbe |
| By: | Mitesh Kataria (Max Planck Institute of Economics, Jena); M. Vittoria Levati (Max Planck Institute of Economics, Jena, and University of Verona); Matthias Uhl (Technical University of Munich) |
| Abstract: | We investigate experimentally whether the protégés' reaction to paternalism depends on the consequences of the paternalistic action to their well-being. We find that protégé punish a paternalist restricting their freedom of choice. Yet, this negative reaction is not based on principled grounds because, with hindsight, protégés punish the paternalist only if the restriction makes them worse off. Conversely, if the restriction makes them better off, the protégé on average do not punish and, sometimes, they even reward the paternalist. This suggests that protégés take a consequentialist stand on paternalism. Controlling for intentions ascribed to the patron does not alter our finding. |
| Keywords: | Paternalism, Consequentialism, Value of freedom, Experiment |
| JEL: | C92 D6 P16 |
| Date: | 2012–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2012-050&r=cbe |