nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2012‒10‒06
twelve papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Do people avoid opportunities to donate? A natural field experiment on recycling and charitable giving By Knutsson, Mikael; Martinsson, Peter; Wollbrant, Conny
  2. Opting-In: Participation Biases in the Lab By Slonim, Robert; Wang, Carmen; Garbarino, Ellen; Merrett, Danielle
  3. Information Feedback and Contest Structure in Rent-Seeking Games By Francesco Fallucchi; Elke Renner; Martin Sefton
  4. Self-Selection and Variations in the Laboratory Measurment of Other-Regarding Preferences Across Subject Pools: Evidence from One College Student and Two Adult Samples By D Nosenzo; Jon Anderson; Stephen V Burks; Jeffrey Carpenter; Lorenz Gotte; Karsten Maurer; Ruth Potter; Kim Rocha; Aldo Rustichini
  5. Fooling the Nice Guys: The effect of lying about contributions on public good provision and punishment By Bernd Irlenbusch; Janna Ter Meer
  6. When the stress of quitting meets the cost of playing: An Experiment on to quit or not to quit? By Schade, Christian; Snir, Avichai
  7. Is trust an ambiguous rather than a risky decision By Sacha Bourgeois-Gironde; Anne Corcos; François Pannequin
  8. Does team telecommuting affect productivity? An experiment By E. Glenn Dutcher; Krista Jabs Saral
  9. Conditional Cooperation and Disclosure in Developing Countries By Martinsson, Peter; Pham-Khanh, Nam; Villegas-Palacio, Clara
  10. Mediocrity and induced reciprocity By Natalia Montinari; Antonio Nicolo; Regine Oexl
  11. Measuring risk aversion with lists: A new bias By Antoni Bosch-Domenech; Joaquim Silvestre
  12. Menu-Dependent Emotions and Self-Control By Joaquin Gomez-Minambres; Eric Schniter

  1. By: Knutsson, Mikael (Dept of Psychology, University of Gothenburg); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Wollbrant, Conny (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We use a natural field experiment to investigate the hypothesis that generosity is partly involuntary, by examining whether individuals tend to avoid opportunities to act generously. In Sweden, new recycling machines for bottles and cans with an option of donating the returned deposit to charity were gradually introduced in one of the largest store chains. We find a substantial decline in recycling the month these new machines were introduced and a further decline in the following months. These results indicate that individuals avoid opportunities to act generously and corroborate findings from both lab and field studies supporting the claim that generous behavior is partly involuntary
    Keywords: Generosity; Donations; Natural field experiment; Avoidance behavior
    JEL: C93 D01 D03 D64
    Date: 2012–09–25
  2. By: Slonim, Robert (University of Sydney); Wang, Carmen (University of Sydney); Garbarino, Ellen (University of Sydney); Merrett, Danielle (University of Sydney)
    Abstract: Assuming individuals rationally decide whether to participate or not to participate in lab experiments, we hypothesize several non-representative biases in the characteristics of lab participants. We test the hypotheses by first collecting survey and experimental data on a typical recruitment population and then inviting them to participate in a lab experiment. The results indicate that lab participants are not representative of the target population on almost all the hypothesized characteristics, including having lower income, working fewer hours, volunteering more often, and exhibiting behaviors correlated with interest in experiments and economics. We discuss the implications and various methods for addressing non-representative biases.
    Keywords: participation bias, laboratory experiments
    JEL: C9
    Date: 2012–09
  3. By: Francesco Fallucchi (School of Economics, University of Nottingham); Elke Renner (School of Economics, University of Nottingham); Martin Sefton (School of Economics, University of Nottingham)
    Abstract: We investigate the role of information feedback in rent-seeking games with two different contest structures. In the stochastic contest a contestant wins the entire rent with probability equal to her share of rent-seeking expenditures; in the deterministic contest she receives a share of the rent equal to her share of rent-seeking expenditures. Information feedback has very different effects depending on the contest structure. We observe the highest rent dissipation in stochastic contests when players only get feedback on own choices and earnings. In these contests aggregate expenditures usually exceed the value of the rent. We find that giving additional feedback about rivals? choices and earnings moderates average expenditures. In contrast, in deterministic contests average expenditures converge to equilibrium levels when subjects only get feedback about own choices and earnings. In these contests additional feedback about rivals? choices and earnings has the opposite effect of raising average expenditures.
    Keywords: contests, rent-seeking, information, learning, imitation, experiments
    Date: 2012–12
  4. By: D Nosenzo (School of Economics, the University of Nottingham); Jon Anderson (Division of Science and Mathematics, University of Minnesota); Stephen V Burks (Division of Social Science, University of Minnesota); Jeffrey Carpenter (Department of Economics, Middlebury College); Lorenz Gotte (Faculty of Business and Economics, University of Lausanne); Karsten Maurer (Department of Statistics, Iowa State University); Ruth Potter (Division of Social Science, University of Minnesota); Kim Rocha (Division of Social Science, University of Minnesota); Aldo Rustichini (Department of Economics, University of Minnesota)
    Abstract: We measure the other-regarding behavior in samples from three related populations in the upper Midwest of the United States: college students, non-student adults from the community surrounding the college, and adult trainee truckers in a residential training program. The use of typical experimental economics recruitment procedures made the first two groups substantially self-selected. Because the context reduced the opportunity cost of participating dramatically, 91% of the adult trainees solicited participated, leaving little scope for self-selection in this sample. We find no differences in the elicited other-regarding preferences between the selfselected adults and the adult trainees, suggesting that selection is unlikely to bias inferences about the prevalence of other-regarding preferences among non-student adult subjects. Our data also reject the more specific hypothesis that approval-seeking subjects are the ones most likely to select into experiments. Finally, we observe a large difference between self-selected college students and self-selected adults: the students appear considerably less pro-social.
    Keywords: methodology; selection bias; laboratory experiment; field experiment; other regarding behavior, social preferences, prisoner's dilemma, truckload, trucker.
    Date: 2012
  5. By: Bernd Irlenbusch (University of Cologne); Janna Ter Meer (University of Cologne)
    Abstract: Our study takes an individual perspective on receiver credulity in a public good setting with deceptive messages. In a laboratory experiment, subjects play a public good game with punishment in which feedback on actual contributions is obscured. Instead, subjects can communicate what they have contributed through a post-hoc announcement mechanism. Using subject’s social value orientation, we show that those highest on the measure are too optimistic towards announcements of their fellow group members. This, in turn, influences payoff-relevant decisions: those high on social value orientation contribute more to the public good and punish their fellow group members less.
    Keywords: public goods, punishment, lying, receiver credulity
    JEL: C92 D03 H41 D02
    Date: 2012–08
  6. By: Schade, Christian; Snir, Avichai
    Abstract: Business-owners often postpone disinvestment decisions even when future profits are not expected to compensate for current losses. We use an experiment to study one possible behavioral motivation. Studies in psychology suggest that making decisions is stressful and, consequently, many people prefer to buck-pass their decisions to someone else or to postpone them to future periods. Other people, however, are vigilant subjects that are able to make efficient decisions. In our experiment, we measure subjects’ buck-passing, vigilance and risk-aversion traits and study their performance in games in which they have to make investment and disinvestment decisions. We find that the number of rounds most subjects play is greater than the number expected by real-option theory but that vigilant and risk-averse subjects tend to make decisions that are more efficient than all other subjects, that vigilant but not risk-averse subjects tend to shirk making the investment decisions and that buck-passing and not risk-averse subjects tend to postpone their disinvestment decisions even when they make losses that would have induced most other subjects to disinvest. Unternehmer sind dafür bekannt, Desinvestitionsentscheidungen zu verschieben, auch wenn die Erwartung über zukünftige Gewinne nicht ausreicht, um die derzeitigen Verluste zu kompensieren. Wir führen eine experimentelle Studie durch, um einen möglichen Treiber dieses Verhaltens besser zu verstehen. Psychologische Studien zeigen, dass das Treffen von Entscheidungen mit Stress verbunden sein kann, und dass viele Menschen daher eine Neigung haben, entweder andere ihre Entscheidungen treffen zu lassen oder diese auf zukünftige Perioden zu verschieben. Andere Personen sind dagegen wachsam und dazu in der Lage, effizient zu entscheiden. In unserem Experiment messen wir die Tendenz von Personen, ihre Entscheidungen zu verschieben bzw. wachsam zu sein sowie deren Risikobereitschaft und beobachten, wie gut diese in Spielen abschneiden, in denen sie Investitions- und Desinvestitionsentscheidungen treffen müssen. Unsere Ergebnisse zeigen, dass die meisten Personen mehr Runden spielen, als dies auf Basis der Realoptionstheorie erklärt werden kann, dass aber zugleich wachsame und risikoaverse Personen Entscheidungen treffen, die näher an eine effiziente Entscheidung herankommen als die anderer Personen. Wir zeigen weiterhin, dass wachsame, aber nicht risikoaverse Personen dazu neigen, die Investitionsentscheidung gar nicht erst zu treffen (d.h., die Teilnahme an dem Spiel zu vermeiden), und dass verschiebende und nicht risikoaverse Personen dazu neigen, ihre Desinvestitionsentscheidungen auch dann spät zu treffen, wenn sie Verluste machen, bei denen andere längst mit dem Spiel aufgehört hätten.
    Keywords: buck-passing, conflict theory of decision making, disinvestment decisions, economic experiment, optimal stopping, player types, risk aversion, vigilance, Buck-passing (Entscheidungsverschiebungsneigung), Konflikttheorie der Entscheidung, Desinvestitionsentscheidungen, ökonomisches Experiment, optimal stopping, Spielertypen, Risikoneigung, Vigilance (Wachsamkeit), Agribusiness, Agricultural and Food Policy, Farm Management, Labor and Human Capital, Risk and Uncertainty, D03, D81, L26,
    Date: 2012–09
  7. By: Sacha Bourgeois-Gironde (IJN - Institut Jean-Nicod - CNRS : UMR8129 - Ecole Normale Supérieure de Paris - ENS Paris - Ecole des Hautes Etudes en Sciences Sociales (EHESS), LEM - Laboratoire d'Économie Moderne - Université Paris II - Panthéon-Assas : EA4442); Anne Corcos (LEM - Laboratoire d'Économie Moderne - Université Paris II - Panthéon-Assas : EA4442); François Pannequin (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, ENS Cachan - Ecole Normale Supérieure de Cachan - École normale supérieure de Cachan - ENS Cachan)
    Abstract: According to an early approach, the decision to trust in the one-shot anonymous trust game is intuitively tantamount to a risky decision: the willingness to bet on the reciprocation of my investment. In a seminal study, Eckel and Wilson (2004) explored the correlation between risk attitudes (as elicited through a Holt and Laury mechanism) and the behavior of investors in the trust game. They found no correlation: trust decision cannot be viewed as a risky decision. However, since the probabilities of possible returns are unknown, we argue that trust behavior may correlate more specifically with ambiguity aversion rather than with risk aversion. We therefore modified Eckel and Wilson's experimental procedure in order to investigate the question as to whether trust is an ambiguous decision. We extended Holt and Laury switching-point elicitation mechanism between risky lotteries to ambiguous lotteries as Chrakravarty and Roy (2009) did. We then ran an experimental session including a standard one shot anonymous trust game (OSG). We found significant negative correlations between aversion to ambiguity and behavior in OSG. This result is a plea in favor of a decision-theoretical analogy between choices in ambiguous lotteries and trust-games.
    Keywords: trust, risk aversion, ambiguity
    Date: 2012–08–10
  8. By: E. Glenn Dutcher; Krista Jabs Saral
    Abstract: Telecommuting policies have been increasingly adopted by employers. The benefits of telecommuting from the employer's perspective include direct cost-saving from not having to house employees in an office and indirect cost-saving through reduced turnover associated with increased employee satisfaction. The downside is the perceived opportunity for shirking outside of the traditional workplace, a problem which is potentially exacerbated if employees are placed into telecommuting teams. Using a controlled experiment which randomly assigned subjects to participate in the laboratory (non-telecommuters) or to participate online in a location of their choice (telecommuters), we directly test whether telecommuters are more likely to free ride when in teams and whether or not the locational composition of the team influences this outcome. We find no evidence of free-riding in teams for either telecommuters or non-telecommuters. We also find that variation in output when a worker is paired in a traditional team versus a telecommuting team can be attributed to the beliefs subjects have about their teammates' productivity. The last result leads directly to policy implications for managers.
    Keywords: Telecommuting, Team Production, Productivity, Virtual Teams, Economic Experiments
    JEL: J21 J24 J28 C90
    Date: 2012–09
  9. By: Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Pham-Khanh, Nam (Department of Economics, School of Business, Economics and Law, Göteborg University); Villegas-Palacio, Clara (Dept of Geosciences and Environment,)
    Abstract: Understanding the motivations behind people’s voluntary contributions to public goods is crucial for the broader issues of economic and social development. By using the experimental design of Fischbacher et al. (2001), we investigate the distribution of contribution types in two developing countries with very high collectivism rating – Colombia and Vietnam – and compare our findings with those previously found in developed countries. We also investigate the effect of introducing disclosure of contribution on the distribution of contribution types and on the contribution itself. Overall, our experiments show that the distribution of contribution types remains unaffected by the disclosure of contributions and, on average, is similar both in the two countries and when compared with previous findings with the exception of proportion of free-riders.<p>
    Keywords: Conditional cooperation; Disclosure; Experiment; Public Goods.
    JEL: C72 C92 H41
    Date: 2012–09–25
  10. By: Natalia Montinari; Antonio Nicolo; Regine Oexl
    Abstract: We report evidence from an experiment where a principal chooses an agent out of two to perform a task for a fixed compensation. The principal's payoff depends on the agent's ex-ante ability and on a non-contractible effort that the agent has to exert once employed. We find that a significant share of principals select the mediocre agent (i.e. the one with the lower ex-ante ability). When the principal is allowed to send a message, mediocre agents exert more effort than agents with higher ability, and principals who choose mediocre agents on average have a larger payoff than principals who select agents with higher ability. This difference in effort overcompensates the difference in ability. Mediocre agents reciprocate more than agents who have ex-ante higher ability when the principals are able to make them feeling indebted.
    Keywords: reciprocity, communication, incentives, mediocrity
    JEL: C9
    Date: 2012–09
  11. By: Antoni Bosch-Domenech; Joaquim Silvestre (Department of Economics, University of California Davis)
    Abstract: Various experimental procedures aimed at measuring individual risk aversion involve a list of pairs of alternative prospects. We first study the widely used method by Holt and Laury (2002), for which we find that the removal of some items from the lists yields a systematic decrease in risk aversion and scrambles the ranking of individuals by risk aversion. This bias, that we call embedding bias, is quite distinct from other confounds that have been previously observed in the use of the Holt and Laury method. It may be related to empirical phenomena and theoretical developments where better prospects increase risk aversion. Nevertheless, we also find that the more recent elicitation method due to Abdellaoui et al. (2011), also based on lists but using only one and the same probability in the list, does not display any statistically significant bias when the corresponding items of the list are removed. Our results suggest that methods other than the popular Holt and Laury one may be preferable for the measurement of risk aversion.
    Keywords: Risk aversion, risk attitudes, experiments, lists, elicitation method, Holt, Laury, Abdellaoui, Driouchi, l’Haridon, independence axiom, probability weighting
    JEL: C
    Date: 2012–09–26
  12. By: Joaquin Gomez-Minambres (Economic Science Institute, Chapman University); Eric Schniter (Economic Science Institute, Chapman University)
    Abstract: We study a dynamic model of self-control where the history of one's decisions (understood as emotions) has influence on subsequent decision making. We propose that effort and regret are emotions produced by previous decisions to either resist or yield to temptation, respectively. When recalled, these emotions affect an individual's preferences, in turn affecting self-control decision at a particular point in time. Our model provides a unified explanation for several empirical regularities puzzling economists and cognitive scientists. We explain non-stationary consumption paths characterized by compensatory indulgence and restraint cycles, why the amplitude of consumption cycles increases with foresight and decreases with emotional memory, and, finally, we show how unavoidable options that might show up on one's menu influence choices, consequent emotions, consumption paths, and preferences for commitment.
    Date: 2012

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