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on Cognitive and Behavioural Economics |
| By: | Jeannette Brosig-Koch; Timo Heinrich; Christoph Helbach |
| Abstract: | We investigate learning and the development of the capability to backward induct in children and young adults aged 6 to 23 under controlled laboratory conditions. The experimental design employs a modified version of the race game. As in the original game (see Burks et al., 2009, Dufwenberg et al., 2010, Gneezy et al., 2010, and Levitt et al., 2011), subjects need to apply backward induction in order to solve the games. We find that subjects’ capability to backward induct improves with age, but that this process systematically diff ers across gender. Our repetition of the games provides insights into differences in learning between age groups and across gender. |
| Keywords: | Backward induction; learning; age effects; experimental economics; children |
| JEL: | C72 J13 C91 |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0360&r=cbe |
| By: | Testa, Alessia |
| Abstract: | We define path-dependency as the generic phenomenon according to which agents take an action regardless of their private information. Path-dependency can be of two types contingent on whether agents act with the crowd (herding) or against the crowd (contrarianism). We consider a quote-driven market where traders can in some cases observe whether their predecessors were informed, although they cannot observe their private information, while in other cases they are left with the uncertainty that their predecessors acted purely for liquidity motives. In this setting we recover herding and contrarianism and we find that better-informed markets (i.e. where informed traders receive high precision signals) can generate path-dependent behavior more easily than poorly informed ones. Moreover, we illustrate how a market dominated by herding features a price that is more informative of the asset value than the price of a market where traders always follow their signal. We also discuss how contrarianism has the exact opposite effect by decreasing price informativeness. |
| Keywords: | Herding; Contrarianism; Financial Markets |
| JEL: | D82 D83 G14 |
| Date: | 2012–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:388&r=cbe |
| By: | Seda Ertac (Department of Economics, Koç University); Mehmet Y. Gurdal (Department of Economics, TOBB-ETU) |
| Abstract: | This paper explores the effect of personality traits on: (1) the willingness to make risk-taking decisions on behalf of a group, (2) the nature of "choice shifts", i.e. the difference between the amount of risk taken in the group context and individually. Openness and agreeableness emerge as significant determinants of the willingness to lead: non-leader women and non-leader men score lower on openness and higher in agreeableness compared to both leader men and leader women. Neuroticism explains the within-gender variance in individual risk-taking among women, who are on average more risk-averse than men. Subjects in general behave more cautiously when they are making risky decisions on behalf of a group. Among men, a higher agreeableness score implies higher caution in group decisions, while conscientiousness leads to less caution. In contrast, among women, a higher conscientiousness score implies higher caution in the group context, suggesting that the two genders might interpret the social norms in group decision-making differently. |
| Keywords: | Personality, leadership, gender, group decision-making, risk, choice shifts, experiments. |
| JEL: | C91 C92 D81 J16 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1227&r=cbe |
| By: | Riener, Gerhard; Wiederhold, Simon |
| Abstract: | This paper investigates the interaction of intrinsic and extrinsic incentives. We propose a simple principal-agent model with control that incorporates the existence of social groups resulting from common experiences in the past. Our laboratory experiment shows that agents with previous common experiences with their principals (CE agents) perform better than agents without such experiences (NCE agents). However, as soon as actual control exceeds their expectation, CE agents decrease their performance substantially, which has no equivalent for NCE agents. This pronounced decrease in effort when control is perceived as excessive represents a novel channel through which hidden costs of control materialize. Our results have important implications for firms' strategies to motivate employees. -- |
| Keywords: | Employee motivation,Principal-agent theory,Experiments |
| JEL: | C92 M54 D03 J22 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:66&r=cbe |
| By: | Augurzky, Boris (RWI); Bauer, Thomas K. (RWI); Reichert, Arndt R. (RWI); Schmidt, Christoph M. (RWI); Tauchmann, Harald (RWI) |
| Abstract: | We test whether financial incentives have an effect on weight reduction in a randomized controlled trial involving 700 obese persons assigned to three experimental groups. While two treatment groups obtain €150 and €300, respectively, for achieving an individually assigned target weight within four months, a control group receives no such premium. The results indicate that the weight losses for the treatment groups are 2.6 and 2.9 percentage points higher than that achieved by the control group, raising the average total weight loss for the incentivized groups to 5 percent of the initial weight. This percentage is typically regarded as a threshold to improve the health status of the obese. Further evidence indeed indicates some health improvements. The higher reward causes only the group of obese women to lose more weight. Overall, the results suggest that financial incentives can motivate people to lose weight significantly. |
| Keywords: | randomized experiment, financial incentives for weight loss, obesity, non-random sample attrition, effect heterogeneity |
| JEL: | I10 I18 H23 C93 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6888&r=cbe |
| By: | Monic Sun (Department of Marketing, Stanford University); Xiaoquan (Michael) Zhang (Department of Information Systems, Business Statistics and Operations Management, Hong Kong University of Science and Technology); Feng Zhu (Department of Management and Organization, University of Southern California) |
| Abstract: | We examined whether people conform to or diverge from the most popular choice among their friends by conducting a large-scale field experiment on a leading social-networking site in China. Our setting allowed us to minimize confounding effects such as pre-existing taste similarities between a subject and her friends, the need to create a social identity, and the possibility of learning by observing friends’ choices. Surprisingly, we found that subjects were more likely to diverge from the popular choice among their friends as the popularity of that choice increased. The effect was more pronounced when they were reminded that their choices were visible to their friends. These results suggest that even members of a collectivist culture have a dominating need to be different. |
| Keywords: | uniqueness-seeking, conformity, collectivist culture, field experiment, social network |
| JEL: | C93 J10 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1215&r=cbe |
| By: | Isabelle SALLE (GREThA, CNRS, UMR 5113); Martin ZUMPE (GREThA, CNRS, UMR 5113); Murat YILDIZOGLU (GREThA, CNRS, UMR 5113); Marc-Alexandre SENEGAS (GREThA, CNRS, UMR 5113) |
| Abstract: | We propose an agent-based macroeconomic model (ABM) inspired by the New Keynesian general equilibrium model (NKM, Woodford 2003). We analyse the aggregate economic dynamics resulting from social learning of agents (households and firms). Households’ labour supply and consumption demand, as well as firms\' labour demand and wage offers evolve through imitation and random experimenting by the agents. We study, in this setting, the aggregate properties of the economy and the ability of those learning agents to coordinate on the intra-temporal equilibrium of the original model. Our approach is quite different from the existing learning literature in the NKM (à la Evans & Honkapohja, that mainly focuses on learning for testing local stability of equilibria), since learning is directly embedded in the behaviour of the individual agents. This original approach opens new perspectives about the NKM, and allows us to ask new questions about the coordination problems that can result from social learning. First, our computational analysis (Monte Carlo simulations) shows that social learning does not allow the agents to correctly learn about the interdependence between markets, because of the emergence of coordination problems that result in insufficient labour supply and depressive dynamics. Second, we shed light on the general properties of social learning that are behind these results in a general (dis)equilibrium setting, and prove that their neutralisation, at least on the one side of the markets, can significantly improve the performance of the economy. Our results point to the importance of carefully modelling learning mechanisms within macroeconomic ABMs. |
| Keywords: | Computational Economics, Agent-Based Modelling, Social Learning, New Keynesian Model, General Equilibrium, Coordination Problems |
| JEL: | C63 D11 D21 D51 D83 E21 E32 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2012-20&r=cbe |
| By: | Boris Augurzky; Thomas K. Bauer; Arndt R. Reichert; Christoph M. Schmidt; Harald Tauchmann |
| Abstract: | We test whether financial incentives have an effect on weight reduction in a randomized controlled trial involving 700 obese persons assigned to three experimental groups. While two treatment groups obtain Euro150 and Euro300, respectively, for achieving an individually assigned target weight within four months, a control group receives no such premium. The results indicate that the weight losses for the treatment groups are 2.6 and 2.9 percentage points higher than that achieved by the control group, raising the average total weight loss for the incentivized groups to 5 percent of the initial weight. This percentage is typically regarded as a threshold to improve the health status of the obese. Further evidence indeed indicates some health improvements. The higher reward causes only the group of obese women to lose more weight. Overall, the results suggest that financial incentives can motivate people to lose weight significantly. |
| Keywords: | Randomized experiment; financial incentives for weight loss; obesity; nonrandom sample attrition; effect heterogeneity |
| JEL: | I10 I18 H23 C93 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0368&r=cbe |