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on Cognitive and Behavioural Economics |
| By: | Cristina Bodea; Adrienne LeBas |
| Abstract: | How do social contracts come into being? This paper argues that norm adoption plays an important and neglected role in this process. Using novel data from urban Nigeria, we examine why individuals adopt norms favoring a citizen obligation to pay tax where state enforcement is weak. We find that public goods delivery by the state produces the willingness to pay tax, but community characteristics also have a strong and independent effect on both social contract norms and actual tax payment. Individuals are less likely to adopt pro-tax norms if they have access to community provision of security and other services. In conflict-prone communities, where “self-help” provision of club goods is less effective, individuals are more likely to adopt social contract norms. Finally, we show that social contract norms substantially boost tax payment. This paper has broad implications for literatures on state formation, taxation, clientelism, and public goods provision. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2013/02&r=cbe |
| By: | Sheremeta, Roman |
| Abstract: | We provide an overview of experimental literature on contests and point out the two main phenomena observed in most contest experiments: (i) overbidding relative to the standard Nash equilibrium prediction and (ii) heterogeneous behavior of ex-ante symmetric contestants. Based on the sample of contest experiments that we review, the median overbidding rate is 72%. We provide different explanations for the overbidding phenomenon, including bounded rationality, utility of winning, other-regarding preferences, probability distortion, and the shape of the payoff function. We also provide explanations for heterogeneous behavior of contestants based on differences in preferences towards winning, inequality, risk and losses, and demographic differences. Furthermore, we suggest mechanisms that can reduce overbidding and induce more homogeneous behavior. Finally, we discuss directions for future research. |
| Keywords: | experiments; contests; overbidding; heterogeneous behavior |
| JEL: | C92 D74 D72 C91 C72 |
| Date: | 2013–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44124&r=cbe |
| By: | Jeffrey V. Butler (EIEF); Luigi Guiso (EIEF); Tullio Jappelli (University of Naples "Federico II" and CSEF) |
| Abstract: | Prior research suggests that those who rely on intuition rather than effortful reasoning when making decisions are less averse to risk and ambiguity. The evidence is largely correlational, however, leaving open the question of the direction of causality. In this paper, we present experimental evidence of causation running from reliance on intuition to risk and ambiguity preferences. We directly manipulate participants’ predilection to rely on intuition and find that enhancing reliance on intuition lowers the probability of being ambiguity averse by 30 percentage points and increases risk tolerance by about 30 percent in the experimental subpopulation where we would a priori expect the manipulation to be successful (males). |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:1301&r=cbe |
| By: | Sebastian J. Goerg; Jan Meise; Gari Walkowitz; Eyal Winter |
| Abstract: | We investigate strategic interactions of Israelis and Palestinians within a controlled laboratory experiment. In our first treatment we retrieve cooperation benchmarks prevailing within both subject pools. Then we measure cooperation levels and associated beliefs between Israelis and Palestinians. Treatment three assesses the influence of pre-play face-to-face encounter on cooperative behavior. Our findings are: The degree of expected and actual cooperation within the Palestinian subject pool is significantly higher as compared to the respective levels found in Israel. In line with previous findings, cooperation decreases if subjects are paired with subjects from the other subject pool. Previously detected subject pool differences are not offset. The drop in inter-subject pool cooperation can be outweighed by the introducing of face-to-face communication, which dramatically increases the cooperation rates. The differences in contributions between Palestinians and Israelis are associated with differences in subjects' beliefs. Face-to-face encounter increases and balances beliefs and therefore enhances cooperation. |
| Keywords: | Bargaining, Belief-structure, Israeli-Palestinian Conflict, International Cooperation, Prisoner's Dilemma |
| JEL: | A13 C72 C91 F51 |
| Date: | 2013–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:04-01&r=cbe |
| By: | David Danz; Frank Hüber; Dorothea Kübler; Lydia Mechtenberg; Julia Schmid |
| Abstract: | With the help of a simple model, we show that the hindsight bias can lead to ineffcient delegation decisions. This prediction is tested experimentally. In an online experiment that was conducted during the FIFA World Cup 2010 participants were asked to predict a number of outcomes of the ongoing World Cup and had to recall their assessments after the outcomes had been realized. This served as a measure of the hindsight bias for each participant. The participants also had to make choices in a delegation game. Our data confirm that hindsight-biased subjects more frequently fail to delegate optimally than subjects whom we have classified as not hindsight biased. |
| Keywords: | hindsight bias, delegation, experiments |
| JEL: | C72 C91 D84 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2013-009&r=cbe |
| By: | Giovanna Devetag; Sibilla Di Guida; Luca Polonio |
| Abstract: | We analyze subjects’ eye movements while they make decisions in a series of one-shot games. The majority of them perform a partial and selective analysis of the payoff matrix, often ignoring the payoffs of the opponent and/or paying attention only to specific cells. Our results suggest that subjects apply boundedly rational decision heuristics that involve best responding to a simplification of the decision problem, obtained either by ignoring the other players’ motivations or by considering them only for a subset of outcomes. Finally, we find a correlation between types of eye movements observed and choices in the games. |
| Keywords: | one-shot games; eye-tracking; similarity; categorization; focal points; experimental economics; individual behavior; behavioral economics |
| JEL: | C72 C91 D01 D83 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/138438&r=cbe |
| By: | Bas ter Weel; Lex Borghans (Maastricht University)............ Huub Meijers (Maastricht University) |
| Abstract: | This research provides an economic model of the way people behave during an IQ test. We distinguish a technology that describes how time investment improves performance from preferences that determine how much time people invest in each question. We disentangle these two elements empirically using data from a laboratory experiment. The main findings is that both intrinsic (questions that people like to work on) and extrinsic motivation (incentive payments) increase time investments and as a result performance. The presence of incentive payments seems to be more important than the size of the reward. Intrinsic and extrinsic motivation turn out to be complements. |
| JEL: | J20 J24 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:231&r=cbe |
| By: | Lunn, Pete |
| Keywords: | economic analysis/telecommunications |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:rb2012/4/3&r=cbe |