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on Cognitive and Behavioural Economics |
| By: | Falk, Armin (University of Bonn); Szech, Nora (University of Bamberg) |
| Abstract: | This paper studies how organizational design affects moral outcomes. Subjects face the decision to either kill mice for money or to save mice. We compare a Baseline treatment where subjects are fully pivotal to a Diffused-Pivotality treatment where subjects simultaneously choose in groups of eight. In the latter condition eight mice are killed if at least one subject opts for killing. The fraction of subjects deciding to kill is higher when pivotality is diffused. The likelihood of killing is monotone in subjective perceptions of pivotality. On an aggregate level many more mice are killed in Diffused-Pivotality than Baseline. |
| Keywords: | morality, pivotality, experiment, organization, responsibility |
| JEL: | C91 D01 D03 D23 D63 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7442&r=cbe |
| By: | Johannes Abeler (School of Economics, University of Oxford); Daniele Nosenzo (School of Economics, University of Nottingham) |
| Abstract: | Laboratory experiments have become a wide-spread tool in economic research. Yet, there is still doubt about how well the results from lab experiments generalize to other settings. In this paper, we investigate the self-selection process of potential subjects into the subject pool. We alter the recruitment email sent to first-year students, either mentioning the monetary reward associated with participation in experiments; or appealing to the importance of helping research; or both. We find that the sign-up rate drops by two-thirds if we do not mention monetary rewards. Appealing to subjects’ willingness to help research has no effect on signup. We then invite the so-recruited subjects to the laboratory to measure a range of preferences in incentivized experiments. We do not find any differences between the three groups. Our results show that student subjects participate in experiments foremost to earn money, and that it is therefore unlikely that this selection leads to an over-estimation of social preferences in the student population. |
| Keywords: | Methodology; Selection bias; Laboratory experiment; Field experiment; Otherregarding behavior; Social preferences; Social Approval; Experimenter Demand. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2013-03&r=cbe |
| By: | Eckel, Catherine; Johnson, Cathleen; Montmarquette, Claude |
| Abstract: | The purpose of the study is to better understand human capital investment decisions of the working poor, and to collect information that can be used to design a policy to induce the poor to invest in human capital. We use laboratory experimental methodology to elicit the preferences and observe the choices of the target population of a proposed government policy. We recruited 256 subjects in Montreal, Canada; 72 percent had income below 120 percent of the Canadian poverty level. The combination of survey measures and actual decisions allows us to better understand individual heterogeneity in responses to different subsidy levels. In particular, participants chose between various cash alternatives and educational subsidies, for themselves and for a family member, allowing for the construction of two measures of willingness to invest in education. Two behavioral characteristics, patience and attitude towards risk, are key to understanding the determinants of educational investment for the low-income individuals in this experiment. The decision to save for a family member’s education is somewhat different from that of investing in one’s own education. Patient participants were more likely to save for a family member’s education, but in contrast to investing in one’s own education, a subject’s attitude towards risk played no role. |
| Keywords: | Intertemporal choice, field experiments, risk attitudes, working poor. |
| JEL: | C93 D81 D91 |
| Date: | 2012–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47782&r=cbe |
| By: | Mueller-Langer, Frank; Andreoli-Versbach, Patrick |
| Abstract: | Two 'order effects' may emerge in dynamic tournaments with information feedback. First, participants adjust effort across stages, which could advantage the leading participant who faces a larger 'effective prize' after an initial victory (leading-effect). Second, participants lagging behind may increase risk at the final stage as they have 'nothing to lose' (risk-taking). We use a randomized natural experiment in professional two-game soccer tournaments where the treatment (order of a stage-specific advantage) and team characteristics, e.g. ability, are independent. We develop an identification strategy to test for leading-effects controlling for risk-taking. We find no evidence of leading-effects and negligible risk-taking effects. |
| Keywords: | Tournaments; order effects; leading-effect; risk-taking; randomized natural experiments |
| JEL: | C93 C21 D01 L83 |
| Date: | 2013–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:15452&r=cbe |
| By: | Matteus Joffily (Center for Mind/Brain Sciences - UNIVERSITÀ DEGLI STUDI DI TRENTO); Giorgio Coricelli (Center for Mind/Brain Sciences - UNIVERSITÀ DEGLI STUDI DI TRENTO, GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon, Department of Economics, University of Southern California - University of Southern California) |
| Abstract: | The free-energy principle has recently been proposed as a unified Bayesian account of perception, learning and action. Despite the inextricable link between emotion and cognition, emotion has not yet been formulated under this framework. A core concept that permeates many perspectives on emotion is valence, which broadly refers to the positive and negative character of emotion or some of its aspects. In the present paper, we propose a definition of emotional valence in terms of the negative rate of change of free-energy over time. If the second time-derivative of free-energy is taken into account, the dynamics of basic forms of emotion such as happiness, unhappiness, hope, fear, disappointment and relief can be explained. In this formulation, an important function of emotional valence turns out to regulate the learning rate of the causes of sensory inputs. When sensations increasingly violate the agent's expectations, valence is negative and increases the learning rate. Conversely, when sensations increasingly fulfil the agent's expectations, valence is positive and decreases the learning rate. This dynamic interaction between emotional valence and learning rate highlights the crucial role played by emotions in biological agents' adaptation to unexpected changes in their world. |
| Keywords: | Emotional Valence ; Free-Energy Principle |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00834063&r=cbe |
| By: | Simone Gobien; Björn Vollan |
| Abstract: | Mutual aid among villagers in developing countries is often the only means of insuring against economic shocks. We use “lab-in-the-field experiments” in Cambodian villages to study social cohesion in established and newly resettled communities. Both communities are part of a land distribution project. The project participants all signed up voluntarily, and their socio-demographic attributes and pre-existing network ties are similar. We use a version of the “solidarity game” to identify the effect of voluntary resettlement on willingness to help fellow villagers after an income shock. We find a sizeable reduction in willingness to help others. Resettled players transfer on average between 47% and 74% less money than non-resettled players. The effect remains large and significant after controlling for personal network and when controlling for differences in transfer expectations. The costs of voluntary resettlement, not only monetary but also social, seem significantly higher than is commonly assumed by development planners. |
| Keywords: | Voluntary resettlement, Social cohesion, Risk-sharing networks, Monetary transfers, “Lab-in-the-field” experiment, Cambodia |
| JEL: | C93 O15 O22 R23 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2013-16&r=cbe |
| By: | Lilley, Andrew (University of Sydney); Slonim, Robert (University of Sydney) |
| Abstract: | This paper presents a model and experimental evidence to explain the "volunteering puzzle" where agents prefer volunteering time to donating money when monetary donations are, ceteris paribus, more efficient for providing resources to charity. In the model agents receive heterogeneous utility from pure and impure altruism (Andreoni 1989) that permits warm glow to vary between monetary donations and volunteering, thus allowing preferences for impure altruism to rationalize inefficient allocation decisions. We define a measure of the price of impure altruism as the additional proportion of income sacrificed by a donor to give in the dimension that maximizes her utility, holding the overall charitable contribution constant. To test the predictions of the model we ran an experiment in which we varied within-subjects the costs and benefits of monetary and volunteer donations. We also primed between-subjects the emphasis on the donation value to the charity (pure altruism) or the sacrifice to the donor (impure warm-glow altruism). Consistent with the model's predictions, the experiment shows that priming pure altruism increases the efficiency of donation choices, substitutability of donations between money and time and crowding out. Nonetheless, while greater impurity results in a more inefficient allocation of resources, empirically we find it increases overall charitable donations. We discuss the implications of our experimental results for both theory and policy. |
| Keywords: | altruism, warm glow, volunteering, monetary donations, laboratory experiments |
| JEL: | D64 D78 H41 C91 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7445&r=cbe |
| By: | Karina Gose (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | When an employee in a gift exchange game earns significantly less than the employer, the source of employer income does not affect effort choices. However, to induce one unit of effort, the employer has to pay higher wages than in a game without payoff inequality. |
| Keywords: | Gift exchange, fair wage-effort hypothesis, reciprocity, inequity aversion, tit for tat |
| JEL: | C91 D31 M52 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:130009&r=cbe |
| By: | Björn Vollan; Yexin Zhou; Andreas Landmann; Biliang Hu; Carsten Herrmann-Pillath |
| Abstract: | There is ample evidence for a “democracy premium”. Laws that have been implemented via election lead to a more cooperative behavior compared to a top-down approach. This has been observed using field data and laboratory experiments. We present evidence from Chinese students and workers who participated in public goods experiments and a value survey. We find a premium for top-down rule implementation stemming from people with stronger individual values for obeying authorities. When participants have values for obeying authorities, they even conform to non-preferred rule. Our findings provide strong evidence that the efficiency of political institutions depends on societal norms. |
| Keywords: | Deterrent effect of legal sanctions, expressive law, authoritarian norms, public goods, democratic voting, China |
| JEL: | A13 C92 D02 D72 H41 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2013-14&r=cbe |
| By: | Vanessa Mertins (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Susanne Warning (University of Augsburg) |
| Abstract: | It has recently been claimed that women’s social preferences are easier to manipulate than men’s. We tested for gender differences in responsiveness to a homo economicus prime in a gift-exchange experiment with 113 participants. We observed gender differences in the direction of prime-to-behavior effects. For men, we found that primed participants behaved more selfishly than non-primed men as expected. However and surprisingly, for women we observed that participants primed toward selfishness behaved less selfishly than non-primed women. To explain this counterintuitive result, we suggest that prime-to-behavior effects are sensitive to individuals’ associations with the prime. We surveyed 452 students to test whether the homo economicus prime activated systematically different associations among men and women. We found strong evidence that women have significantly less positive associations with the homo economicus concept than men, pointing to a likely reason for the observed contrast effect among women. |
| Keywords: | priming, gender difference, gift exchange, experiment |
| JEL: | C91 D03 D63 M52 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:dpaper:201309&r=cbe |
| By: | Holden, Stein (Centre for Land Tenure Studies, Norwegian University of Life Sciences) |
| Abstract: | This study revisits the issue whether poverty and shocks are associated with high discount rates by using an incentive compatible Multiple Price List approach in a poor rural population in Africa where a substantial share of the population had been affected by drought in the recent rainy season. Randomized treatments included tests for present bias, magnitude effects and time horizon effects. While the study revealed significant present bias, magnitude and time horizon effects, average rates of time preference remained high after correcting for risk aversion. Exposure to drought increased the average rates of time preference by 42-47%. |
| Keywords: | Time preferences; poverty; climatic shocks; risk aversion; artifactual field experiment; Multiple Price List approach; Malawi |
| JEL: | C93 D91 Q54 |
| Date: | 2013–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nlsclt:2013_008&r=cbe |
| By: | Andrew T. Ching (Rotman School of Management, University of Toronto); Tülin Erdem (Stern School of Business, New York University); Michael P. Keane (Nuffield College and Department of Economics, University of Oxford) |
| Abstract: | Learning models extend the traditional discrete choice framework by postulating that consumers have incomplete information about product attributes, and that they learn about these attributes over time. In this survey we describe the literature on learning models that has developed over the past 20 years, using the model of Erdem and Keane (1996) as a unifying framework. We described how subsequent work has extended their modeling framework, and applied learning models to a wide range of different products and markets. We argue that learning models have contributed greatly to our understanding of consumer behavior, in particular in enhancing our understanding of brand loyalty and long run advertising effects. We also discuss the limitations of existing learning models and discuss potential extensions. One key challenge is to disentangle learning as a source of dynamics from other key mechanisms that may generate choice dynamics (inventories, habit persistence, etc.). Another is to enhance identification of learning models by collecting and utilizing direct measures of signals, perceptions and expectations. |
| Keywords: | Learning Models, Choice modeling, Dynamic Programming, Structural models, Brand equity |
| Date: | 2013–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:nuf:econwp:1307&r=cbe |