nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2013‒08‒05
twelve papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Public Good Provision, Punishment and the Endowment Origin: Experimental Evidence By Armenak Antynian; Luca Corazzini; daniel.neururer
  2. Trust and reciprocity among Mediterranean countries By Nikolaos Georgantzis; Juan A. Lacomba; Francisco Lagos; Juliette Milgram
  3. A robust test of warm glow giving and spiteful pleasure in a “real donation†experiment with and without earned endowments. By Andrew Luccasen; Philip J. Grossman
  4. Risk Aversion and Emotions By Nguyen, Y.; Noussair, C.N.
  5. Religion, Minority Status and Trust: Evidence from a Field Experiment By Gautam Gupta; Minhaj Mahmud; Pushkar Maitra; Santanu Mitra; Ananta Neelim
  6. Leadership, Information, and Risk Attitude: A Game Theoretic Approach By John T. Kulas; Mana Komai; Saint Cloud State University; Philip J. Grossman
  7. Justice under uncertainty By Riedl A.M.; Cettolin E.
  8. The Role of Probability Interval and Emotional Parameters By Robert M. Feinberg; Mahmud Yesuf
  9. Are Happier People Less Judgmental of Other People's Selfish Behaviors? Laboratory Evidence from Trust and Gift Exchange Games By Michalis Drouvelis; Nattavudh Powdthavee
  10. Who knows It is a game? On rule understanding, strategic awareness and cognitive ability By Fehr, Dietmar; Huck, Steffen
  11. Conducting pro-social research: cognitive diversity, research excellence and awareness about the social impact of research By D’Este,Pablo; Llopis,Oscar; Yegros,Alfredo
  12. Rule Rationality By Heller, Yuval; Winter, Eyal

  1. By: Armenak Antynian (University of Venice); Luca Corazzini (University of Padova); daniel.neururer (University of Innsbruck)
    Abstract: We study the interplay between contributions and costly punishment in a linear public good game in which subjects differ in the origin of their endowment: for half of the group members, obtaining the endowment is conditional on succeeding in a real effort task, while for the remaining half, it is exogenously granted. Compared to a benchmark treatment with no real effort task, we find no differences in contributions. However, we detect significant differences in punishment between treatments, with subjects in the benchmark being more inclined to punish non-cooperative behaviors. Moreover, in the treatment with heterogeneity of endowment sources, we find that subjects exerting real effort to earn their endowments assign fewer punishing points than those receiving a windfall endowments.
    Keywords: Endowment Origin, Linear Public Good Game, Punishment. JEL: D63, H41, C91, C92.
    Date: 2013–07
  2. By: Nikolaos Georgantzis (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Juan A. Lacomba (Department of Economics & GLOBE, University of Granada, Spain); Francisco Lagos (Department of Economics & GLOBE, University of Granada, Spain); Juliette Milgram (Department of Economics & GLOBE, University of Granada, Spain)
    Abstract: This article examines an intra- and international trust game experiment among Moroccan, French and Spanish subjects. Before making each decision, participants were informed on the nationality of their partner. We find that, overall, subjects from Morocco exhibited a higher level of trust. Furthermore, they were found to trust French subjects more than those from Spain. Regarding reciprocal behavior, subjects from Spain were the least trustworthy. Apart from this, we do not observe any discriminatory patterns from or towards any country.
    Keywords: trust, reciprocity, trust game, cross-country, experiment
    JEL: C91
    Date: 2013
  3. By: Andrew Luccasen; Philip J. Grossman
    Abstract: Behavioral research provides evidence consistent with individuals enjoying kind acts (Crumpler and Grossman, 2008) and with individuals enjoying harmful acts (Abbink and Herrmann, 2011). This paper reports on an experiment designed to test if kind or harmful acts are an artefact of the experimental design. We investigate this question using a “real donation†laboratory experiment (Eckel and Grossman 1996) in which participants make a dictator allocation decision and are paired with an actual charity. We use a 2x3 design to vary the action set (only give to charity, or, give to or take from charity) and the source of the endowment (house money, earned endowment, or earned charity endowment). The experiment is designed so that a pure altruist has no incentive to donate or take. In the context of the “real donation†experiment, we observe very few participants taking money from charity. We find that giving persists when the endowment is earned, and when participants are given the option to take. The results are consistent with a warm glow motivation for giving.
    Keywords: Warm glow; spiteful pleasure; charitable giving; lab experiment.
    Date: 2013–07
  4. By: Nguyen, Y.; Noussair, C.N. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: We consider the relationship between emotions and decision-making under risk. Specifically, we examine the emotional correlates of risk-averse decisions. In our experiment, individuals' facial expressions are monitored with facereading software, as they are presented with risky lotteries. We then correlate these facial expressions with subsequent decisions in risky choice tasks. We find that the valence of one’s emotional state is negatively correlated, and the strength of a number of emotions: fear, happiness, anger, and surprise, is positively correlated, with risk-averse decisions.
    Keywords: Risk aversion;emotions;facereading;fear.
    JEL: C9
    Date: 2013
  5. By: Gautam Gupta; Minhaj Mahmud; Pushkar Maitra; Santanu Mitra; Ananta Neelim
    Abstract: It is now well accepted that trust is crucial for economic and social development. There is also evidence that religion strongly affects how individuals act when interacting with others. The same is true of status. Using a field experiment conducted in Bangladesh and West Bengal, India, two regions, which are similar in terms of socioeconomic characteristics, ethnicity and language but have different religious composition, this paper examines whether religion or minority status affect trusts among different segments of the population. Our results show that it is minority status rather than religion that drives behavior. In both countries individuals belonging to the minority group (Muslims in West Bengal and Hindus in Bangladesh) exhibit positive in-group bias in trust behavior, while individuals belonging to the majority group in both countries (Hindus in West Bengla and Muslims in Bangladesh) show positive out-group bias in trustworthiness. The driver of this bias is however different across the two countries. Finally we find that the extent of in-group bias is systematically higher for religious individuals than non-religious individuals.
    Keywords: Trust, Religion, Status, In-group and Out-group, Field Experiment, South Asia.
    JEL: C93 N3 C21 D03
    Date: 2013–07
  6. By: John T. Kulas; Mana Komai; Saint Cloud State University; Philip J. Grossman
    Abstract: This paper experimentally investigates how risk attitudes mitigate leadership effectiveness in a collective setting with projects that exhibit both free riding and coordination problems. We take two novel approaches: 1) the introduction of economic game theory to psychological studies of leadership, and 2) the application of the leadership ontology of Drath et al. (2008) as a crossdisciplinary integrative framework. Leadership here is focused on the presence or absence of direction, alignment, and commitment as well as antecedent beliefs and practices that are held within a collective (for us, our experimental participants). Our leadership context is stripped down to very minimal conditions: three group members, an investment decision, and the introduction of information regarding group members' attitudes toward risk. We find that the mere mention of risk attitude (whether risky or risk averse) undermines leadership effectiveness in mitigating free riding for our 420 experimental participants. Our study’s primary implications lie in the application of game theory methodology to the psychological study of leadership, the introduction of relevant individual difference constructs to economic studies of leadership, and the advocation of the Drath et al. (2008) framework as a helpful integrative mechanism for interdisciplinary leadership research.
    Keywords: game theory; risk attitude; interdisciplinary research; group dynamics
    Date: 2013–07
  7. By: Riedl A.M.; Cettolin E. (GSBE)
    Abstract: An important element for the public support of policies is their perceived justice. At the same time most policy choices have uncertain outcomes. We report the results of a first experiment investigating just allocations of resources when some recipients are exposed to uncertainty. Although, under certainty almost all uninvolved participants distribute resources equally, they exhibit remarkable heterogeneity in just allocations under uncertainty. Moreover, uninvolved participants allocate on average less to recipients exposed to higher degrees of uncertainty and allocations are correlated with their own risk preferences. The observed allocations are consistent with four different views of justice under uncertainty.
    Keywords: Design of Experiments: Laboratory, Individual; Equity, Justice, Inequality, and Other Normative Criteria and Measurement;
    JEL: C91 D63
    Date: 2013
  8. By: Robert M. Feinberg; Mahmud Yesuf
    Abstract: We study risk and ambiguity aversion among experimental subjects, focusing on understanding the role of the degree of ambiguity (as measured by the probability interval) and selected emotional parameters on attitudes towards ambiguity. In contrast to the general findings in the literature that people usually tend to take gambles with known probability over equivalent gambles with ambiguous probability, we find that student subjects are ambiguity neutral when faced with a relatively narrow probability interval but ambiguity averse in relatively wider intervals. We also find that less trusting and more pessimistic individuals tend to avoid ambiguity, while a measure of subject happiness has no impact on ambiguity aversion. JEL classification:
    Date: 2013–07
  9. By: Michalis Drouvelis; Nattavudh Powdthavee
    Abstract: What determines people's moral judgments of selfish behaviors? Here we study whether people's normative views in trust and gift exchange games, which underlie many situations of economic and social significance, are themselves functions of positive emotions. We used experimental survey methods to investigate people's moral judgments empirically, and explored whether we could influence subsequent judgments by deliberately making some individuals happier. We found that moral judgments of selfish behaviors in the economic context depend strongly on other people's behaviors, but their relationships are significantly moderated by an increase in happiness for the person making the judgment.
    Keywords: Happiness, moral judgments, trust games, gift exchange games
    JEL: C91
    Date: 2013–07
  10. By: Fehr, Dietmar; Huck, Steffen
    Abstract: We introduce the notion of strategic awareness in experimental games which captures the idea that subjects realize they are playing a game and thus have to form beliefs about others' actions in order to play well. The concept differs from both, rule understanding and rationality. We then turn to experimental evidence from a beauty contest game where we elicit measures of cognitive ability and beliefs about others' cognitive ability. We show that the effect of cognitive ability is highly non-linear. Subjects' behavior below a certain threshold is indistinguishable from uniform random play and does not correlate with beliefs about others ability. In contrast, choices of subjects who exceed the threshold avoid dominated choices and react very sensitively to beliefs about others cognitive ability. -- In vielen Situationen spielt das Bewusstsein über strategische Komponenten eine wichtige Rolle. In diesem kurzen Artikel führen wir das Konzept von strategic awareness in Experimenten ein. Dieses neue Konzept beschreibt die Fähigkeit von Experimentteilnehmer, strategische Situationen zu erkennen und daher Erwartungen über das Verhalten von anderen zu bilden. Das Konzept unterscheidet sich sowohl von Rationalität als auch vom bloßen Verstehen von den Regeln eines Experiments. Wir demonstrieren das Konzept empirisch mit Hilfe von Daten eines Beauty Contest Games, in dem wir die kognitiven Fähigkeiten der Teilnehmer und ihre Einschätzungen über die kognitiven Fähigkeiten der anderen Teilnehmer erheben. Die Resultate zeigen, dass kognitive Fähigkeiten einen starken nichtlinearen Effekt auf die Entscheidungen in dem Beauty Contest Game haben. Das Verhalten von Experimentteilnehmer, die unter einer bestimmten Schwelle liegen, kann nicht von zufälligen Entscheidungen unterschieden werden und korreliert auch nicht mit deren Einschätzung über die kognitiven Fähigkeiten der anderen Teilnehmer. Im Gegensatz dazu vermeiden Teilnehmer, die über dieser Schwelle liegen, dominierte Entscheidungen und basieren ihre Entscheidungen auf ihrer Einschätzung über die kognitiven Fähigkeiten der anderen Teilnehmer.
    Keywords: strategic awareness,cognitive ability,beauty contest
    JEL: C7 C9 D0
    Date: 2013
  11. By: D’Este,Pablo; Llopis,Oscar; Yegros,Alfredo
    Abstract: We propose the concept of pro-social research as reflecting the adoption of conducts that place social relevance as a critical goal of research. We argue that pro-social conducts represent a behavioural antecedent of the actual engagement of scientists in knowledge transfer activities. Our study investigates the impact that different cognitive aspects have on the development of pro-social research behaviour. In particular, we examine if certain types of research skills (i.e. cognitive diversity and research excellence) have a positive impact in shaping a pro-social research behaviour and, more critically, if they act as substitutes for prior experience in knowledge transfer activities. The main source of data comes from a large scale survey conducted on all scientists at the Spanish Council for Scientific Research (CSIC).
    Keywords: Knowledge transfer, cognitive diversity, research excellence, pro-social behaviour
    JEL: O31 O32
    Date: 2013–07–31
  12. By: Heller, Yuval; Winter, Eyal
    Abstract: We study the strategic advantages of following rules of thumb that bundle different games together (called rule rationality) when this may be observed by one's opponent. We present a model in which the strategic environment determines which kind of rule rationality is adopted by the players. We apply the model to characterize the induced rules and outcomes in various interesting environments. Finally, we show the close relations between act rationality and “Stackelberg stability” (no player can earn from playing first).
    Keywords: Bounded Rationality, Commitments, Categorization, Value of information.
    JEL: C72 D82
    Date: 2013–07–31

This nep-cbe issue is ©2013 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.