nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2013‒08‒10
nine papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. The Skin In The Game Heuristic for Protection Against Tail Events By Nassim N. Taleb; Constantine Sandis
  2. Trust and Trustworthiness Under The Prospect Theory and Quasi-Hyperbolic Preferences: A Field Experiment in Vietnam By Quang NGUYEN; Marie Claire VILLEVAL; Hui XU
  3. Carry a big stick, or no stick at all An experimental analysis of trust and capacity of punishment By Vicente Calabuig; Enrique Fatas; Gonzalo Olcina; Ismael Rodriguez-Lara
  4. Changing Eating Habits – A Field Experiment in Primary Schools. By Michèle Belot (University of Edinburgh), Jonathan James (University of Bath) and Patrick Nolen (University of Essex)
  5. The Self-Image Signaling Roles of Voice in Decision-Making By Qiyan ONG; Yohanes Eko RIYANTO; Walter E. THESEIRA; Steven M. SHEFFRIN
  6. Giving and Sorting among Friends: Evidence from a Lab-in-the-Field Experiment By Binzel, Christine; Fehr, Dietmar
  7. Parental Investment and the Intergenerational Transmission of Economic Preferences and Attitudes By Maria Zumbuehl; Thomas Dohmen; Gerard Pfann
  8. Stochastic Asymmetric Blotto Games: Theory and Experimental Evidence By John Duffy; Alexander Matros
  9. Intertemporal Choice Shifts in Households: Do they occur and are they good? By Carlsson, Fredrik; Yang, Xiaojun

  1. By: Nassim N. Taleb; Constantine Sandis
    Abstract: Standard economic theory makes an allowance for the agency problem, but not the compounding of moral hazard in the presence of informational opacity, particularly in what concerns high-impact events in fat tailed domains. But the ancients did; so did many aspects of moral philosophy. We propose a global and morally mandatory heuristic that anyone involved in an action which can possibly generate harm for others, even probabilistically, should be required to be exposed to some damage, regardless of context. While perhaps not sufficient, the heuristic is certainly necessary hence mandatory. It is supposed to counter risk hiding in the tails. We link the rule to various philosophical approaches to ethics and moral luck.
    Date: 2013–08
  2. By: Quang NGUYEN (Division of Economics, Nanyang Technological University, Singapore 637332, Singapore); Marie Claire VILLEVAL (University of Lyon, F-69007, France; CNRS, GATE, 93, ChemindesMouilles, F-69130, Ecully, France; IZA, Bonn, Germany); Hui XU (University of Lyon, F-69007, France; CNRS, GATE, 93, ChemindesMouilles, F-69130, Ecully, France. Beijing Normal University,19 XinjiekouWai Street, Beijing 100875, P. R. China.)
    Abstract: This study incorporates risk, time, and social preferences. We conduct a field experiment in Vietnamese villages and estimate the effect of the Cumulative Prospect Theory and of quasi-hyperbolic time preferences parameters on trust and trustworthiness. We find that both probability sensitivity and risk aversion are not related to trust. Yet, more risk averse and less present biased participants are found to be trustworthier. People with longer exposure to a collectivist economy tend to have a lower level of trust and trustworthiness.
    Keywords: Trust, Trustworthiness, Cumulative Prospect Theory, Risk preferences, Time preferences, Quasi–hyperbolic preferences, Vietnam, Field experiment
    JEL: C91 C93 D81 D90
    Date: 2013–01
  3. By: Vicente Calabuig (ERICES, Universidad de Valencia); Enrique Fatas (University of East Anglia); Gonzalo Olcina (ERICES, Universidad de Valencia); Ismael Rodriguez-Lara (ERICES, Universidad de Valencia)
    Abstract: We investigate the effect of punishment in a trust game with endowment heterogeneity in which the investor may punish the allocator at a cost. Our results indicate that the effect of the punishment crucially depends on the investor’s capacity of punishment, that is measured in our experiment by the proportion of the allocator’s payoffs that the investor can destroy. We find that punishment fosters trust when the capacity of punishment is high (i.e., when the cost of punishing is relatively low). Otherwise, punishment fails to promote trusting behavior, crowding out intrinsic motivation to trust. Trustworthiness is higher with punishment than without punishment, except if investors have a high capacity of punishment
    Keywords: Trust game, punishment, crowding-out, intrinsic and extrinsic motivation, experimental economics
    JEL: C91 D02 D03 D69
    Date: 2013–08
  4. By: Michèle Belot (University of Edinburgh), Jonathan James (University of Bath) and Patrick Nolen (University of Essex)
    Abstract: We conduct a field experiment in 31 primary schools in England to test whether incentives to eat fruit and vegetables help children develop healthier habits. The intervention consists of rewarding children with stickers and little gifts for a period of four weeks for choosing a portion of fruit and vegetables at lunch. We compare the effects of two incentive schemes (competition and piece rate) on choices and consumption over the course of the intervention as well as once the incentives are removed and six months later. We find that the intervention had positive effects, but the effects vary substantially according to age and gender. However, we find little evidence of sustained long term effects, except for the children from poorer socio-economic backgrounds.
    Keywords: Incentives, Health, Habits, Child nutrition, Field experiment.
    JEL: J13 I18 I28 H51 H52
    Date: 2013–08–02
  5. By: Qiyan ONG (Division of Economics, Nanyang Technological University, Singapore 637332, Singapore); Yohanes Eko RIYANTO (Division of Economics, Nanyang Technological University, Singapore 637332, Singapore); Walter E. THESEIRA (Division of Economics, Nanyang Technological University, Singapore 637332, Singapore); Steven M. SHEFFRIN (Murphy Institute, Department of Economics at Tulane University, 108 Tilton Hall, New Orleans, LA 70115)
    Abstract: Why are individuals willing to pay costs in order to express their voice in decision-making settings? Research suggests voice provides a strategic opportunity to improve outcomes, or the perceived fairness of outcomes. This paper proposes that people are willing to expend resources to express their views to learn about themselves through “self-image signaling.” We distinguish between these differing interpretations of voice through a modified ultimatum game where responders are assigned opportunities to bid for voice, either to the proposer or to a third party. Strikingly, 63% of responders are willing to pay on average 34% of their endowments for the opportunity for voice, even when their messages are sent to a third party and thus hold no strategic value. The act of expressing voice appears to change a responder’s willingness to accept offers, suggesting that voice’s effects on self-image could be as important as any strategic or communications function.
    Keywords: Voice, Self-image, Signaling
    JEL: D03 C91
    Date: 2013–03
  6. By: Binzel, Christine (Heidelberg University); Fehr, Dietmar (WZB - Social Science Research Center Berlin)
    Abstract: Among residents of an informal housing area in Cairo, we examine how dictator giving varies by the social distance between subjects – friend versus stranger – and by the anonymity of the dictator. While giving to strangers is high under anonymity, we find – consistent with Leider et al. (2009) – that (i) a decrease in social distance increases giving, (ii) giving to a stranger and to a friend is positively correlated, and (iii) more altruistic dictators increase their giving less under non-anonymity than less altruistic dictators. However, friends are not alike in their altruistic preferences, suggesting that an individual's intrinsic preferences may not necessarily be shaped by his (or her) peers. Instead, reciprocal motives seem important, indicating that social relationships may be valued differently when individuals are financially dependent on them.
    Keywords: social distance, reciprocity, giving, networks, sorting
    JEL: C93 D64 L14 O12
    Date: 2013–07
  7. By: Maria Zumbuehl; Thomas Dohmen; Gerard Pfann
    Abstract: We study empirically whether there is scope for parents to shape the economic preferences and attitudes of their children through purposeful investments. We exploit information on the risk and trust attitudes of parents and their children, as well as rich information about parental efforts in the upbringing of their children from the German Socio-Economic Panel Study. Our results show that parents who invest more in the upbringing of their children are more similar to them with respect to risk and trust attitudes and thus transmit their own attitudes more strongly. The results are robust to including variables on the relationship between children and parents, family size, and the parents’ socioeconomic background.
    Keywords: parental investments, risk preferences, trust, intergenerational transmission, cultural economics, family economics, social interactions
    JEL: D80 J12 J13 J62 Z13
    Date: 2013
  8. By: John Duffy; Alexander Matros
    Abstract: We consider a model where two players compete for n items having different common values in a Blotto game. Players have to decide how to allocate their budgets across all n items. The winner of each item is determined stochastically using a lottery mechanism. We analyze two payoff objectives: (i) players aim to maximize their total expected payoff and (ii) players maximize the probability of winning a majority value of all n items. We develop some new theoretical results for the majority rule case and show that the majority rule objective results in qualitatively different equilibrium behavior than the total expected payoff objective. We report the results of an experiment where the two payoff mechanisms are compared and we find strong support for the theoretical predictions.
    Keywords: Colonel Blotto game, Contests, Resource Allocation, Lotteries, Electoral College, Game Theory, Political Theory, Experimental Economics
    JEL: C72 C73 C92 D72 D74
    Date: 2013–08
  9. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Yang, Xiaojun (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We examine whether and to what extent joint choices are more or less patient and time-consistent than individual choices in households. We use data from an artefactual field experiment where both individual and joint time preferences were elicited. We find a substantial shift from individual to joint household decisions. Interestingly, joint decisions do not only generate beneficial shifts, i.e., patient and time-consistent shifts. On the contrary, a majority of the observed shifts are impatient and time-inconsistent shifts. A number of observable characteristics are significantly correlated with these shifts in preferences from individual decisions to joint decisions.
    Keywords: individual decisions; joint decisions; patience; time-consistency; choice shifts; rural China
    JEL: C91 C92 C93 D10
    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.
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