nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2013‒11‒02
fourteen papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Confucianism and Preferences: Evidence from Lab Experiments in Taiwan and China By Liu, Elaine M.; Meng, Juanjuan; Wang, Joseph Tao-yi
  2. Effects of Religiosity on Social Behaviour: Experimental Evidence from a Representative Sample of Spaniards By Brañas-Garza, Pablo; Espín, Antonio M.; Neuman, Shoshana
  3. Nannying, nudging, rewarding? A discussion on the constraints and the degree of control over health status By Christine le Clainche; Sandy Tubeuf
  4. Partnership and trust in gift-exchange games. By Benoît Chalvignac
  5. You Are Who Your Friends Are: An Experiment on Trust and Homophily in Friendship Networks By Fabian Winter; Mitesh Kataria
  6. Individuals, Teams and Hometowns in an Experimental Market in China By Xiangdong Qin; Junyi Shen; Ken-Ichi Shimomura; Takehiko Yamato
  7. Incentives and creativity in groups By Ramm, Joachim; Tjøtta, Sigve; Torsvik, Gaute
  8. Tit for Others' Tat Repeated Prisoner's Dilemma Experiments with Third-Party Monitoring and Indirect Punishment By Lisa Bruttel; Werner Güth
  9. Social Centipedes: the Impact of Group Identity on Preferences and Reasoning By Le Coq, Chloe; Tremewan, James; Wagner, Alexander K.
  10. A Model of Non-Belief in the Law of Large Numbers By Collin Raymond; Daniel J. Benjamin; Matthew Rabin
  11. Revealed Notions of Distributive Justice II: Experimental Evidence By Nicole Becker; Kirsten Häger; Jan Heufer
  12. Mortality Salience, Self-esteem and Status Seeking By C. Giannetti; R. Orsini
  13. Fair Division in Unanimity Bargaining with Subjective Claims By Anita Gantner; Kristian Horn; Rudolf Kerschbamer
  14. Norm enforcement in the city: A natural field experiment By Loukas Balafoutas; Nikos Nikiforakis

  1. By: Liu, Elaine M. (University of Houston); Meng, Juanjuan (Peking University); Wang, Joseph Tao-yi (National Taiwan University)
    Abstract: This paper investigates how Confucianism affects individual decision making in Taiwan and in China. We found that Chinese subjects in our experiments became less accepting of Confucian values, such that they became significantly more risk loving, less loss averse, and more impatient after being primed with Confucianism, whereas Taiwanese subjects became significantly less present-based and were inclined to be more trustworthy after being primed by Confucianism. Combining the evidence from the incentivized laboratory experiments and subjective survey measures, we found evidence that Chinese subjects and Taiwanese subjects reacted differently to Confucianism.
    Keywords: social norm, Confucianism, time preferences, risk aversion, trust
    JEL: C91 Z10
    Date: 2013–10
  2. By: Brañas-Garza, Pablo (Middlesex University Business School, London); Espín, Antonio M. (Universidad de Granada); Neuman, Shoshana (Bar-Ilan University)
    Abstract: This study explores the effect of several personal religion-related variables on social behaviour, using three paradigmatic economic games: the dictator (DG), ultimatum (UG), and trust (TG) games. A large carefully designed sample of a Spanish urban adult population (N=766) is employed. From participants' decisions in these games we obtain measures of altruism, bargaining behaviour and sense of fairness/equality, trust, and positive reciprocity. Three dimensions of religiosity are examined: (i) religious denomination; (ii) the intensity of religiosity, measured by active participation at church services; and (iii) converting out into a different denomination than the one raised in. The major results are: (i) individuals with "no religion" made decisions closer to rational selfish behaviour in the DG and the UG compared to those who affiliate with a "standard" religious denomination; (ii) among Catholics, intensity of religiosity is the key variable that affects social behaviour insofar as religiously-active individuals are generally more pro-social than non-active ones; and (iii) the religion raised in seems to have no effect on pro-sociality, beyond the effect of the current measures of religiosity. Importantly, behaviour in the TG is not predicted by any of the religion-related variables we analyse. Given the accelerating share of "no religion" individuals (in Europe and elsewhere) and the large influx of immigrants – who tend to be more religiously active compared to the native populations – our findings have significant implications for the future pro-sociality patterns in Europe.
    Keywords: church attendance, religion, economic experiments, pro-social behaviour, Spain
    JEL: C7 C9 Z12 Z13
    Date: 2013–10
  3. By: Christine le Clainche (CEE, Economics Department, Paris); Sandy Tubeuf (Academic Unit of Health Economics (University of Leeds),)
    Abstract: Public health policies typically assume that there are characteristics and constraints over health that an individual cannot control and that there are choices that an individual could change if he is nudged or provided with incentives. We consider that health is determined by a range of personal, social, economic and environmental factors and we discuss to what extent an individual can control those factors. In particular, we assume that observed health status is the result of individual control and constraints to change that an individual faces. We suggest three different constraints: budget, time and psychological constraints and position various determinants of health according to increasing levels of constraint and increasing degrees of individual control. We finally discuss public health policies such as nannying, nudging, and rewarding within this new framework and show that the level of constraints and the degree of individual control over health status are essential dimensions to consider when designing and implementing public health policies.
    Keywords: health determinants, equality of opportunity, individual agency, health public policy
    JEL: I1 I18 I12 D01 D63
    Date: 2013
  4. By: Benoît Chalvignac
    Abstract: In this paper we extend the gift-exchange game setting to include a new experimental treatment where subjects are paired with the same partner for the whole game. We observe that the matching mode is more critical to cooperation levels than the contractual arrangement, and that trust-based contracts outperform incentive-based contracts when interaction is repeated within the same pair. In the partner setting, individual preferences seem only to be second-order determinants of cooperation levels and most subjects are highly responsive to others' cooperative choices. Our findings help explain the cooperation dynamics required for organizations to leverage their incentive structure and to endure.
    Keywords: Gift-exchange game; Trust; Cooperation; Informal organization.
    JEL: D2 D7 M2
    Date: 2013
  5. By: Fabian Winter (Max-Planck Institute of Economics, Jena); Mitesh Kataria (Max-Planck Institute of Economics, Jena)
    Abstract: We study the existence of homophily (i.e. the tendency for people to make friends with people who are similar to themselves) with respect to trustworthiness. We ask whether two friends show similarly trustworthy behavior towards strangers, and whether this is anticipated by outsiders. We develop a simple model of bayesian learning in trust games and test the derived hypotheses in a controlled laboratory environment. In the experiment, two trustees sequentially play a trust game with the same trustor, where the trustees depending on treatmen are either friends or strangers to each other. We affirm the existence of homophily with re- spect to trustworthiness. Trustors' beliefs about the trustees' trustfulness are not affected by the knowledge about the (non-)existent friendship between the trustees. Behaviorally, however, they indirectly reciprocate the (un-)trustworthy behavior of one trustee towards his/her friends in later interactions.
    Keywords: social networks, homophily, trust, friendship, indirect tit-for-tat
    JEL: C92 D83 J24 J40
    Date: 2013–10–23
  6. By: Xiangdong Qin (School of Economics, Shanghai Jiao Tong University, China); Junyi Shen (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Ken-Ichi Shimomura (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Takehiko Yamato (Department of Social Engineering, Graduate School of Decision Science and Technology, Tokyo Institute of Technology, Japan)
    Abstract: Several papers have documented that individual decision-making and team or group decision-making differ in a broad range of economic situations. We conducted a market experiment in China to examine potential differences between team and individual trades, and potential effects of subjects’ hometowns on their behaviors. Our results revealed that increasing group size from one-person to two-person strengthened the bargaining power of subjects from coastal areas but weakened that of subjects from inland areas when commodity exchanges were conducted between subjects from different areas.
    Keywords: Market experiment, Team trade, Individual trade, Hometown, China
    JEL: C91 C92 D51
    Date: 2013–10
  7. By: Ramm, Joachim (Minestry of Local Governmenet and Regional Development); Tjøtta, Sigve (University of Bergen); Torsvik, Gaute (University of Bergen)
    Abstract: It has been argued that monetary incentives restrain individual creativity and hamper performance in jobs requiring out of the box thinking. This paper reports from an experiment designed to test if the negative incentive effect is present also when individuals work together to solve such problems. We do not find a negative impact of incentives on group performance. As a comparison we ran the same experiment (the Candle Problem) with and without incentives for individuals as well. Incentives did not reduce performance there either. Comparing individuals with groups we find that team-work facilitates creative problems solving. Individuals appear to be more creative when working together than when working alone.
    Keywords: Incentives; innovation; creativity
    JEL: J24 J31 M11 O31
    Date: 2013–06–01
  8. By: Lisa Bruttel (University of Konstanz, Department of Economics); Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group)
    Abstract: Two pairs of two participants each interact repeatedly in two structurally independent but informationally linked Prisoner's Dilemma games. Neither pair receives feedback about past choices by their own partner but is fully informed about the choices by the other pair. Considering this as a four-person infinite horizon game allows for Folk-Theorem-like voluntary cooperation. We ask whether monitoring and indirect punishment with the help of others are comparable to direct monitoring and punishment in establishing and maintaining voluntary cooperation. The treatment effects we find are rather weak. Others' monitoring of own activities is only an insufficient substitute for direct observability.
    Keywords: prisoner's dilemma, monitoring, experiment
    JEL: C73 C91 D82 D84
    Date: 2013–10–18
  9. By: Le Coq, Chloe (Stockholm Institute of Transition Economics); Tremewan, James (Department of Economics, University of Vienna (Austria)); Wagner, Alexander K. (Department of Economics, University of Cologne (Germany))
    Abstract: Using a group identity manipulation we examine the role of social preferences in an experimental one-shot centipede game. Contrary to what social preference theory would predict, we find that players continue longer when playing with outgroup members. Our explanation rests on two observations: (i) players should only stop if they are sufficiently confident that their partner will stop at the next node, given the exponentially-increasing payoffs in the game, and (ii) players are more likely to have this degree of certainty if they are matched with someone from the same group, whom they view as similar to themselves and thus predictable. We find strong statistical support for this argument. We conclude that group identity not only impacts a player’s utility function, as identified in earlier research, but also affects her reasoning about the partner’s behavior.
    Keywords: Group identity; centipede game; prospective reference theory
    JEL: C72 C91 C92 D83
    Date: 2013–09–30
  10. By: Collin Raymond; Daniel J. Benjamin; Matthew Rabin
    Abstract: People believe that, even in very large samples, proportions of binary signals might depart significantly from the population mean.� We model this "non-belief in the Law of Large Numbers" by assuming that a person believes that proportions in any given sample might be determined by a rate different than the true rate.� In prediction, a non-believer expects the distribution of signals will have fat tails, more so for larger samples.� In inference, a non-believer remains uncertain and influenced by priors even after observing an arbitrarily large sample.� We explore implications for beliefs and behavior in a variety of economic settings.
    Keywords: learning, non-Bayesian updating, behavioral economics, information economics
    JEL: B49 D03 D14 D83 G11
    Date: 2013–09–17
  11. By: Nicole Becker (TU Dortmund University and Ruhr Graduate School in Economics); Kirsten Häger (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Jan Heufer (TU Dortmund University)
    Abstract: We report the results of a combination of a dictator experiment with either a "social planner" or a "veil of ignorance" experiment. The experimental design and the analysis of the data are based on the theoretical framework proposed in the companion paper by Becker, Häger, and Heufer (BHH, 2013), in which we introduce a "notion of distributive justice" by which individuals trade off equality and efficiency. The purpose of the theoretical framework is to explain preferences in dictator experiments by a combination of selfishness and concerns for distributive justice. Most participants conform very well with the Agreement and Symmetry axioms proposed in BHH; we find that for 80% of participants the evidence is very strong. The experiment therefore demonstrates that most participants' behaviour in dictator experiments can be explained by a combination of selfishness and concerns for distributive justice. We also provide a rough classification of preferences and notions of distributive justice and show that participants' strength of the sense for justice (Karni and Safra 2002b) can be compared non- parametrically.
    Keywords: Altruism, Dictator Games, Distributive Justice, Experimental Economics, Non- parametric Analysis, Preference Decom- position, Revealed Preference, Social Preferences
    JEL: C14 C91 D11 D12 D63 D64
    Date: 2013–10–18
  12. By: C. Giannetti; R. Orsini
    Abstract: According to the Terror Management Theory, the fear of death may induce anxiety and threaten individual self-esteem. To remove this fear, individuals need to obtain and sustain self-esteem, for example by competing in rank order tournaments, or by focusing on status seeking. Within an experimental setting, this paper investigates the effect of Mortality Salience on individual productivity, manipulating the information on subjects’ relative performance in a real-effort task where the economic incentive is to not perform: in a first treatment subjects receive only private feedback, which may have effects on productivity via individual self-esteem, while in a second treatment subjects receive public feedback, which may have effects on productivity via status seeking. Our results suggest that the majority of subjects exposed to death-related thoughts tend to be more sensitive to in-group conformity when both types of feedback are provided.
    JEL: C91 C92 D12
    Date: 2013–10
  13. By: Anita Gantner; Kristian Horn; Rudolf Kerschbamer
    Abstract: In an experiment on a subjective claims problem we compare three unanimity bargaining procedures - the Demand, the Offer and the Exit variant - in terms of fairness and efficiency. To assess the fairness of the allocations obtained by these procedures, we evaluate them from a partial point of view using stakeholders' subjective evaluations of claims as elicited in a hypothetical fairness question, and we evaluate them from an impartial point of view using spectators' responses in a vignette. We find that after correcting for the self-serving bias in the partial view, both views point towards the same allocation. The Offer variant, which requires stakeholders to supply complete division proposals, yields outcomes that come closest to this fair allocation.
    Keywords: Fair Division, Subjective Claims, Bargaining, Experiment
    JEL: D63 C91 D61
    Date: 2013–10
  14. By: Loukas Balafoutas; Nikos Nikiforakis
    Abstract: Extensive evidence from laboratory experiments indicates that many individuals are willing to use costly punishment to enforce social norms, even in one-shot interactions. However, there appears to be little evidence in the literature of such behavior in the field. We study the propensity to punish norm violators in a natural field experiment conducted in the main subway station in Athens, Greece. The large number of passengers ensures that strategic motives for punishing are minimized. We study violations of two distinct efficiency enhancing social norms. In line with laboratory evidence, we find that individuals punish norm violators. However, these individuals are a minority. Men are more likely than women to punish violators, while the decision to punish is unaffected by the violator’s height and gender. Interestingly, we find that violations of the better known of the two norms are substantially less likely to trigger punishment. We present additional evidence from two surveys providing insights into the determinants of norm enforcement.
    Date: 2013

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.