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on Cognitive and Behavioural Economics |
| By: | Lena Dräger (University of Hamburg); Ulrich Fritsche (University of Hamburg) |
| Abstract: | We compare the formation of quantitative infl ation perceptions and expectations from questions asked either in terms of price changes or in terms of the in flation rate in a new socio-economic household survey established at the University of Hamburg. In addition to socio-demographic characteristics, we evaluate effects of happiness, trust in people and the central bank, risk attitudes as well as news heard on monetary policy or in flation. We find that the upwards bias of reported perceptions and expectations is higher under the price wording and responses are more heterogeneous, but non-response rates are higher in the infl ation wording. Generally, consumers have lower perceptions or expectations with a higher level of education, which also significantly lowers the probability of non-response. Consumers that perceived positive news on monetary policy or infl ation also tend to give lower infl ation estimates and vice versa. Additionally, our results suggest that happier individuals have significantly lower perceptions and expectations under the price wording, while more risk-averse consumers give significantly higher in flation estimates under the inflation wording. |
| Keywords: | in flation perceptions, in flation expectations, survey design; mental representations, economic beliefs |
| JEL: | E31 D84 C83 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:hep:macppr:201308&r=cbe |
| By: | Tom Coupe (Kyiv School of Economics and Kyiv Economics Institute); Claire Monteiro (Georgetown University) |
| Abstract: | In this paper, we compare the charitable behavior of billionaires who inherited their wealth to the charitable behavior of those billionaires who made their own wealth. Self-made billionaires are found to be more likely to sign the ‘Giving Pledge’ and more likely to be in the Million Dollar Gifts lists or the Philanthropy Top 50 list of big givers, even after controlling for many other variables that can affect charitable behavior. They also are found to give more conditional on giving. This finding, which is consistent with ‘mental accounting’ occurring even at extremely high stakes, means policy makers in many emerging markets with ‘new’ billionaires better quickly modernize their outdated charity laws. |
| Keywords: | billionaires, Forbes, mental accounting, fundraising |
| JEL: | J81 D63 C14 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:kse:dpaper:51&r=cbe |
| By: | Mathis Schröder; Denise Sassenroth; John Körtner; Martin Kroh; Jürgen Schupp |
| Abstract: | The paper gives an overview of two experiments implemented in the German Socio-Economic Panel (SOEP) considering the effect of monetary incentives on cross-sectional and longitudinal response propensities. We conclude that the overall effects of monetary incentives on response rates are positive compared to the "classic" SOEP setting, where a charity lottery ticket is offered as an incentive. In the cross-section, cash incentives are associated with a higher response rate as well as a lower rate of partial unit non-response (PUNR) and fewer noncontacts on the household level. Separate analyses for German and immigrant households show that a monetary incentive has a positive effect on immigrant households’ participation in subsequent waves. Regarding the regions where the households are located, the high cash incentive has a positive effect on response rates in provincial towns and rural areas. The incentive treatment decreases the likelihood of PUNR in the longitudinal setting by motivating members of participating households who had refused to participate in previous waves to respond in subsequent waves. |
| Keywords: | Incentive experiment, response rates, partial unit nonresponse, nonresponse bias, conditional incentives |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp603&r=cbe |
| By: | C. Giannetti; R. Orsini |
| Abstract: | This paper investigates the determinants of reciprocity towards the experimenters in the lab under a flat-wage scheme. We find that personality attributes – such as agreeableness – help predict the behaviour of the subjects. We additionally propose and assess a general measure of reciprocity. |
| JEL: | C91 J33 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp913&r=cbe |
| By: | McGee, Andrew (Simon Fraser University); McGee, Peter (National University of Singapore) |
| Abstract: | Modeling the incentive effects of competitions among employees for promotions or financial rewards, economists have largely ignored the effects of competition on effort provision once the competition is finished. In a laboratory experiment, we examine how competition outcomes affect the provision of post-competition effort. We find that subjects who lose arbitrarily decided competitions choose lower subsequent effort levels than subjects who lose competitions decided by their effort choices. We explore the preferences underlying this behavior and show that subjects' reactions are related to their preferences for meritocratic outcomes. |
| Keywords: | tournaments, counterproductive behavior, promotions, experiment |
| JEL: | C90 J30 D03 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7759&r=cbe |
| By: | Garapin, A.; Muller, L.; Rahali, B. |
| Abstract: | In a within-subjects framework, we compare levels of transfer in the trust game and in the (triple) dictator game. We control preferences towards risk through the Holt and Laury test (2002) and social preferences with the ring test (Liebrand, 1984). We then provide evidence that social preferences correlate with levels of transfer, while risk attitudes do not. Finally, we also cast doubts on the predictive power of the two tests. |
| Keywords: | DICTATOR GAME;TRUST GAME;RISK ATTITUDE;SOCIAL PREFERENCE;EXPERIMENT |
| JEL: | C72 C90 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:gbl:wpaper:2013-12&r=cbe |
| By: | De Paola, Maria (University of Calabria); Gioia, Francesca (University of Calabria) |
| Abstract: | Time preferences can affect divorce probability both affecting the quality of the match and affecting the spouses' reactions to negative shocks. We analyze the relationship between time preferences and divorce decisions using data from the Italian Survey on Household Income and Wealth, which provides a measure of time preferences based on a hypothetical financial situation in which individuals have to decide how much money to give up in order to receive a certain amount of money today instead of in one year's time. Controlling for a number of individual and family characteristics, we find that an increase in impatience of one standard deviation increases the probability of experiencing divorce by almost one percentage point. Our results are not affected by reverse causality problems and are robust when controlling for individual risk attitudes. We also find that more risk averse individuals are less likely to experience divorce. |
| Keywords: | divorce, time preferences, impatience, risk aversion |
| JEL: | I20 D03 D91 J01 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7769&r=cbe |
| By: | Osberghaus, Daniel |
| Abstract: | Climate change is one of the most pressing challenges in current environmental policy. Appropriate policies intended to stimulate efficient adaptation and mitigation should not exclusively rely on the assumption of the homo oeconomicus, but take advantage of well-researched alternative behavioural patterns. Prospect theory provides a number of climate-relevant insights, such as the notion that evaluations of outcomes are reference dependent, and the relevance of perceived certainty of outcomes. This paper systematically reviews what prospect theory can offer to analyse mitigation and adaptation. It is shown that accounting for reference dependence and certainty effects contributes to a better understanding of some well-known puzzles in the climate debate, including (but not limited to) the different uptake of mitigation and adaptation amongst individuals and nations, the role of technical vs. financial adaptation, and the apparent preference for hard protection measures in coastal adaptation. Finally, concrete possibilities for empirical research on these effects are proposed. -- |
| Keywords: | Adaptation,Climate Change,Mitigation,Prospect Theory,Reference Point,Uncertainty |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13091&r=cbe |
| By: | Ilya Zutler (National Research University Higher School of Economics. Faculty of Economics, Department of Higher Mathematics, Docent, PhD) |
| Abstract: | A number of experiments indicate probabilistic preferences in cases where no one alternative is absolutely optimal. The task of predicting the choice of one of the alternatives among multiple alternatives is then practically important and not trivial. It can occur in situations of choice under risk when no one lottery stochastically dominates others. For risky lotteries there are several complicated models of probabilistic binary preference. For the first time, we herein propose the probabilistic extension of the cumulative prospect theory (CPT). The presented visual graphic justification of this model is intuitively clear and does not use sophisticated cumulative summing or a Choquet integral. Here we propose a model of selecting from a set of alternatives by continuous Markov random walks. It makes predicting the results of a choice easy because it fully uses dates received by probabilistic extension of ÑPT. The proposed methods are quite simple and do not require a large amount of data for practical use |
| Keywords: | cumulative prospect theory, probabilistic choice, continues Markov process. |
| JEL: | D81 D83 C44 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:33/ec/2013&r=cbe |
| By: | Gollier, Christian; Hammitt, James; Treich, Nicolas |
| Abstract: | As in any research field, risk theory has its important questions, results, and paradoxes, as well as its seminal papers and key authors. Louis Eeckhoudt has been a key author in the field of risk theory. To celebrate his many contributions and continue the development of theories of decision making under risk, the Toulouse School of Economics hosted “Risk and choice: A conference in honor of Louis Eeckhoudt” July 12- 13, 2012. This paper presents some of Eeckhoudt’s main contributions to the literature, and provides some illustrations of the remarkable research saga in risk theory over the last 50 years since Pratt’s (1964) characterization of risk aversion under expected utility. |
| Keywords: | Risk aversion, prudence, risk, self-protection, insurance, portfolio choice, expected utility. |
| JEL: | D81 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:27728&r=cbe |
| By: | Rudiger, Jesper |
| Abstract: | Expert opinions are often biased. To test how such bias affects the propensity to use opinions, we set up an experiment where subjects estimate the probability of an event that depends on (i) the subject's type, which is observable, and (ii) the unobserved state of the world. Before making their estimate, one group of subjects, the clients, observe the opinion (estimate) of another subject, the expert. The expert has private information about the state, but he may be of a different type than the clients, and therefore biased. Bias is observable and easily corrected. In spite of this, we find that clients' propensity to use expert opinions is decreasing in the size of the expert's bias. This aversion to use the opinions of biased experts is not explained by computational concerns, ex-post expert informativeness or reluctance to move away from the prior. |
| Keywords: | Experiments; Probability Estimation; Biased Opinions; Naive Advice |
| JEL: | C91 D81 D82 |
| Date: | 2013–11–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51787&r=cbe |
| By: | Patricio S. Dalton; Sayantan Ghosal |
| Abstract: | A number of different models with behavioral economics have a reduced form rep- resentation where potentially boundedly rational decision-makers do not necessarily in- ternalize all the consequences of their actions on payo¤ relevant features (which we label as psychological states) of the choice environment. This paper studies the restrictions that such behavioral models impose on choice data and the implications they have for welfare analysis. First, we propose a welfare benchmark that is justi ed using standard axioms of rational choice and can be applied to a number of existing seminal behavioral economics models. Second, we show that Sens axioms and fully characterize choice data consistent with behavioral decision-makers. Third, we show how choice data to infer information about the normative signi cance of psychological states and establish the possibility of identifying welfare dominated choices. |
| Keywords: | Behavioral Choices, Revealed and Normative Preferences, Individual Welfare, Axiomatic Characterization. |
| JEL: | D03 D60 I30 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:gla:glaewp:2013_22&r=cbe |