nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2014‒03‒22
nineteen papers chosen by
Marco Novarese
Universita' del Piemonte Orientale Amedeo Avogadro

  1. Social norms or low-cost heuristics? An experimental investigation of imitative behavior By Simona Cicognani; Luigi Mittone
  2. Donations, Risk Attitudes and Time Preferences: A Study on Altruism in Primary School Children By Angerer, Silvia; Glätzle-Rützler, Daniela; Lergetporer, Philipp; Sutter, Matthias
  3. Simultaneous and sequential contributions to step-level public goods: One vs. two provision levels By Normann, Hans-Theo; Rau, Holger A.
  4. Fair and unfair punishers coexist in the Ultimatum Game By Pablo Branas-Garza; Antonio M. Espin; Benedikt Herrmann
  5. Stated and revealed heterogeneous risk preferences in educational choice By Fossen, Frank M.; Glocker, Daniela
  6. Dynamic Repeated Random Dictatorship and Gender Discrimination By Dittrich, Dennis Alexis Valin; Büchner, Susanne; Kulesz, Micaela Maria
  7. Can't Touch This! Similarity And The Willingness to Keep "Dirty Money" By David Johnson; Sebastian Goerg; Jonathan Rogers
  8. An experimental study on social anchoring By Meub, Lukas; Proeger, Till
  9. Expressing Emotion and Fairness Crowding-out in an Ultimatum Game with Incomplete Information By Chen, Josie I; Kamei, Kenju
  10. Fairness and Persuasion. How Stakeholder Communication Affects Impartial Decision Making By Marco Kleine; Pascal Langenbach; Lilia Zhurakhovska
  11. Strategic coordination in forecasting: An experimental study By Bizer, Kilian; Meub, Lukas; Proeger, Till; Spiwoks, Markus
  12. Do Sympathy Biases Induce Charitable Giving? The Persuasive Effects of Advertising Content By K. Sudhir; Subroto Roy; Mathew Cherian
  13. A Penny for Your Thoughts:A Survey of Methods for Eliciting Beliefs. By Karl Schlag; James Tremewan; Joel van der Weele
  14. Professional norms and physician behavior: homo oeconomicus or homo hippocraticus? By Kesternich, Iris; Schumacher, Heiner; Winter, Joachim
  15. Luck, Choice and Responsibility. An experimental study of fairness views. By Möllerström, Johanna; Reme, Bjørn-Atle; Sørensen, Erik Ø.
  16. On Uneven Expected Earnings in the Lab By Jade Wong; Andreas Ortmann
  17. Trust and Cheating in Sri Lanka: The Role of Experimentally-Induced Emotions about Tsunami. By Conzo, Pierluigi
  18. Results Intelligence: The Ability of Results-Focused Self-Management By Klein, Diti
  19. Agent-based modeling of knowledge transfer within social networks By Widad Guechtouli

  1. By: Simona Cicognani; Luigi Mittone
    Abstract: This paper extends choice theory by allowing for the interaction between cognitive costs and social norms. We experimentally investigate the role of imitation when participants face a task which is costly in cognitive terms. We identify two main reasons for imitative behavior. First, individuals belonging to a community might want to conform to others to obey to social norms. Second, individuals might be boundedly rational and consider imitation as a decisional device when comparing alternatives is cognitively demanding. In order to disentangle the two effects, we devise a laboratory experiment with a novel experimental task in which we model the choice of different alternatives through high or low cognitive costs and feedback information provided to subjects. Our results provide evidence for imitative behavior only through the channel of beliefs regarding others’ performance. We also find a temporal pattern in the distribution of choices, both in the high-cost and low-cost cognitive conditions, that may represent another cognitive shortcut.
    Keywords: Social Norms, Cognitive Costs, Laboratory Experiments
    JEL: C92 D81 Z13
    Date: 2014
  2. By: Angerer, Silvia (University of Innsbruck); Glätzle-Rützler, Daniela (University of Innsbruck); Lergetporer, Philipp (University of Innsbruck); Sutter, Matthias (European University Institute)
    Abstract: We study with a sample of 1,070 primary school children, aged seven to eleven years, how altruism in a donation experiment is related to children's risk attitudes and intertemporal choices. Examining such a relationship is motivated by theories of reciprocal altruism that provide a cornerstone to understand human social behavior. We find that higher risk tolerance and patience in intertemporal choice increase, in general, the level of donations, albeit the effects are non-linear. We confirm earlier results that altruism increases with age during childhood and that girls are more altruistic than boys. Having older brothers makes subjects less altruistic.
    Keywords: altruism, donations, risk attitudes, intertemporal choices, experiment, children
    JEL: C91 D03 D63 D64
    Date: 2014–03
  3. By: Normann, Hans-Theo; Rau, Holger A.
    Abstract: In a step-level public-good experiment, we investigate how the order of moves (simultaneous vs. sequential) and the number of step levels (one vs. two) affects public-good provision in a two-player game. We find that the sequential order of moves significantly improves public-good provision and payoffs, even though second movers often punish first movers who give less than half of the threshold contribution. The additional second step level - which is not feasible in standard Nash equilibrium - leads to higher contributions but does not improve public-good provision and lowers payoffs. We calibrate the parameters of Fehr and Schmidt's (1999) model of inequality aversion to make quantitative predictions. We find that actual behavior fits remarkably well with several predictions in a quantitative sense. --
    Keywords: experimental economics,fund raising,provision-point public good,sequential play,threshold public good
    JEL: C92 D70 H41
    Date: 2014
  4. By: Pablo Branas-Garza (Business School, Middlesex University London); Antonio M. Espin (GLOBE,Universidad de Granada; Departamento de Teoría e Historia Económica, Universidad de Granada); Benedikt Herrmann (Behavioural Economics Team, Institute for Health and Consumer Protection, Joint Research Centre, European Commission)
    Abstract: Fairness norms are crucial in understanding the emergence and enforcement of large-scale cooperation in human societies. The most widely applied framework in the study of human fairness is the Ultimatum Game (UG). In the UG, a proposer suggests how to split a sum of money with a responder. If the responder rejects the proposer’s offer, both players get nothing. Rejection of unfair offers is considered to be a form of punishment implemented by fair-minded individuals, who are willing to sacrifice their own resources in order to impose the fairness norm. However, an alternative interpretation is equally plausible: punishers might actually be using rejections in a competitive, spiteful fashion as a means to increase their relative standing. This hypothesis is in line with recent evidence demonstrating that “prosocial” and “antisocial” punishers coexist in other experimental games. Using two large-scale experiments, we explore the nature of UG punishers by analyzing their behavior in a Dictator Game. In both studies, we confirm the coexistence of two entirely different sub-populations: prosocial punishers, who behave fairly as dictators, and spiteful (antisocial) punishers, who are totally unfair. Such a result is fundamental for research on the foundations of punishment behavior employing the UG. We discuss how focusing only on the fairness-oriented part of human behavior might give rise to misleading conclusions regarding the evolution of cooperation and the behavioral underpinnings of stable social systems.
    Date: 2014–01
  5. By: Fossen, Frank M.; Glocker, Daniela
    Abstract: Stated survey measures of risk preferences are increasingly being used in the literature, and they have been compared to revealed risk aversion primarily by means of experiments such as lottery choice tasks. In this paper, we investigate educational choice, which involves the comparison of risky future income paths and therefore depends on risk and time preferences. In contrast to experimental settings, educational choice is one of the most important economic decisions taken by individuals, and we observe actual choices in representative panel data. We estimate a structural microeconometric model to jointly reveal risk and time preferences based on educational choices, allowing for unobserved heterogeneity in the Arrow-Pratt risk aversion parameter. The probabilities of membership in the latent classes of persons with higher or lower risk aversion are modelled as functions of stated risk preferences elicited in the survey using standard questions. Two types are identified: A small group with high risk aversion and a large group with low risk aversion. The results indicate that persons who state that they are generally less willing to take risks in the survey tend to belong to the latent class with higher revealed risk aversion, which indicates consistency of stated and revealed risk preferences. The relevance of the distinction between the two types for educational choice is demonstrated by their distinct reactions to a simulated tax policy scenario. --
    Keywords: educational choice,stated preferences,revealed preferences,risk aversion,time preference
    JEL: I20 D81
    Date: 2014
  6. By: Dittrich, Dennis Alexis Valin; Büchner, Susanne; Kulesz, Micaela Maria
    Abstract: To reduce the cognitive experimenter demand effect we embed a dictator game in a more complex decision environment, a dynamic household savings decision problem, thus rendering the dictator decision to share some endowment less salient. We then use this game in a laboratory experiment to investigate gender specific allocation behaviour and discrimination. We observe that dictators treat females nicer than males independent of their own gender. Participants are not aware of their discriminating behaviour.
    Keywords: repeated dictator game; altruistic preferences; gender discrimination
    JEL: C73 C91 D91
    Date: 2014–02–07
  7. By: David Johnson (University of Calgary); Sebastian Goerg; Jonathan Rogers
    Abstract: Traditionally, allocations by dictators in Dictator Games (gifts) have been explained by aspects of altruism, reciprocity, and fairness. However, this assumes the gift to be desirable to the dictators and responder. Giving may also be driven by the source of the endowment. We examine this by using three sources to generate the endowment in a Dictator Game:(1) undergraduate students, (2) Amazon Mechanical Turk workers, and (3) users of a racially/ethnically charged web forum. This endowment is provided to subjects in a traditional laboratory experiment. We find dictator similarity with the source of the endowment influences their allocation decision; the more similar subjects feel to the source the more of the endowment they keep. Our results suggest that decisions can be strongly in influenced by the provider of income shocks.
    Keywords: Experiment; Inequality; Approval
    JEL: C78 C91 C99 D31 D64 D74
    Date: 2014–03–20
  8. By: Meub, Lukas; Proeger, Till
    Abstract: The anchoring-and-adjustment heuristic has been studied in numerous experimental settings and is increasingly drawn upon to explain systematically biased decisions in economic areas as diverse as auctions, real estate pricing, sports betting and forecasting. In these cases, anchors result from publicly observable and aggregated decisions of other market participants. However, experimental studies have neglected this social dimension by focusing on external, experimenter-provided anchors in purely individualistic settings. We present a novel experimental design with a socially derived anchor, monetary incentives for unbiased decisions and feedback on performance to more accurately implement market conditions. Despite these factors, we find robust effects for the social anchor, an increased bias for higher cognitive load, and only weak learning effects. Finally, a comparison to a neutral, external anchor shows that the social context increases the bias, which we ascribe to conformity pressure. Our results support the assumption that anchoring remains a valid explanation for systematically biased decisions within market contexts. --
    Keywords: anchoring,conformity,heuristics and biases,incentives,laboratory experiment
    JEL: C9 D8
    Date: 2014
  9. By: Chen, Josie I; Kamei, Kenju
    Abstract: Recent experimental research has shown that when rating systems are available, buyers are more generous in accepting unfair offers made by sellers. It has also shown that sellers make fairer decisions when they are rated, while some studies show that they are little affected by the rating systems. These studies are conducted under complete information settings. However, asymmetric information about the values of traded commodities between sellers and buyers may change their perception of fairness and thus may change sellers’ decisions. We conduct ultimatum game experiments in which only the sellers are informed of the size of pies. We find that when rating systems are available to the buyers, the buyers become more amenable to potentially unfair offers. We also find that sellers attempt to sell the commodity at higher prices, taking advantage of the buyers’ openness to potentially unfair offers, contrary to the past studies with complete information.
    Keywords: Experiments, Ultimatum Game, Incomplete Information, Emotion, Rating, Social Approval, Social Disapproval
    JEL: C91 D03 D82 M21
    Date: 2014–03–13
  10. By: Marco Kleine (Max Planck Institute for Research on Collective Goods, Bonn); Pascal Langenbach (Max Planck Institute for Research on Collective Goods, Bonn); Lilia Zhurakhovska (University of Erlangen-Nuremberg & Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: We study experimentally whether and to what extent impartial decision makers are influenced by stakeholders’ fairness opinions in an allocation decision. The setting allows for different focal fairness rules to be considered. We compare communication treatments, in which one of the stakeholders states his or her opinion prior to the allocation decision, to a baseline without communication opportunities. We find that stakeholders who state their opinion in the communication treatments are allocated significantly less money than their counterparts in the baseline. Asymmetric reactions to the statements appear to be the driving force behind this result: impartial decision makers deviate from their initial fairness judgment and follow stakeholders’ opinions only if the requests are moderate; they largely ignore high monetary claims. Our results contribute to understanding the underlying processes that may affect the decisions of judges, juries, arbitrators, referees, or other impartial decision makers in interaction with stakeholders.
    Keywords: fairness, Norms, Communication, impartial decision maker, laboratory experiment, influence, persuasion
    JEL: D63 D02 K40 C91 D03
    Date: 2014–03
  11. By: Bizer, Kilian; Meub, Lukas; Proeger, Till; Spiwoks, Markus
    Abstract: Reputational herding has been considered as a driving force behind economic and financial forecasts clustered around consensus values. Strategic coordination can consequently explain poor performances of prediction markets as resulting from the distinct incentives that forecasters face. While this notion has been considered theoretically and empirically, the underlying behavioral working mechanisms have not yet been described. We thus put forth an exploratory experiment on the emergence and robustness of coordination in a forecasting setting implementing contradictory incentives for accurate forecasts and coordination. Forecasts are shown to be inaccurate and biased toward current values. This in turn has subjects aiming at coordination benefits. Predominantly, coordination is achieved through the risk-dominant equilibrium as the game proceeds. Once established, coordination is fairly stable and adds to overall welfare. Our results support the assumption of rational herding as a driving force for predictions of poor accuracy that are systematically biased towards focal points. --
    Keywords: coordination,incentives,laboratory experiment,reputational herding,sunspot equilibrium
    JEL: C90 D03 D83 G17
    Date: 2014
  12. By: K. Sudhir (Cowles Foundation and Yale School of Management); Subroto Roy (Dept. of Marketing, University of New Haven); Mathew Cherian (HelpAge India)
    Abstract: We randomize advertising content motivated by the psychology literature on sympathy generation and framing effects in mailings to about 185,000 prospective new donors in India. We find significant impact on the number of donors and amounts donated consistent with sympathy biases such as the "identifiable victim," "in-group" and "reference dependence." A monthly reframing of the ask amount increases donors and amount donated relative to daily reframing. A second experiment targeted to past donors, finds that the effect of sympathy bias on giving is smaller in percentage terms but statistically and economically highly significant in terms of the magnitude of additional dollars raised. Methodologically, the paper complements the work of behavioral scholars by adopting an empirical researchers' lens of measuring relative effect sizes and economic relevance of multiple behavioral theoretical constructs in the sympathy bias and charity domain within one field setting. This can provide guidance to managers on which behavioral theories are most managerially and economically relevant when developing advertising content.
    Keywords: Charitable giving, Sympathy biases, Identified victim effect, Non-profit marketing, Advertising, Behavioral economics
    JEL: L31 M37 M31 C99
    Date: 2014–03
  13. By: Karl Schlag; James Tremewan; Joel van der Weele
    Abstract: Incentivized methods for eliciting subjective probabilities in economic experiments present the subject with risky choices or bets that encourage truthful reporting. We discuss the most prominent elicitation methods and their underlying assumptions, provide theoretical comparisons, and propose some extensions to the standard framework. In addition, we survey the empirical literature on the performance of these elicitation methods in actual experiments, considering also practical issues of implementation such as order efects, hedging, and diferent ways of presenting probabilities and payment schemes to experimental subjects. We end with some thoughts on the merits of using incentives for belief elicitation and some guidelines for implementation.
    JEL: C83 C91 D83
    Date: 2014–01
  14. By: Kesternich, Iris; Schumacher, Heiner; Winter, Joachim
    Abstract: Physicians' treatment decisions determine the level of health care spending to a large extent. The analysis of physician agency describes how doctors trade off their own and their patients' benefits, with a third party (such as the collective of insured individuals or the taxpayers) bearing the costs. Professional norms are viewed as restraining physicians' self-interest and as introducing altruism towards the patient. We present a controlled experiment that analyzes the impact of professional norms on prospective physicians' trade-offs between her own profits, the patients' benefits, and the payers' expenses for medical care. We find that professional norms derived from the Hippocratic tradition shift weight to the patient in the physician's decisions while decreasing his self-interest and efficiency concerns.
    Keywords: social preferences; allocation of medical resources; professional norms
    JEL: A13 I19 C72 C91
    Date: 2014–03–13
  15. By: Möllerström, Johanna (Harvard University); Reme, Bjørn-Atle (Dept. of Economics, Norwegian School of Economics and Business Administration); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: We conduct a laboratory experiment where third-party spectators can redistribute resources between two agents, thereby offsetting the consequences of controllable and uncontrollable luck. Some spectators go to the limits and equalize all or no inequalities, but many follow an interior allocation rule previously unaccounted for by the fairness views in the literature. These interior allocators regard an agent’s choice as more important than the cause of her low income and do not always compensate bad uncontrollable luck. Instead, they condition such compensation on the agent’s decision regarding controllable luck exposure, even though the two types of luck are independent.
    Keywords: Fairness; responsibility; option luck; brute luck; experimen.
    JEL: C91 D63 D81 H23
    Date: 2014–03–07
  16. By: Jade Wong (Australian School of Business, the University of New South Wales); Andreas Ortmann (School of Economics, Australian School of Business, the University of New South WalesAuthor-Name: Craig Freedman)
    Abstract: We discuss ways to cope with uneven expected lab earnings that are the likely results of role assignments. We identify three problems associated with uneven earnings in the lab: of social preferences, of low marginal return for effort, and of perceived deception. Mining the opinions of respondents from the Economic Science Association’s (ESA) discussion list, the literature, and drawing on our own experience, we present five responses experimenters can use to mitigate the three problems. We discuss the merits and drawbacks of each strategy.
    Keywords: uneven expected lab earnings; social preferences; preferences
    JEL: B41 C91 C92
    Date: 2014–01
  17. By: Conzo, Pierluigi (University of Turin)
    Abstract: Through a field experiment in Sri Lanka I analyze the role of experimentally-induced memories of 2004 tsunami on behavior in a trust game in which personal notions of cheating are elicited. Micro-finance borrowers were randomly assigned to a treatment (control) group consisting in watching a video about the calamity before feel cheated; in a survey they selected whether the video mostly reminded about solidarity, looting or the calamity experience. Results suggest a differential impact of emotional stimuli induced by the video-treatment on trustors’ definition of cheating and trustees’ intentional cheating. Among the treated, the probability trustors define cheating as a non-negative return on investment (i.e. receive no more than what invested) and trustees satisfy trustor’s cheating notion (i.e. return at least what makes him/her not feel cheated) is higher when recalling solidarity than when looting and/or the calamity. As expected, there are no significant emotional effects of the video on control group’s behavior. If the trust game replicates real investment decisions, identifying the channels through which emotional memories of a past shock affect behavior offer important insights on what hinders socio-economic transactions within post-disaster areas.
    Date: 2014–03
  18. By: Klein, Diti
    Abstract: What Is Results Intelligence and Why Does It Have the Most Influence on Success? The research of human intelligence includes a broad range of theories and a variety ofdifferent answers regarding most of the fundamental questions in the field, including thefollowing questions: What is the nature of intelligence? Is it a constant innate cognitive traitor is it a skill that can be improved? Is intelligence a single uniform entity or is it amultiplicity of independent abilities? What is the intelligence that most influences the degreeof success and in what fields?. The responses of most of the researchers depend largely on thetype of intelligence studied, as a result of a variety of approaches and schools –developmental, cognitive, psychometric, emotional-social, practical, and so on. In contrast,the starting point of this study is the success itself, with the goal to examine whether there isone ability that is shared by all those who succeed over time and whether and how it can beimproved - Since on the one hand, people with completely different abilities succeed inattaining significant achievements and on the other hand, only some people with similarabilities achieve lasting success. The main conclusion as examined during a decade ofcounseling and support of more than five hundred different people is that all those whoachieve ongoing success have a good level of ability in results-focused self-management –and this is results intelligence. The study shows that every individual has a different profile ofintelligences that includes his main abilities – and results intelligence is the ability to manageall the other abilities in favor of the achievement of the maximum results of success desiredover time. Since results intelligence is fundamentally a management ability and managementaddresses ways of thinking and doing and includes the ability to plan and implement a varietyof actions so as to achieve different goals, it exists in everybody, even if at different levels ofawareness, skill, or maximization. On the basis of the theory of management by objectivesfrom the approach of Professor Peter Drucker (as presented in the continuation) in life, as inbusiness, management is the factor that most influences the degree of success over time – andmanagement can be learned. Thus, it is possible to learn how to develop the level of resultsintelligence and thus to significantly improve the chances of reaching the maximum ofsuccess in a variety of areas of life. Therefore, the purpose of this study is to create the modelof the development of results intelligence so as to enable individuals to identify their mainabilities and to learn how to leverage them and manage themselves, for the benefit of theachievement of their desired success and goals.
    Keywords: Intelligence, Results, Success, Abilities, Self-Management
    JEL: M53
    Date: 2014
  19. By: Widad Guechtouli
    Abstract: In this paper, we study both processes of direct and indirect knowledge transfer, from a modelling perspective, using agent-based models. In fact, there are several ways to model knowledge. We choose to study three different representations, and try to determine which one allows to better capture the dynamics of knowledge diffusion within a social network. Results show that when knowledge is modelled as a binary vector, and not cumulated, this enables us to observe some heterogeneity in agents' learning and interactions, in both types of knowledge transfer.
    Keywords: knowledge model, knowledge transfer, social networks, communication.
    Date: 2014–02–25

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