nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2014‒04‒11
twenty papers chosen by
Marco Novarese
Universita' del Piemonte Orientale Amedeo Avogadro

  1. The impact of age and training on creativity: a design-theory approach to study fixation effects By Marine Agogué; Nicolas Poirel; Olivier Houde; Arlette Pineau; Mathieu Cassotti
  2. Is Self-Reported Risk Aversion Time Varying? By Seeun Jung; Carole Treibich
  3. The Misbehavior of Reinforcement Learning By Gianluigi Mongillo; Hanan Shteingart; Yonatan Loewenstein
  4. Blissful Ignorance? A Natural Experiment on the Effect of Feedback on Students'Performance By Oriana Bandiera; Valentino Larcinese; Imran Rasul
  5. Experience in Public Goods Experiments By Anna Conte; M. Vittoria Levati; Natalia Montinari
  6. Shirking, Monitoring, and Risk Aversion By Seeun Jung; Kenneth Houngbedji
  7. Effects of Stress on Economic Decision-Making: Evidence from Laboratory Experiments By Delaney, Liam; Fink, Günther; Harmon, Colm P.
  8. Public Goods: Voluntary Contributions and Risk By Miguel Sánchez Villalba; Silvia Martínez-Gorricho
  9. Peer Effects and Students’ Self-Control By Berno Buechel; Lydia Mechtenberg; Julia Petersen;
  10. Knowing that You Matter, Matters! The Interplay of Meaning, Monetary Incentives, and Worker Recognition By Kosfeld, Michael; Neckermann, Susanne; Yang, Xiaolan
  11. Misperception of Consumption: Evidence from a Choice Experiment By Seeun Jung; Yasuhiro Nakamoto; Masayuki Sato; Katsunori Yamada
  12. Attention Discrimination: Theory and Field Experiments with Monitoring Information Acquisition By Bartos, Vojtech; Bauer, Michal; Chytilová, Julie; Matejka, Filip
  13. Social Capital to Induce a Contribution to Environmental Collective Action in Indonesia: An Experimental Method By Alin Halimatussadiah; Budy P. Resosudarmo; Diah Widyawati
  14. Why are economists so different? Nature, nurture, and gender effects in a simple trust game By Haucap, Justus; Müller, Andrea
  15. Attitudes to Income Inequality: Experimental and Survey Evidence By Andrew E. Clark; Conchita D'ambrosio
  16. "Channels of Peer Effects and Guilt Aversion in Crime: Experimental and Empirical Evidence from Bangladesh" By Masahiro Shoji
  17. Between-group conflict and other-regarding preferences in nested social dilemmas By Robert Böhm; Gary Bornstein; Hannes Koppel
  18. What Mechanism Design Theorists Had to Say About Laboratory Experimentation in the Mid-1980s By Kyu Sang Lee
  19. The CCCTB option: An experimental study By Keser, Claudia; Kimpel, Gerrit; Oestreicher, Andreas
  20. Fairness and Accountability: Testing Models of Social Norms in Unequal By Visser, Martine

  1. By: Marine Agogué (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris, LaPsyDÉ - Laboratoire de Psychologie du Développement et de l'Éducation de l'enfant - Université Paris V - Paris Descartes); Nicolas Poirel (LaPsyDÉ - Laboratoire de Psychologie du Développement et de l'Éducation de l'enfant - Université Paris V - Paris Descartes); Olivier Houde (LaPsyDE - Laboratoire de Psychologie du Développement et de l'Education de l'enfant - Université Paris V - Paris Descartes); Arlette Pineau (LaPsyDÉ - Laboratoire de Psychologie du Développement et de l'Éducation de l'enfant - Université Paris V - Paris Descartes); Mathieu Cassotti (LaPsyDÉ - Laboratoire de Psychologie du Développement et de l'Éducation de l'enfant - Université Paris V - Paris Descartes)
    Abstract: Despite the existence of many studies about the different aspects of fixation in creativity and design reasoning, the underlying mechanisms of fixation, i.e., the processes that interfere during creative reasoning and lead one to become fixated on a small number of unvaried solutions, remain unclear. In this paper, we propose a theoretical framework to model fixation based on C-K design theory, which states that fixation is characterised as a set of restrictive heuristics activated in creative reasoning. We applied our framework in a set of experiments. We demonstrated how this framework makes sense of the varieties of fixation in design processes. We conclude by proposing three capabilities to understand fixation and overcome it: restrictive heuristics development, inhibitory control and expansion.
    Date: 2014
  2. By: Seeun Jung (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Carole Treibich (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), Paris School of Economics - Université Paris 1 - Panthéon-Sorbonne, AMSE - Aix-Marseille School of Economics - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM))
    Abstract: We examine a Japanese Panel Survey in order to verify whether self-reported risk aversion varies over time. In most panels, risk attitudes variables are collected only once (found in only one survey wave), and it is assumed that self-reported risk aversion reflects individual's time-invariant component of preferences toward risk. Nonetheless, one may wonder whether financial and health shocks a person faces over his lifetime modify his risk aversion. Our empirical analysis provides proof that risk aversion is composed of a time-variant part and shows that the variation cannot be reduced to measurement error or noise given that it is related to income or health shocks. Then, we nonetheless find that time-invariant factors explain a bigger share of individual risk aversion than time-variant ones. Taking into account the fact that there are still time-variant factors in risk aversion, we investigate how often it is preferable to collect the risk aversion measure in long panel surveys. Our result suggests that the best predictor for current behaviors is the average of risk aversion, where risk aversion is collected every 3-4 years. The risk aversion measure is, therefore, advised to be collected every 3 or 4 years in long panel surveys.
    Keywords: Risk Aversion
    Date: 2014–03
  3. By: Gianluigi Mongillo; Hanan Shteingart; Yonatan Loewenstein
    Abstract: Organisms modify their behavior in response to its consequences, a phenomenon referred to as operant learning. The computational principles and neural mechanisms underlying operant learning are a subject of extensive experimental and theoretical investigations. Theoretical approaches largely rely on concepts and algorithms from Reinforcement Learning. The dominant view is that organisms maintain a value function, that is a set of estimates of the cumulative future rewards associated with the different behavioral options. These values are then used to select actions. Learning in this framework results from the update of these values depending on experience of the consequences of past actions. An alternative view questions the applicability of such a computational scheme to many real-life situations. Instead, it posits that organisms exploit the intrinsic variability in their action selection mechanism(s) to modify their behavior, e.g., via stochastic gradient ascent, without the need of an explicit representation of values. In this review, we compare these two approaches in terms of their computational power and flexibility, their putative neural correlates and, finally, in terms of their ability to account for behavior as observed in repeated-choice experiments. We discuss the successes and failures of these alternative approaches in explaining the observed patterns of choice behavior. We conclude by identifying some of the important challenges to a comprehensive theory of operant learning.
    Date: 2014–03
  4. By: Oriana Bandiera; Valentino Larcinese; Imran Rasul
    Abstract: We provide evidence on whether providing university students with feedback on their past exam performance affects their future exam performance. Our identification strategy exploits a natural experiment in a leading UK university where different departments have historically different rules on the provision of feedback to their students. We find the provision of feedback has a positive effect on students’ subsequent test scores: the mean impact corresponds to 13% of a standard deviation in test scores. The impact of feedback is stronger for more able students and for students who have less information to start with about the academic environment, while no subset of individuals is found to be discouraged by feedback. Our findings suggest that students have imperfect information on how their effort translates into test scores and that the provision of feedback might be a cost?effective means to increase students' exam performance. Keywords: feedback, incentives, students' performance, university education.
    Date: 2014
  5. By: Anna Conte (Max Planck Institute of Economics, Jena, and WBS, University of Westminster, EQM Department); M. Vittoria Levati (Max Planck Institute of Economics, Jena, and University of Verona, Department of Economics); Natalia Montinari (Max Planck Institute of Economics, Jena, and Lund University, Department of Economics)
    Abstract: We use information on students' past participation in economic experiments, as stored in our database, to analyze whether behavior in public goods games is affected by experience (i.e., previous participation in social dilemma-type experiments) and history (i.e., participation in experiments of a different class than the social dilemma). We have three main results. First, at the aggregate level, the amount subjects contribute and expect others to contribute decrease with experience. Second, a mixture model reveals that the proportion of unconditional cooperators decreases with experience, while that of selfish individuals increases. Finally, history also influences behavior, although to a lesser extent than experience. Our findings have important methodological implications for researchers, who are urged to control for subjects' experience and history in their experiments if they want to improve the external validity and replicability of their results.
    Keywords: Public goods experiments, Social preferences, Mixture models, Experience, History
    JEL: C35 C51 C72 H41
    Date: 2014–03–31
  6. By: Seeun Jung (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Kenneth Houngbedji (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper studies the effect of risk aversion on effort under different monitoring schemes. It uses a theoretical model which relaxes the assumption of agents being risk neutral, and investigates changes of effort as monitoring varies. The predictions of the theoretical model are tested using an original experimental setting where the level of risk aversion is measured and monitoring rates vary exogenously. Our results show that shirking decreases with risk aversion and monitoring. Moreover, monitoring is more effective to curtail shirking behaviors for subjects who are less risk averse.
    Keywords: Risk aversion
    Date: 2014–03
  7. By: Delaney, Liam (University of Stirling); Fink, Günther (Harvard School of Public Health); Harmon, Colm P. (University of Sydney)
    Abstract: The ways in which preferences respond to the varying stress of economic environments is a key question for behavioral economics and public policy. We conducted a laboratory experiment to investigate the effects of stress on financial decision making among individuals aged 50 and older. Using the cold pressor task as a physiological stressor, and a series of intelligence tests as cognitive stressors, we find that stress increases subjective discounting rates, has no effect on the degree of risk-aversion, and substantially lowers the effort individuals make to learn about financial decisions.
    Keywords: stress, financial decisions, discounting, risk aversion, learning
    JEL: D91 I31
    Date: 2014–03
  8. By: Miguel Sánchez Villalba (Dpto. Fundamentos del Análisis Económico); Silvia Martínez-Gorricho (Dpto. Análisis Económico Aplicado)
    Abstract: We analyze two incentive mechanisms as a way of financing public goods. Our mechanism can be interpreted as a variation of a parimutuel lottery in which the total rebate (prize) is made endogenous by setting it equal to a non-increasing function of total bets. The mechanism changes the nature of the standard VCM from a Prisoner’s Dilemma to a Stag-Hunt game. We tested —and found support for— the theoretical predictions of the model by means of a computer-based experiment. The theoretical model and the supporting experimental evidence both suggest the mechanism is an efficient and equitable means to finance public goods through voluntary contributions. In policy terms, and beyond the efficiency and equity considerations, the mechanism would be easy to implement and run given its simplicity and self-sufficiency.
    Keywords: Public Goods, Voluntary Contribution Mechanism, Subsidy Schemes, Laboratory Experiments
    JEL: C72 C92 H41
    Date: 2014–03
  9. By: Berno Buechel; Lydia Mechtenberg; Julia Petersen;
    Abstract: We conducted a multi-wave field experiment to study the interaction of peer effects and selfcontrol among undergraduate students. We use a behavioral measure of self-control based on whether students achieve study related goals they have set for themselves. We find that both self-control and the number of talented friends increase students’ performance. We then set out to test the theoretical prediction of Battaglini, Bénabou and Tirole (2005) that (only) sufficiently self-controlled individuals profit from interactions with peers. We find that peers with high self-control are more likely to connect to others, have a higher overall number of friends and have a higher number of talented friends. Moreover, positive news about self-controlled behavior of their peers increases students’ own perseverance. Hence, our findings are consistent with the model of Battaglini, Bénabou and Tirole. In addition, we find that female students are more likely to have high self-control, but do not outperform male students. One reason for this is that female students have a lower number of talented friends than their male counterparts, thereby profiting less from positive peer effects.
    Keywords: Self-control, Peer Influence, Social Networks, Goals, Time preferences, Procrastination, Willpower, School Performance, Experiment
    JEL: C93 D85 I21 J24
    Date: 2014–04
  10. By: Kosfeld, Michael (Goethe University Frankfurt); Neckermann, Susanne (Erasmus University Rotterdam); Yang, Xiaolan (Zhejiang University)
    Abstract: We manipulate workers' perceived meaning of a job in a field experiment. Half of the workers are informed that their job is important, the other half are told that their job is of no relevance. Results show that workers exert more effort when meaning is high, corroborating previous findings on the relationship between meaning and work effort. We then compare the effect of meaning to the effect of monetary incentives and of worker recognition via symbolic awards. We also look at interaction effects. While meaning outperforms monetary incentives, the latter have a robust positive effect on performance that is independent of meaning. In contrast, meaning and recognition have largely similar effects but interact negatively. Our results are in line with image-reward theory (Bénabou and Tirole 2006) and suggest that meaning and worker recognition operate via the same channel, namely image seeking.
    Keywords: meaning, monetary incentives, worker recognition, field experiment
    JEL: C93 J33 M12 M52
    Date: 2014–03
  11. By: Seeun Jung (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Yasuhiro Nakamoto (Kyushu Sangyo University - Kyushu Sangyo University); Masayuki Sato (Graduate School of Human Development and Environment - Kobe University); Katsunori Yamada (ISER - Institute of Social and Economic Research - Osaka University)
    Abstract: We investigate people's different conceptions of the economic term "consumption" when comparing with others. An Internet-based hypothetical discrete choice experiment was conducted with Japanese participants. As in other relative income comparison studies, we found that own consumption and own saving had a positive impact on utility, whereas the consumption and saving of a reference person had a negative impact on utility. However, the results show that the magnitudes of consumption and saving differ in size; saving could affect utility much more than consumption for the Japanese subjects. By using scope tests, we found that the impact of own consumption is not monotonic and so does not necessarily increase utility. This calls into question the conventional assumption of the monotonicity of "the utility of consumption"; consumption could be perceived as a negative good. Our results, therefore, provide some evidence that, in reality, people understand and perceive the economic terms differently from what economists would expect. Furthermore, when considering the consumption of others as well as their own, the size of the discrepancy is even bigger.
    Keywords: Relative Utility ; Choice Experiment ; Misperception of Economic Terms
    Date: 2014–03
  12. By: Bartos, Vojtech (CERGE-EI); Bauer, Michal (Charles University, Prague); Chytilová, Julie (Charles University, Prague); Matejka, Filip (CERGE-EI)
    Abstract: We link two important ideas: attention is scarce and lack of information about an individual drives discrimination in selection decisions. Our model of allocation of costly attention implies that applicants from negatively stereotyped groups face "attention discrimination": less attention in highly selective cherry-picking markets, where more attention helps applicants, and more attention in lemon-dropping markets, where it harms them. To test the prediction, we integrate tools to monitor information acquisition into correspondence field experiments. In both countries we study we find that unfavorable signals, minority names, or unemployment, systematically reduce employers' efforts to inspect resumes. Also consistent with the model, in the rental housing market, which is much less selective than labor markets, we find landlords acquire more information about minority relative to majority applicants. We discuss implications of endogenous attention for magnitude and persistence of discrimination in selection decisions, returns to human capital and, potentially, for policy.
    Keywords: discrimination, attention, field experiment, monitoring information acquisition
    JEL: C93 D83 J15 J71
    Date: 2014–03
  13. By: Alin Halimatussadiah; Budy P. Resosudarmo; Diah Widyawati
    Abstract: Social capital is considered to be an important factor in economic development. It is argued that it generates a flow of (economic) benefits through collective action, by reducing free riding and increasing individual contribution. This study examines whether social capital increases individual contribution in a collective action situation. Using a classroom experiment, two games are played in a sequential manner: a trust game to measure level of trust–as a proxy for social capital–and a public goods game to measure individual contribution to collective action. In the public goods game, we apply some treatments to look at the impact of partial disclosure of a group member’s behaviour in the trust game on contributions in the public goods game. In general, the result shows that the level of social capital positively impacts individual contribution to collective action. However, we found no significant evidence to support the impact of partial disclosure of a group member's behaviour in the trust game on contributions in the public goods game.
    Keywords: Social Capital, Collective Action, Trust Game, Public Goods Game
    JEL: A14 C91 C92
    Date: 2014
  14. By: Haucap, Justus; Müller, Andrea
    Abstract: We analyze the behavior of 577 economics and law students in a simple binary trust experiment. While economists are both significantly less trusting and less trustworthy than law students, this difference is largely due to differences between female law and economics students. While female law students are already different in nature (during the first term of study) from female economists, the gap between them also widens more drastically over the course of their study compared to their male counterparts. This finding is rather critical as the detailed composition of students is typically neglected in most experiments. --
    Keywords: Gender Effects,Trust Game,Economists,Nature,Nurture
    JEL: A12 A22 C35 C91
    Date: 2014
  15. By: Andrew E. Clark (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA)); Conchita D'ambrosio (Université du Luxembourg - Université du Luxembourg)
    Abstract: We review the findings in surveys and experiments from the literature on attitudes to income inequality. We interpret the latter as any disparity in incomes between individuals. We classify these contributions into two broad groups of individual attitudes to income distribution in a society: the normative and the comparative view. The first can be thought of as the individual's disinterested evaluation of income inequality; on the contrary, the second view reflects self-interest, as individual's inequality attitudes depend not only on how much income they receive but also on how much they receive compared to others. We conclude with a number of extensions, outstanding issues and suggestions for future research.
    Keywords: Attitudes ; Distribution ; Experiments ; Income inequality ; Life satisfaction ; Reference groups
    Date: 2014–03–31
  16. By: Masahiro Shoji (Faculty of Economics, Seijo University)
    Abstract:    This study empirically disentangles the channels of peer effects in crime through an experiment conducted in rural Bangladesh. The first part of this study assumes that individuals exhibit guilt aversion, which predicts the peer effects via guilt sensitivity and belief. By incorporating peer effects in a take-away game, the criminal player is informed about the victim player's belief only in the treatment group, so that the peer effects in the treatment group are driven only through guilt sensitivity. The experime ntal results suggest that peer effects affect and bring about changes in belief. The second part elicits guilt sensitivity to test guilt aversion. I find robust supporting evidence for my results, and reject the alternatives such as pure altruism and trustw orthiness. Finally, external validity is also confirmed: the criminal behaviour of subjects in the experiment is correlated with their attitude towards illegal activities in the real wo rld, and individuals are less likely to suffer from property crime in villages with a higher guilt sensitivity neighbourhood.
    Date: 2014–02
  17. By: Robert Böhm (RWTH Aachen University, Germany); Gary Bornstein (Hebrew University of Jerusalem, Israel); Hannes Koppel (Heidelberg University, Germany)
    Abstract: We investigate experimentally the underlying motivations and individual dierences with regard to the participation in between-group conflict in nested social dilemmas. In our nested social dilemmas, the collective is divided into two groups, and individuals allocate tokens between a private, a group-specific, and a collective good. We vary the marginal per capita return of the group-specific and collective good in order to manipulate the motivational within- and between group conflicts. A first experiment shows that a between-group conflict leads to within-group cooperation and particularly individuals with positive other-regarding preferences (prosocials) react to a between-group conflict by contributing to the group-specific good. Hence, paradoxically, individuals with positive other-regarding preferences may foster between-group conflicts. A second experiment reveals that prosocials' contributions to the group-specific or collective good vary as a function of the personal costs of within-group versus collective cooperation, supporting the weighted average social preference theory by Charness and Rabin (2002).
    Keywords: between-group conflict, nested social dilemma, other-regarding preferences, local and global public goods
    JEL: C72 C92 H41
    Date: 2014–03–31
  18. By: Kyu Sang Lee
    Abstract: Thanks to the recent studies of the history and philosophy of experimental economics, it is well known that around the early 1980s, experimental economists made a case for the legitimacy of their laboratory work by emphasizing that it was a nice and indispensable complement to mechanism design theorists’ mathematical study of institutions. The present paper examines what mechanism design theorists thought of laboratory experimentation, or whether they were willing to form a coalition with experimental economists circa the mid-1980s. By exploring several dimensions of the relationship between mechanism design theory and experimental economics, the present paper shows that a close rapport had been established by the early 1980s between the representative members of the two camps, and also that mechanism design theorists were among the strongest supporters of laboratory experimentation in the economics profession in the mid-1980s.
    Keywords: mechanism design theory, experimental economics, institutional design, Stanley Reiter, Vernon Smith, Charles Plott
    Date: 2013
  19. By: Keser, Claudia; Kimpel, Gerrit; Oestreicher, Andreas
    Abstract: The objective of this paper is to look into the probability that, given the choice, corporate groups would opt for taxation on a consolidated basis. Consolidation would allow them to offset losses crossborder but remove the opportunity to exploit international tax-rate differentials between entities via transfer pricing. We present a laboratory experiment in which we investigate to what extent a corporation would be inclined to take up the consolidation option and how this would impact on the corporation´s location of investment and its transfer pricing activities involving locations outside the consolidated group. We use a 2-by-2 treatment design with two levels of tax-rate differential between two investment locations, and two different remuneration functions allowing the participants to act as owners or managers of a company. --
    Keywords: international company taxation,separate accounting,formula apportionment,transfer pricing,experimental economics
    JEL: C91 H25 M41
    Date: 2014
  20. By: Visser, Martine (SALDRU, School of Economics, University of Cape Town)
    Abstract: We examine behavioural models involved in the provision of public goods when income inequality exists within groups. Our sample consists of individuals from urban and rural South African fishing communities. We find that behaviour observed in unequal groups does not accord with models of inequality aversion or egocentric altruism which require an equal distribution of final payoffs. On the other hand it is also not the case that individuals completely discount differences in initial allocations of wealth, as proposed by our absolute reciprocity model. Instead our empirical results lends support to a reciprocal model which requires that individuals contribute a proportional share of their initial endowments. Accordingly individuals are only partly held responsible for exogenous differences in initial wealth.
    Keywords: Social Norms; Inequality Aversion; Altruism; Reciprocity; Public goods; National Income Dynamics Study
    JEL: C9 C72 D63 D64 H41 Z13
    Date: 2013

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