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on Cognitive and Behavioural Economics |
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Issue of 2014‒06‒02
eleven papers chosen by Marco Novarese Universita' del Piemonte Orientale Amedeo Avogadro |
| By: | Schütte, Miriam; Thoma, Carmen |
| Abstract: | According to several psychological and economic studies, non-binding communication can be an effective tool to increase trust and enhance cooperation. This paper focuses on reasons why people stick to a given promise and analyzes to what extent image concerns of being perceived as a promise breaker play a role. In a controlled laboratory experiment, we vary the ex post observability of the promising party's action in order to test for social image concerns. We observe that slightly more promises are kept if the action is revealed than if it is not, yet the difference is not significant. However, a variation in the selection of pre-defined messages across treatments delivers another interesting finding. While most of the promises are kept, statements of intent tend to be broken. |
| Keywords: | Promises; communication; social image concerns; guilt; shame; behavioral economics; experiment |
| JEL: | C70 C91 D03 D82 |
| Date: | 2014–05–18 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:20861&r=cbe |
| By: | Natsuka Tokumaru |
| Abstract: | Economic experiments have shown that human incentives are not only limited to the profit-maximizing principle but also motivated by fairness. Those studies presuppose that individuals commit to fixed value systems and that experimental institutions invoke fairness ideals. This paper shows that participants strategically select fairness ideals advantageous for self-distribution. Participants whose relative earnings are higher than those of their pairs adhere to a liberalist fairness ideal, whereas those with lower relative earnings prefer an egalitarian distribution of money. This reflects that individuals commit opportunistic behavior as a result of resolving a cognitive dissonance between material utility and fairness. |
| Keywords: | Economic Experiment, Fairness Ideals, Cognitive Dissonance, Hidden Selfishness, Opportunistic Behavior |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:kue:dpaper:e-14-004&r=cbe |
| By: | Fabio Galeotti (University of East Anglia) |
| Abstract: | An important branch of economic research on emotions has used power-to-take game experiments to study the impact of negative emotions, such as anger, irritation and contempt, on the decision to punish. We investigate experimentally to what extent the findings of this literature are driven by the particular punishment technology adopted, and whether the experience and background of the participants affect behavior and emotions in this context. We found that (a) negative emotions do still play an important role when the potential relevant confound is removed from the punishment technology; (b) subjects display a similar behavior under a punishment technology with a constant and variable ‘fine-to-fee’ ratio; (c) previous experience mediates how contempt impacts on the decision to punish; and (d) non-UK students experience similar emotions to UK students, but generally appropriate more resources than UK students. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:13-07&r=cbe |
| By: | Annarita COLASANTE (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Alberto RUSSO (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali) |
| Abstract: | This paper analyzes the impact of inequality in the distribution of endowments on contributions. We conduct a lab experiment using the well-known Public Good Game to test the relation between inequality and contribution to a public fund. We introduce the possibility to choose among three different redistribution rules: equidistribution, proportional to contribution and progressive to endowment. This novelty, combined with a payoff function that depends also on previous period behavior, allows us to verify the hypothesis that players show inequity averse preferences. Results show that inequality has a negative impact on individual contribution. Since inequality is decreasing during repetitions, we deduce that players show inequity averse preferences. |
| Keywords: | Inequality, Public Good Game, Reciprocity |
| JEL: | C9 D7 H41 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:401&r=cbe |
| By: | Elena Asparouhova; Peter Bossaerts; Jon Eguia; William Zame |
| Abstract: | We present a theory and experimental evidence on pricing and portfolio choices under asymmetric reasoning. We show that under asymmetric reasoning, prices do not reflect all (types of) reasoning. Some agents who observe prices that cannot be reconciled with their reasoning switch from perceiving the environment as risky to perceiving it as ambiguous. If ambiguity averse, these agents become price-insensitive and no longer influence prices directly. We present the results of an experiment and report that consistent with the theory i) mispricing decreases as the fraction of price-sensitive agents increases, and ii) price-insensitive agents trade to more balanced portfolios. |
| Keywords: | Asset pricing theory, disagreement, reasoning models, ambiguity aversion, experimental finance, financial markets. |
| JEL: | G11 G12 G14 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:bri:uobdis:14/640&r=cbe |
| By: | Piers Fleming (University of East Anglia); Daniel John Zizzo (University of East Anglia) |
| Abstract: | As a stress test of experimenter demand effects, we run an experiment where subjects can physically destroy coupons awarded to them. About one subject out of three does. Giving money back to the experimenter is possible in a separate task but is more consistent with an experimenter demand effect than an explanation based on altruism towards the experimenter. A measure of sensitivity to social pressure helps predict destruction when social information is provided. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:13-04&r=cbe |
| By: | Lacetera, Nicola (University of Toronto); Macis, Mario (Johns Hopkins University); Mele, Angelo (Johns Hopkins University) |
| Abstract: | How do the social media affect the success of charitable promotional campaigns? We use individual-level longitudinal data and experimental data from a social-media application that facilitates donations while broadcasting donors' activities to their contacts. We find that broadcasting is positively associated with donations, although some individuals appear to opportunistically broadcast a pledge, and then delete it. Furthermore, broadcasting a pledge is associated with more pledges by a user's contacts. However, results from a field experiment where broadcasting of the initial pledges was randomized suggest that the observational findings were likely due to homophily rather than genuine social contagion effects. The experiment also shows that, although our campaigns generated considerable attention in the forms of clicks and “likes,” only a small number of donations (30 out of 6.4 million users reached) were made. Finally, an online survey experiment showed that both the presence of an intermediary and a fee contributed to the low donation rate. Our findings suggest that online platforms for charitable giving may stimulate costless forms of involvement, but have a smaller impact on actual donations, and that network effects might be limited when it comes to contributing real money to charities. |
| Keywords: | altruism, fundraising, social media, network effects, field experiments |
| JEL: | D64 C93 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8171&r=cbe |
| By: | Akerlund, David (SOFI, Stockholm University); Golsteyn, Bart H.H. (Maastricht University); Grönqvist, Hans (SOFI, Stockholm University); Lindahl, Lena (SOFI, Stockholm University) |
| Abstract: | One main motive behind lengthy prison terms for serious crime is to deter potential offenders from engaging in crime. Yet, economic theory predicts that the scope for punishment as acting as a deterrent depends on how much individuals discount future events when balancing the immediate utility of the crime and the costs of a potential future punishment. If criminals have short time horizons, then it is hard to imagine punishment acting as a key deterrent. This paper provides the first empirical investigation of the link between time preferences and criminal behavior. Our study is made possible by access to a unique Swedish longitudinal dataset that links individual measures of time preferences collected at age 13 to various crime indicators from administrative registers spanning over 18 years. Our results show that high discount rates significantly predict criminal involvement. The magnitude of the relationship is substantial and corresponds to roughly one third of the association between intelligence and crime. Although high discount rates significantly predict the onset of criminal involvement, it is less strongly correlated with crime at the intensive margin. The link is more pronounced for property crime and among males with low intelligence. We also find that part of the association can be explained by high discount rates being associated with lower human capital accumulation. |
| Keywords: | time discounting, impatience, intertemporal choice, crime |
| JEL: | K4 D03 D90 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8168&r=cbe |
| By: | Ryota Nakamura (University of East Anglia); Marc Suhrcke (University of East Anglia); Daniel John Zizzo (University of East Anglia) |
| Abstract: | We propose a triple test to evaluate the usefulness of behavioral economics models for public health policy. Test 1 is whether the model provides reasonably new insights. Test 2 is on whether these have been properly applied to policy settings. Test 3 is whether they are corroborated by evidence. Where a test is not passed, this may point to directions for needed further research. We exemplify by considering the cases of social interactions models, self-control models and, in relation to health message framing, prospect theory; out of these, only a correctly applied prospect theory fully passes the tests at present. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:14-01&r=cbe |
| By: | Marc Höglinger; Ben Jann; Andreas Diekmann |
| Abstract: | Self-administered online surveys provide a higher level of privacy protection to respondents than surveys administered by an interviewer. Yet, studies indicate that asking sensitive questions is problematic also in self-administered surveys. Because respondents might not be willing to reveal the truth and provide answers that are subject to social desirability bias, the validity of prevalence estimates of sensitive behaviors from online surveys can be challenged. A well-known method to overcome these problems is the Randomized Response Technique (RRT). However, convincing evidence that the RRT provides more valid estimates than direct questioning in online surveys is still lacking. A new variant of the RRT called the Crosswise Model (CM) has recently been proposed to overcome some of the deficiencies of existing RRT designs. We therefore conducted an experimental study in which different implementations of the RRT and the CM were tested and compared to direct questioning. Our study is a large-scale online survey (N = 6,037) on sensitive behaviors by students such as cheating in exams and plagiarism. The results reveal a poor performance of the forced-response RRT, while the CM yielded significantly higher estimates of sensitive behaviors than direct questioning. We conclude that the CM is a promising approach for asking sensitive questions in self-administered surveys. |
| Keywords: | online survey, sensitive questions, plagiarism, exam cheating, randomized response technique, crosswise model |
| JEL: | C81 C83 |
| Date: | 2014–05–22 |
| URL: | http://d.repec.org/n?u=RePEc:bss:wpaper:9&r=cbe |
| By: | Tempelaar D.T.; Non J.A. (GSBE) |
| Abstract: | We analyze the relation between time preferences, study effort, and academic performance among first-year Business and Economics students. Time preferences are measured by stated preferences for an immediate payment over larger delayed payments. Data on study efforts are derived from an electronic learning environment, which records the amount of time students are logged in and the fraction of exercises completed. Our third measure of study effort is participation in an on-line summer course. We find that impatient students show weaker performance, but the consequences are relatively mild. Impatient students obtain lower grades and fail first sit exams more often, but they do not obtain significantly fewer study credits, nor are they more likely to drop out as a result of obtaining fewer study credits than required. We find a weak negative relationship between impatience and study effort. Differences in study effort therefore cannot explain impatient students lower academic performance. |
| Keywords: | Behavioral Economics: Underlying Principles; Intertemporal Choice and Growth: General; Analysis of Education; |
| JEL: | D03 D90 I21 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2014012&r=cbe |