nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2014‒06‒22
ten papers chosen by
Marco Novarese
Universita' del Piemonte Orientale Amedeo Avogadro

  1. Social preferences in the online laboratory: a randomized experiment By Jérôme Hergueux; Nicolas Jacquemet
  2. Are Smarter People Better Samaritans? Effect of Cognitive Abilities on Pro-Social Behaviors By Luis Aranda; Martin Siyaranamual
  3. The Paradox of Misaligned Profiling: Theory and Experimental Evidence By Charles A. Holt; Andrew Kydd; Laura Razzolini; Roman Sheremeta
  4. Cognitive ability, character skills, and learning to play equilibrium: A level-k analysis By David Gill; Victoria Prowse
  5. An Experimental Study on the Effect of Ambiguity in a Coordination Game By David Kelsey; Sara le Roux
  6. Giving is a question of time: Response times and contributions to a real world public good By Lohse, Johannes; Goeschl, Timo; Diederich , Johannes
  7. A Cold Shower for the Hot Hand Fallacy By Joshua B. Miller; Adam Sanjurjo
  8. Learning, Words and Actions: Experimental Evidence on Coordination-Improving Information By Nicolas Jacquemet; Adam Zylbersztejn
  9. Are we more wearful than greedy? Outbounding the incentives to defect in cooperation dilemmas By Mantilla, Cesar
  10. An experimental approach to generational heterogeneity By Marianna Baggio; Luigi Mittone

  1. By: Jérôme Hergueux (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris - Institut d'Études Politiques [IEP] - Paris - PRES Sorbonne Paris Cité - Fondation Nationale des Sciences Politiques [FNSP]); Nicolas Jacquemet (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II)
    Abstract: Internet is a very attractive technology for the implementation of experiments, both in order to obtain larger and more diverse samples and as a field of economic research in its own right. This paper reports on an experiment performed both online and in the laboratory, designed to strengthen the internal validity of decisions elicited over the Internet. We use the same subject pool, the same monetary stakes and the same decision interface, and control the assignment of subjects between the Internet and a traditional university laboratory. We apply the comparison to the elicitation of social preferences in a Public Good game, a dictator game, an ultimatum bargaining game and a trust game, coupled with an elicitation of risk aversion. This comparison concludes in favor of the reliability of behaviors elicited through the Internet. We moreover find a strong overall parallelism in the preferences elicited in the two settings. The paper also reports some quantitative differences in the point estimates, which always go in the direction of more other-regarding decisions from online subjects. This observation challenges either the predictions of social distance theory or the generally assumed increased social distance in internet interactions.
    Keywords: Social experiment ; Field experiment ; Internet Methodology ; Randomized assignment
    Date: 2014
  2. By: Luis Aranda (Department of Economics, University Of Venice Cà Foscari); Martin Siyaranamual (Department of Economics, University Of Venice Cà Foscari)
    Abstract: This study investigates the link between cognitive abilities and civic engagement of older Europeans (aged 50+), using waves two and three of the SHARE dataset. An instrumental variable approach is employed in an attempt to disentangle possible endogeneity issues arising between cognition and pro-social behaviors. In so doing, cognitive abilities are instrumented with the number of books in the respondent’s place of residence during childhood. The results advocate for the existence of a causal relationship running from cognition in old age to community engagement. Though contradicting standard theoretical predictions, this empirical finding is in line with mainline experimental results showing how participants with higher cognitive abilities tend to be less risk averse, and thus more willing to opt for a payoff-dominant action in a stag hunt game context more often.
    Keywords: Cognitive ability; civic engagement; instrumental variables; risk aversion; we-rationality.
    JEL: D03 D64 D71
    Date: 2014
  3. By: Charles A. Holt (University of Virginia); Andrew Kydd (University of Wisconsin); Laura Razzolini (Virginia Commonwealth University); Roman Sheremeta (Case Western Reserve University and the Economic Science Institute)
    Abstract: This paper implements an experimental test of a game-theoretic model of equilibrium profiling. Attackers choose a demographic “type” from which to recruit, and defenders choose which demographic types to search. Some types are more reliable than others in the sense of having a higher probability of carrying out a successful attack if they get past the security checkpoint. In a Nash equilibrium, defenders tend to profile by searching the more reliable attacker types more frequently, whereas the attackers tend to send less reliable types. Data from laboratory experiments with financially motivated human subjects are consistent with the qualitative patterns predicted by theory. However, we also find several interesting behavioral deviations from the theory.
    Keywords: terrorism, profiling, game theory, laboratory experiment
    JEL: C72 C91 J16
    Date: 2014
  4. By: David Gill; Victoria Prowse
    Abstract: In this paper we investigate how cognitive ability and character skills influence behavior, success and the evolution of play towards Nash equilibrium in repeated strategic interactions.� We study behavior in a p-beauty contest experiment and find striking differences according to cognitive ability: more cognitively able subjects choose numbers closer to equilibrium, converge more frequently to equilibrium play and earn more even as behavior approaches the equilibrium prediction.� To understand better how subjects with different cognitive abilities learn differently, we estimate a structural model of learning based on level-k reasoning.� We find a systematic positive relationship between cognitive ability and levels; furthermore, the average level of more cognitively able subjects responds positively to the cognitive ability of their opponents, while the average level of less cognitively able subjects does not respond.� Finally, we compare the influence of cognitive ability to that of character skills, and find that both cognition and personality affect behavior and learning.� More agreeable and emotionally stable subjects perform better and learn faster, although the effect of cognitive ability on behavior is stronger than that of character skills.
    Keywords: Cognitive ability, character skills, personality traits, level-k, bounded rationality, learning, convergence, non-equilbrium behavior, beauty contest, repeated games, structural modeling, theory of mind, intelligence, IQ, cognition, Raven test
    JEL: C92 C73 D83
    Date: 2014–06–12
  5. By: David Kelsey (Department of Economics, University of Exeter); Sara le Roux (Department of Economics, Oxford Brookes University)
    Abstract: We report an experimental test of the influence of ambiguity on behaviour in a coordination game. We study the behaviour of subjects in the presence of ambiguity and attempt to determine whether they prefer to choose an ambiguity safe option. We fi?nd that this strategy, which is not played in either Nash equilibrium or iterated dominance equilibrium, is indeed chosen quite frequently. This provides evidence that ambiguity aversion infl?uences behaviour in games. While the behaviour of the Row Player is consistent with randomising between her strategies, the Column Player shows a marked preference for avoiding ambiguity and choosing his ambiguity-safe strategy.
    Keywords: Ambiguity; Choquet expected utility; coordination game; Ellsberg urn, experimental economics.
    JEL: C72 C91 D03 D81
    Date: 2014
  6. By: Lohse, Johannes; Goeschl, Timo; Diederich , Johannes
    Abstract: Recent experimental research has examined whether contributions to public goods can be traced back to intuitive or deliberative decision-making, using response times in public good games in order to identify the specific decision process at work. In light of conflicting results, this paper reports on an analysis of response time data from an online experiment in which over 3400 subjects from the general population decided whether to contribute to a real world public good. The between-subjects evidence confirms a strong positive link between contributing and deliberation and between free-riding and intuition. The average response time of contributors is 40 percent higher than that of free-riders. A within-subject analysis reveals that for a given individual, contributing significantly increases and free-riding significantly decreases the amount of deliberation required.
    Keywords: Public Goods; Cooperation; Dual Process Theories; Response Times; Climate Change; Online Experiment
    Date: 2014–06–16
  7. By: Joshua B. Miller; Adam Sanjurjo
    Abstract: The hot hand fallacy has long been considered a massive and widespread cognitive illusion with important economic consequences. While the canonical domain of the fallacy is basketball, which continues to provide its strongest and most readily generalizable supporting evidence, the fallacy has been considered as a candidate explanation for various economic and financial anomalies. We demonstrate, in its canonical domain, that belief in the hot hand cannot be considered a fallacy. Our identification approach is to design a controlled shooting field experiment and develop statistical measures that together have superior identifying power over previous studies. We find substantial evidence of the hot hand, both in our study and in all extant controlled shooting studies, including the seminal study. In light of this discovery, we reexamine the evidence for the hot hand fallacy in other domains and reevaluate whether the hot hand fallacy is an economically meaningful cognitive illusion. JEL Classification Numbers: C12; C14; C91; C93; D03. Keywords: Hot Hand Fallacy; Hot Hand Effect.
    Date: 2014
  8. By: Nicolas Jacquemet (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II); Adam Zylbersztejn (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: We experimentally study an asymmetric coordination game with two Nash equilibria: one is Pareto-efficient, the other is Pareto-inefficient and involves a weakly dominated strategy. We assess whether information about the interaction partner helps eliminate the imperfect equilibrium. Our treatments involve three information-enhancing mechanisms: repetition and two kinds of individual signals: messages from partner or observation of his past choices. Repetition-based learning increases the frequencies of the most efficient outcome and the most costly strategic mismatch. Moreover, it is superseded by individual signals. Like previous empirical studies, we find that signals provide a screening of partners' intentions that reduces the frequency of coordination failures. Unlike these studies, we find that the transmission of information between partners, either via messages or observation, does not suffice to significantly increase the overall efficiency of outcomes. This happens mostly because information does not restrain the choice of the dominated action by senders.
    Keywords: coordination game; communication; cheap-talk; observation
    Date: 2013–07
  9. By: Mantilla, Cesar
    Abstract: Previous studies analyzing the impact of payoffs' cardinality in cooperation dilemmas have concluded that the additional benefits of defecting against a cooperator (the greed dimension) are more salient than the additional costs of cooperating against a defector (the fear dimension). We conduct an experiment to show that when the costs of cooperation exceed its gains, this pattern is reversed. The larger impact of fear over greed on the likelihood to defect is robust to random rematching and to repeated matching, and is mostly driven by a relative rather than an absolute perception of the incentives to cooperate across different dilemmas.
    JEL: C91 D03
    Date: 2014–04
  10. By: Marianna Baggio; Luigi Mittone
    Abstract: The development and use of long-lived public goods involves more than one demographic generation, leaving the classic literature on voluntary provisions partially unfit to explain complex phenomena such as welfare systems, climate policies and major infrastructure projects. This paper proposes a model that explains how equilibrium is reached in a context where heterogeneity is linked to seniority and strategic interaction is finitely repeated. Within this model the case of financial aid schemes for economic development is explained using a redistribution rule that benefits the younger players, as a compensation for their inexperience. Experimental evidence shows that subjects who belong to low or middling marginal per capita return types are negatively affected by heterogeneity, whereas groups benefit from the presence of experienced subjects.
    Date: 2014

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