nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2014‒07‒05
thirteen papers chosen by
Marco Novarese
Universita' del Piemonte Orientale Amedeo Avogadro

  1. Why does real-time information reduce energy consumption? By John Lynham; Kohei Nitta; Tatsuyoshi Saijo; Nori Tarui
  2. People Do Not Discount Heavily in Strategic Settings, but They Believe Others Do. By Cary Deck; Salar Jahedi
  3. Experimenting with Behavior Based Pricing By Zuzana Brokesova; Cary Deck; Jana Peliova
  4. Narrative and deliberative instauration: The use of narrative as process and artefact in the social construction of institutions By William James Fear; Ricardo Azambuja
  5. On Self-Interest and Greed By Gebhard Kirchg�ssner
  6. Save the planet for humans’ sake: The relation between social and environmental value orientations By Kurt A. Ackermann; Eva Fleiß; Jürgen Fleiß; Ryan O. Murphy; Alfred Posch
  7. The Impact of Education on Personality: Evidence from a German High School Reform By Sarah Dahmann; Silke Anger
  8. Behavioral Economics and Macroeconomic Models By Driscoll, John C.; Holden, Steinar
  9. Keeping others in our mind or in our heart? Distribution games under cognitive load By Hauge, Karen Evelyn; Brekke, Kjell Arne; Johansson, Lars-Olof; Johansson-Stenman, Olof; Svedsäter, Henrik
  10. Workers’ Risk Attitude and Financial Participation By Rahma Daly; Marc-Arthur Diaye; Jean-Max Koskievic
  11. Raising the Price of Talk: An Experimental Analysis of Transparent Leadership By Daniel Houser; David M. Levy; Kail Padgitt; Sandra J. Peart; Erte Xiao
  12. Do recruiters 'like' it? Online social networks and privacy in hiring: a pseudo-randomized experiment By Manant, Matthieu; Pajak, Serge; Soulié, Nicolas
  13. When Is Speech Silver and Silence Golden ?A Field Experiment on an Information Campaign By Olivier Body

  1. By: John Lynham (Department of Economics, University of Hawaii at Manoa and UHERO); Kohei Nitta (Department of Economics, University of Hawaii at Manoa); Tatsuyoshi Saijo (School of Management, Kochi University of Technology); Nori Tarui (Department of Economics, University of Hawaii at Manoa)
    Abstract: A number of studies have estimated how much energy conservation is achieved by providing households with real-time information on energy use via in-home displays. However, none of these studies tell us why real-time information changes energy-use behavior. We explore the causal mechanisms through which real-time information affects energy consumption by conducting a randomized-control trial with residential households. The experiment disentangles two competing mechanisms: (i) learning about the energy consumption of various activities, the “learning effectâ€, versus (ii) having a constant reminder of energy use, the “saliency effectâ€. We have two main results. First, we find a statistically significant treatment effect from receiving real-time information. Second, we find that learning plays a more prominent role than saliency in driving energy conservation. This finding supports the use of energy conservation programs that target consumer knowledge regarding energy use.
    Keywords: energy efficiency; energy conservation; real-time information; experiment
    JEL: D03 D12 Q41 Q48
    Date: 2014–06
  2. By: Cary Deck (University of Arkansas and Chapman University); Salar Jahedi (RAND Corporation)
    Abstract: Several studies have shown that people greatly discount future benefits and costs. However, most of the direct laboratory evidence of this phenomenon has focused on individual choice experiments. This paper investigates the degree to which the timing of payments affects behavior in four commonly studies strategic settings: a Prisoner's Dilemma game, a Stag-Hunt game, a First Price Auction and a Second Price Auction. In all four settings, a two week delay in payoffs has a comparable effect to a 20% reduc- tion in current payoffs. A follow-up study suggests that it is an individual's strategic response to the anticipated discount rate of others that might be driving this behavior rather than a participant's own discount factor.
    Keywords: Strategic Behavior, Time Discounting, Experiments.
    Date: 2014
  3. By: Zuzana Brokesova (University of Economics in Bratislava); Cary Deck (Sam M. Walton College of Business, University of Arkansas and Economic Science Institute, Chapman University); Jana Peliova (University of Economics in Bratislava)
    Abstract: Many purchases of differentiated goods are repeated, giving sellers the opportunity to engage in price discrimination based upon the shopper’s previous behavior by either offering loyalty discounts to repeat buyers or introductory rates to new customers. Recent theoretical work suggests that loyalty discounts are likely to be implemented when customer preferences are not stationary and sellers can pre-commit to prices for repeat buyers, but otherwise repeat buyers can be expected to pay the same or more than new buyers. This paper reports the results of a series of controlled laboratory experiments designed to empirically test the impact of these factors on pricing strategies, seller profit and total cost to consumers. Absent price pre-commitments, sellers in the lab engage in poaching when it is optimal to do so, but the ability to pre-commit leads to prices being relatively more favorable to loyal customers. Customer poaching increases seller profit and increases total consumer costs in the case of stable consumer preferences without price pre-commitment.
    Keywords: Strategic Behavior, Time Discounting, Experiments.
    JEL: C71 C91 D41
    Date: 2014
  4. By: William James Fear (Department of Organizational Psychology - Birkbeck College University of London); Ricardo Azambuja (MC - Management et Comportement - Grenoble École de Management (GEM))
    Abstract: Patient Safety is a global institution in the field largely assumed to have emerged following the publication of To Err Is Human by the Institute of Medicine in 1999. In this paper we demonstrate that Patient Safety has been constructed as an institution separately in the practice of anaesthesia since 1954 and in hospitalised care since 1964. The publication of To Err was, in fact, only one of a number of later field configuring events. We use Bruner's (1991) theory of narrative to frame the institution building process which we term deliberative instauration in recognition of the historic literature on the subject. We further link the process of institution building to Vygotsky's theory of social mediation and the use of artefacts in relation to the object of intended action. We conclude that a narrative can be understood as both an artefact and a process used in the social construction of institutions by professional psychological collectives (in this case physicians).
    Keywords: Institution; Artefact; Narrative; Patient Safety; Healthcare
    Date: 2014
  5. By: Gebhard Kirchg�ssner
    Abstract: First the assumption of self-interest as applied in Economics is presented. Here we also discuss areas in which (many) people behave less self- but more other-regarding than traditional economic models assume. Then, greedy behaviour is considered as existing in the political and economic �world�. Here we refer to corruption as well as to the role of money as a positional good. We also discuss such behaviour in the academic world, in which money plays a role as well as reputation. Thus, while the assumption of mutually disinterested rationality is a very powerful instrument for analysing individual behaviour, to explain some phenomena we have to recognise that people are not only sometimes other-regarding, but also sometimes greedy, and that they might value money much more than traditional Economics assumes. We conclude with some remarks on what we can learn in this respect from Behavioural Economics.
    Keywords: Economic Model of Behaviour; Self-Interest; Altruism; Greed; Corruption
    JEL: B41
    Date: 2014–06
  6. By: Kurt A. Ackermann (Chair of Decision Theory and Behavioral Game Theory, ETH Zurich); Eva Fleiß (Institute of Systems Sciences, Innovation and Sustainability Research, Karl-Franzens-University Graz); Jürgen Fleiß (Institute of Statistics and Operations Research, Karl-Franzens-University Graz); Ryan O. Murphy (Chair of Decision Theory and Behavioral Game Theory, ETH Zurich); Alfred Posch (Institute of Systems Sciences, Innovation and Sustainability Research, Karl-Franzens-University Graz)
    Abstract: The literature shows a significant correlation between people’s concerns for others and their concerns for the environment. However, these social and environmental considerations were commonly measured by means of attitude questionnaires that were not incentivized and did not readily facilitate a direct comparison of the results. In the present experiment, we employed a consistent incentivized method to assess subjects’ social value orientations (SVO) and their concerns for the environment and humanitarian aid. Subjects make real decisions with real consequences regarding the distribution of resources while the experimental design ensured comparability of subjects’ social preferences and their willingness to make tradeoffs for different environmental and social causes. We found that social and environmental value orientations are intertwined to some extent, but that the nature of the association is not simple. Nonetheless the results clearly show that people are generally willing to pay more for the benefit of people in need, compared to abstract environmental causes. We conclude that interventions to nudge people towards environment-friendly behavior may have a greater impact if human suffering as resulting from global warming is made salient.
    Date: 2014–06–17
  7. By: Sarah Dahmann; Silke Anger
    Abstract: This paper investigates the short-term effects of a reduction in the length of high school on students' personality traits using a school reform carried out at the state level in Germany as a quasi-natural experiment. Starting in 2001, academic-track high school (Gymnasium) was reduced from nine to eight years in most of Germany's federal states, leaving the overall curriculum unchanged. This enabled students to obtain a university entrance qualification (Abitur ) after a total of only 12 rather than 13 years of schooling. We exploit the variation in the length of academic-track high school over time and across states to identify the effect of schooling on students' Big Five personality traits and on their locus of control. Using rich data on adolescents and young adults from the German Socio-Economic Panel (SOEP) study, our estimates show that shortening high school caused students on average to be more extroverted and less emotionally stable.Our estimates point to important heterogeneous e ects. In addition to di erences between East and West Germany, we nd that male students and students from disrupted families showed stronger personality changes following the reform: they became more agreeable and more extroverted, respectively. We conclude that the educational system plays an important role in shaping adolescents' personality traits.
    Keywords: Non-cognitive Skills, Big Five, Locus of Control, Skill Formation, High School Reform
    JEL: I21 I28 J24
    Date: 2014
  8. By: Driscoll, John C. (Board of Governors of the Federal Reserve System (U.S.)); Holden, Steinar (University of Oslo)
    Abstract: Over the past 20 years, macroeconomists have incorporated more and more results from behavioral economics into their models. We argue that doing so has helped fixed deficiencies with standard approaches to modeling the economy--for example, the counterfactual absence of inertia in the standard New Keynesian model of economic fluctuations. We survey efforts to use behavioral economics to improve some of the underpinnings of the New Keynesian model--specifically, consumption, the formation of expectations and determination of wages and employment that underlie aggregate supply, and the possibility of multiple equilibria and asset price bubbles. We also discuss more broadly the advantages and disadvantages of using behavioral economics features in macroeconomic models.
    Keywords: Behavioral macroeconomics; New Keynesian model
    Date: 2014–06–04
  9. By: Hauge, Karen Evelyn (Frisch Centre for Economic Research); Brekke, Kjell Arne; Johansson, Lars-Olof (Department of Psychology); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Svedsäter, Henrik
    Abstract: It has recently been argued that giving is spontaneous while greed is calculated (Rand et al. 2012). If greed is calculated we would expect that cognitive load, which is assumed to reduce the influence of cognitive processes, should affect greed. In this paper we study both charitable giving and the behavior of dictators under high and low cognitive load, to test if greed is affected by the load. In the dictator games we use both a give frame, where the dictators are given an amount that they may share with a partner, and a take frame, where dictators may take from an amount initially allocated to the partner. The results show consistently that the behavioral effect in terms of allocated money of the induced load is small if at all existent. At the same time, follow-up questions indicate that the subjects’ decisions are more driven by their feelings and less driven by their thoughts under cognitive load.
    Keywords: Cognitive load; Dictator games; Social preferences; Pro-social behavior; altruism
    JEL: C91 D64
    Date: 2014–06
  10. By: Rahma Daly (University of Evry Val d’Essonne (EPEE)); Marc-Arthur Diaye (University of Evry Val d’Essonne (EPEE)); Jean-Max Koskievic (ESG Management School)
    Abstract: The French "2010 Household Wealth Survey" includes an experimental module that makes it possible to measure risk aversion in an objective manner. Using this survey, we analyse workers’ attitudes towards financial participation with respect to their attitudes towards risk.
    Keywords: Risk aversion, financial participation
    JEL: J33 M52 J54
    Date: 2014
  11. By: Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); David M. Levy (Center for the Study of Public Choice and Department of Economics, George Mason University); Kail Padgitt (Tax Foundation); Sandra J. Peart (University of Richmond); Erte Xiao (Department of Social and Decision Sciences Carnegie Mellon University)
    Abstract: Does transparent leadership promote cooperative groups? We address this issue using a public goods experiment with exogenously selected leaders who are able to send non-binding contribution suggestions to the group. To investigate the effect of transparency in this setting we vary the ease with which a leader’s actions are known by the group. We find leaders’ suggestions encourage cooperation in all treatments, but that both leaders and their group members are more likely to follow leaders’ recommendations when institutions are transparent so that non-leaders can easily see what the leader does. Consequently, transparency leads to significantly more cooperation, higher group earnings and reduced variation in contributions among group members. Length: 46
    Keywords: experimental economics
    Date: 2014–06
  12. By: Manant, Matthieu; Pajak, Serge; Soulié, Nicolas
    Abstract: With the advance of online social networks, the screening of applicants during hiring can extend beyond the usual application material. Although browsing the online profile of an applicant raises ethical issues, this practice potentially improves the job matching, at virtually no cost to the employer. In this paper, we investigate the use of online social networks as a reliable source of information for recruiters on applicants in the French job market. We set up a field experiment using real accountant job offers in the greater Paris area. We adjust the content of Facebook accounts to manipulate the perceived origins of applicants (hometown and language spoken) and analyze the impact on the number of callbacks received from employers. The signal we manipulate to distinguish applicants is available only within the online profile, not the application material. During a 12 month period from March 2012 to March 2013, we submitted more than 800 applications. The test applicant received a third fewer callbacks compared to the control applicant, a significant difference. Our results suggest that online profiles are used indeed to screen applicants, and that this occurs early in the hiring process. During the course of the experiment, a change to the standard Facebook layout sent a part of our signal, namely the language spoken by the applicants, into a sub-tab not directly visible from the front page. This exogenous change (clicking on a tab is now required to access the information) allowed us to measure the recruiter's depth of search. In subsequent months, the gap between the two applicant types shrank and virtually disappeared. This suggests that screening is superficial, illustrating the existence of employer search costs for browsing an entire profile.
    Keywords: Online Social Network; Labor Market Discrimination; Privacy; Field experiment
    JEL: D82 D83 M5
    Date: 2014–06–24
  13. By: Olivier Body
    Keywords: communication; information acquisition; field experiment; effort
    JEL: C93 D80
    Date: 2014–06

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