nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2014‒08‒02
eleven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Because I'm Worth It: A Lab-Field Experiment on the Spillover Effects of Incentives in Health By Paul Dolan; Matteo M. Galizzi
  2. Private provision of a public good: cooperation and altruism of internet forum users By Ros-Galvez, Alejandro; Rosa-García, Alfonso
  3. Do leaders affect ethical conduct? By Giovanna d’Adda; Donja Darai; Roberto A. Weber
  4. Disorder, Social Capital, and Norm Violation: Three Field Experiments on the Broken Windows Thesis By Keuschnigg, Marc; Wolbring, Tobias
  5. The indirect effect of monetary incentives on deception By Janna Ter Meer
  6. Self discrimination: A field experiment on obesity By Antonios Proestakis; Pablo Branas-Garza; Praveen Kujal
  7. Advance in your career and get satisfaction: How much your emotional, social and cognitive competencies matter? By Sara Bonesso; Fabrizio Gerli; Claudio Pizzi
  8. Rationally irrational or irrationally rational? Risk perceptions and their influence in the investment process By Constantinescu, Mihnea
  9. The Green Behaviour: Experimental Economics and Sustainable Real Estate By Bienert, Sven
  10. Behavioural Biases on Residential House Purchase Decisions: A Multi-Criteria Decision-Making Approach By Branigan, Clare; Brugha, Cathal
  11. Behavioural Real Estate By Salzman, Diego

  1. By: Paul Dolan; Matteo M. Galizzi
    Abstract: We conduct a controlled lab-field experiment to directly test the short-run spillover effects of one-off financial incentives in health. We consider how incentives affect effort in a physical activity task - and then how they spillover to subsequent eating behaviour. Compared to a control group, we find that low incentives increase effort and have little effect on eating behaviour. High incentives also induce more effort but lead to significantly more excess calories consumed. The key behavioural driver appears to be the level of satisfaction associated with the physical activity task, which 'licensed' highly paid subjects to indulge in more energy-dense food.
    Keywords: Incentives in health, spillover effects, licensing, hidden costs of incentives
    JEL: C91 C93 D03 I10
    Date: 2014–07
  2. By: Ros-Galvez, Alejandro; Rosa-García, Alfonso
    Abstract: We run an experiment with users of internet message boards. We find that forum users cooperate more with partners of their own forum than with partners from a different forum but they are equally altruistic when they made a gift to a partner of their forum or from another one. We also find that individuals are more active in the forums, the more altruistic they are; however, we find no relation between activity in the forum and cooperation. These results suggest that the public good provided in internet forums is mainly provided by a group of unconditional altruistic group of users, and that the feeling of community supports the cooperation in that provision.
    Keywords: internet forums; public good provision; altruism; cooperation
    JEL: C9 C90 H41 H42 L86
    Date: 2014–07–25
  3. By: Giovanna d’Adda; Donja Darai; Roberto A. Weber
    Abstract: We study whether leaders influence the unethical conduct of followers. To avoid selection issues present in natural environments, we use a laboratory experiment in which we form groups and assign leadership roles at random. We study an environment in which groups compete, with dishonest behavior enhancing group earnings to the detriment of social welfare. We vary, by treatment, two instruments through which leaders can influence follower conduct—prominent statements to the group and the allocation of monetary incentives. In general, the presence of active group leaders gives rise to significantly more dishonest behavior. Moreover, appointing leaders who are likely to have acted dishonestly in a preliminary stage of the experiment yields groups with significantly more unethical conduct. The analysis of leaders’ strategies reveals that leaders’ statements have a stronger effect on follower behavior than the ability to distribute financial rewards, and that leaders’ propensity to act dishonestly correlates with their use of statements or incentives as a means for encouraging dishonest follower conduct.
    Keywords: Leadership, ethics, dishonesty, experiment
    JEL: C92 C72 D03
    Date: 2014–07
  4. By: Keuschnigg, Marc; Wolbring, Tobias
    Abstract: Adding to the debate about the “broken windows” thesis we discuss an explanation of minor norm violation based on the assumption that individuals infer expected sanctioning probabilities from contextual cues. We modify the classical framework of rational crime by signals of disorder, local social control, and their interaction. Testing our implications we present results from three field experiments showing that violations of norms, which prevent physical as well as social disorder, foster further violations of the same and of different norms. Varying the net gains from deviance it shows that disorder effects are limited to low cost situations. Moreover, we provide suggestive evidence that disorder effects are significantly stronger in neighborhoods with high social capital.
    Keywords: broken windows theory; disorder; field experiment; low cost situations; norm violation; social capital
    JEL: C9 C93 K42 R23 Z13
    Date: 2014
  5. By: Janna Ter Meer (University of Cologne)
    Abstract: This paper investigates whether working under competitive or cooperative incentives affects deception in a subsequent, unrelated task. I use a laboratory study with two stages. First, participants work under a piece rate, tournament or team incentive in a real effort task. The second part consists of a sender-receiver game where the sender can gain financially at the expense of the receiver by sending a deceptive message. I find that senders who worked under tournament incentives are less honest than those who worked under a piece rate. I find no increase in honesty for those who performed under team incentives relative to the piece rate. Interestingly, this only holds when participants are not informed about their relative performance during the work task. When such feedback is provided I find that relative performance affects honesty across all incentive conditions. In particular, honesty decreases as relative performance differences become small.
    JEL: M52 C92 D02 D03
    Date: 2014–07–07
  6. By: Antonios Proestakis (Institute for Health and Consumer Protection); Pablo Branas-Garza (Middlesex University); Praveen Kujal (Middlesex University)
    Abstract: Empirical evidence suggests that physical characteristics such as obesity can result in a salary gap in the work place. It is, however, not clear how much of this (gap) is due to factors emanating from the demand or supply side of the market. In this paper we use a field experiment to study whether a part of this wage gap can be attributed to personality traits of individuals on the supply side. Monitors randomly select individuals to respond to a questionnaire. Individuals can make money requests for completing the questionnaire. In the questionnaire they also self-report several personality chracteristics. We find that the more obese individuals perceive themselves to be, lesser is the money they request. The negative association between money requests and obesity is mostly driven by female participants. The effect of (self-perceived) non-obese individuals is asymmetric across gender. Self perceived "normal" females, perceived thin by the monitors, request more, meanwhile, males in this category request less relative to those that do not overstate their obesity levels. Our results suggest that lower salary request may anchor obese individuals to lower thresholds and may partly explain the wage gap.
    Date: 2014–07
  7. By: Sara Bonesso; Fabrizio Gerli; Claudio Pizzi
    Abstract: .
    Keywords: Emotional, social and cognitive competencies, career success, career satisfaction, life satisfaction
    JEL: M12 J2 J28
    Date: 2014–07
  8. By: Constantinescu, Mihnea
    Abstract: The current study explores the degree to which real estate investors rely on extrapolation to form expectations about future returns and risk and whether pricing is influenced by cognitive biases. A survey of Swiss institutional market participants elicits past portfolio returns and risk as well as expected values of return and risk over a one-year period. The data is employed to test the consistency of the relationship between expected risk and return. This test is based on simple relations between vacancy and growth rates in rent as well as on a new dynamic cap rate model derived from Campbell and Shiller’s (1988) dynamic DCF model. Preliminary results indicate that the bias caused by the affect heuristic is not present. One explanation, in line with research from the equity market, is that the lack of time pressure and the increased level of financial literacy impede the affect heuristic from occurring.
    Date: 2014
  9. By: Bienert, Sven
    Abstract: The importance of lowering the ecological footprint of human kind to a sustainable level is meanwhile unquestionable. The number of green products is increasing, but the product itself is not sufficient to reduce the ecological imbalance. Since life-cycle-assessments and life-cycle-cost approaches in real estate investments became common, it is known that not just the construction but the sustainable operation of a building leads to the most ecological benefit. Therefore, consumer behaviour is the key to enable and push a sustainable development. By now, the real estate industry focused mainly on the property side rather than on the user and his behaviour. Addressing this issue, the research idea of the study is to introduce experimental and behavioural economics as well as aspects of game theory within sustainable real estate in order to reveal the triggers of individual user behaviour. The paper combines subsequently three disciplines: Game theory/ experimental economics, real estate and sustainability. Theoretical and practical findings of this study should enable companies to address the 'right' issues and to develop adequate incentive schemes for their employees in order to trigger 'green behaviour' and finally limit resource use to reduce operating expenses. Furthermore, efficient strategies to increase personal involvement for climate protection are developed and detailed insights regarding user behaviour are given.
    Date: 2013
  10. By: Branigan, Clare; Brugha, Cathal
    Abstract: In this study, we examine if behavioural biases, such as framing effects, escalation of commitment, and overconfidence are present when residential property purchasers are choosing between alternative properties. To accomplish same, we use a Multi-Criteria Decision-Making (MCDM) approach to examine the behaviour of property purchasers in Dublin during the property boom of 2005.The study was designed using a case study approach and the participants used a Multi-Criteria Decision-Making analysis tool to aid in their selection between alternative properties. The decision tool that was used is Direct-Interactive: i.e., the Decision-Maker gives scores and weights directly and is able to adjust them during the process. It also uses Structured-Criteria, i.e. it tracks elements of the decision to specific disaggregated criteria of the decision-maker.This research finds that using a decision tool provides better decisions as was expected from the method, however, a subset of property buyers resisted applying the tool to make non-rational choices. This indicates how strong behavioural biases can be and how influencing their affect is, even when making large monetary decisions. In conclusion, when a decision-making tool is introduced to enable property purchasers to improve their decision-making capability, a subset of property buyers may resist applying the tool to let their behavioural biases potentially override rational decision-making.
    Date: 2013
  11. By: Salzman, Diego
    Abstract: The behavioural approach to decision making under uncertainty combines insights from psychology and sociology into economic decision making. It steps away from the normative homo economicus and introduces a positive approach to human decision making under uncertainty. The aim of this paper is to provide an overview of the main themes in the behavioural real estate literature from the perspective of different market participants. It can be concluded that there seems to be general agreement that behavioural studies can help explain the inefficiency of real estate markets, but a large component of behavioural decision making in the property markets seems to be undiscovered.
    Date: 2013

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