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on Cognitive and Behavioural Economics |
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Issue of 2014‒09‒29
seven papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale “Amedeo Avogadro” |
| By: | Delaney, Liam; Fink, Günther; Harmon, Colm |
| 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, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:550&r=cbe |
| By: | Anastasia Danilov (University of Cologne); Timo Vogelsang (University of Cologne) |
| Abstract: | This study investigates whether individuals engage in prosocial behavior when it requires their time but not money. In a lab experiment with rigorous anonymity arrangements, subjects receive their payoff beforehand and can engage in a tedious task to increase the earnings of a passive recipient. We find that individuals work for a significant amount of time. |
| Keywords: | Laboratory experiment, social preferences, time, opportunity costs, volunteering, altruism |
| JEL: | C91 D64 J22 |
| Date: | 2014–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:05-05&r=cbe |
| By: | LaRiviere, Jacob; Czajkowski, Mikolaj; Hanley, Nick; Aanesen, Margrethe; Falk-Peterson, Jannike; Tinch, Dugald |
| Abstract: | This paper compares how increases in experience versus increases in knowledge about a public good affect willingness to pay (WTP) for its provision. This is challenging because while consumers are often certain about their previous experiences with a good, they may be uncertain about the accuracy of their knowledge. We therefore design and conduct a field experiment in which treated subjects receive a precise and objective signal regarding their knowledge about a public good before estimating their WTP for it. Using data for two different public goods, we show qualitative equivalence of the effect of knowledge and experience on valuation for a public good. Surprisingly, though, we find that the causal effect of objective signals about the accuracy of a subject’s knowledge for a public good can dramatically affect their valuation for it: treatment causes an increase of $150-$200 in WTP for well-informed individuals. We find no such effect for less informed subjects. Our results imply that WTP estimates for public goods are not only a function of true information states of the respondents but beliefs about those information states. |
| Keywords: | Information, Beliefs, Field Experiment, Valuation, Uncertainty, Choice Experiment, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:edn:sirdps:552&r=cbe |
| By: | Fairlie, Robert |
| Abstract: | A growing literature examines the relationship between personality traits and entrepreneurship, but no previous studies explore whether personality or psychological traits predispose individuals to benefit more from entrepreneurship training. To address selection issues, we use novel data from the largest-ever randomized control experiment providing entrepreneurship training in the United States. We find evidence indicating that individuals who are more risk tolerant benefit more from entrepreneurship training than less risk tolerant individuals. We find some limited evidence that individuals who have a preference for autonomy benefit more from entrepreneurship training in the short run, but we find no evidence of longer-term effects and no evidence of differential effects of entrepreneurship training for individuals who are more innovative. |
| Keywords: | Business, Education, Social and Behavioral Sciences, entrepreneurship, education, training, psychology, experiment |
| Date: | 2014–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucscec:qt9x83w5k4&r=cbe |
| By: | V. I. Yukalov; D. Sornette |
| Abstract: | We investigate how the choice of decision makers can be varied under the presence of risk and uncertainty. Our analysis is based on the approach we have previously applied to individual decision makers, which we now generalize to the case of decision makers that are members of a society. The approach employs the mathematical techniques that are common in quantum theory, justifying our naming as Quantum Decision Theory. However, we do not assume that decision makers are quantum objects. The techniques of quantum theory are needed only for defining the prospect probabilities taking into account such hidden variables as behavioral biases and other subconscious feelings. The approach describes an agent's choice as a probabilistic event occurring with a probability that is the sum of a utility factor and of an attraction factor. The attraction factor embodies subjective and unconscious dimensions in the mind of the decision maker. We show that the typical aggregate amplitude of the attraction factor is $1/4$, and it can be either positive or negative depending on the relative attraction of the competing choices. The most efficient way of varying the decision makers choice is realized by influencing the attraction factor. This can be done in two ways. One method is to arrange in a special manner the payoff weights, which induces the required changes of the values of attraction factors. We show that a slight variation of the payoff weights can invert the sign of the attraction factors and reverse the decision preferences, even when the prospect utilities remain unchanged. The second method of influencing the decision makers choice is by providing information to decision makers. The methods of influencing decision making are illustrated by several experiments, whose outcomes are compared quantitatively with the predictions of our approach. |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1409.0636&r=cbe |
| By: | Joerg Bleile (Center for Mathematical Economics, Bielefeld University) |
| Abstract: | An agent wants to derive her belief over outcomes based on past observations collected in her database (memory). There is well establish evidence in the psychology and marketing literature that agents consistently fail (or choose not) to process all available information. An agent might be constraint to pay attention (recall) and consider only parts of her potentially available information due to unawareness, cognitive or psychological limitations or intentionally for effort-efficiency. Based on this insight, we axiomatize a two-stage belief formation process in which in a first step agents filter ((un)intentionally) the available information. In a second step individuals employ the remaining observations to express a belief. We impose cognitively and normatively desirable properties on the filtering process. The axioms on the belief formation stage describe the relationship between databases and their induced beliefs. The axiomatized belief induced by a filtered databases is representable by a similarity weighted average of the estimations induced by each past attentiongrabbing observation. An appealing application is a satisficing filter that induces a filtered belief that relies only on past experiences that are sufficiently relevant for a current problem. For the specific situation that agents (are able to) always pay attention to all available information, our axiomatization coincides with the axiomatization of a belief formation in Billot et al.(Econometrica (2005)). |
| Keywords: | Belief formation, prior, case-based reasoning, relative frequencies, similarity, limited attention, consideration set, heuristics, satisficing, multicriteria choice, rationalization |
| JEL: | D01 D03 D11 D81 D83 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:518&r=cbe |
| By: | Ninos P. Malek (San Jose State University); Joshua C. Hall (West Virginia University, College of Business and Economics); Collin Hodges (West Virginia University) |
| Abstract: | Drawing largely on educational literature outside of economics, we provide a survey of perspectives on alternative teaching methods. We then report results regarding the effectiveness of various alternative methods such as cooperative learning, class discussions, and the use of multimedia sources compared to lecture-only instruction. A difference-in-means test is utilized to compare gains in learning between control classes and treatment classes. Alternative teaching methods were not shown to increase student performance in a statistically significant manner. |
| Keywords: | active learning, lecture, discussion |
| JEL: | A10 A21 A22 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:14-27&r=cbe |