nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2015‒01‒03
fourteen papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Network Monitoring and Punishment in Public Goods Experiments By Luke Boosey; R. Mark Isaac
  2. Privacy concerns, voluntary disclosure of information, and unraveling: An experiment By Benndorf, Volker; Kübler, Dorothea; Normann, Hans-Theo
  3. How individual characteristics shape the structure of social networks By Yann Girard; Florian Hett; Daniel Schunk
  4. Love Thy Neighbor - Religion and Prosocial Behavior By Guido Heineck
  5. The Effect of Perceived Regional Accents on Individual Economic Behavior: A Lab Experiment on Linguistic Performance, Cognitive Ratings and Economic Decisions By Heblich, Stephan; Lameli, Alfred; Riener, Gerhard
  6. Tradeoffs between Self-interest and Other-Regarding Preferences Cause Willpower Depletion By Hanna Fromell; Daniele Nosenzo; Trudy Owens
  7. Self-Regulatory Organizations Under the Shadow Of Governmental Oversight: An Experimental Investigation By Silvester Van Koten; Andreas Ortmann
  8. Punishment and Reward Institutions with Harmed Minorities By Sagi Dekel; Sven Fischer; Ro’i Zultan
  9. Social Comparison and Risk Taking Behavior By Astrid Gamba; Elena Manzoni; Luca Stanca
  10. Social norms, morals and self-interest as determinants of pro-environment behaviour By Mikolaj Czajkowski; Nick Hanley; Karine Nyborg
  11. The long-term impact of matching and rebate subsidies when public goods are impure: Field experimental evidence from the carbon offsetting market By Kesternich, Martin; Löschel, Andreas; Römer, Daniel
  12. Economists: cheaters with altruistic instincts By Muñoz-Izquierdo, Nora; Gil-Gómez de Liaño, Beatriz; Rin-Sánchez, Francisco Daniel; Pascual-Ezama, David
  13. Judicial Error and Cooperation By Thomas Markussen; Louis Putterman; Jean-Robert Tyran
  14. Behavioral design: A new approach to development policy By Datta, Saugato; Mullainathan, Sendhil

  1. By: Luke Boosey (Department of Economics, Florida State University); R. Mark Isaac (Department of Economics, Florida State University)
    Abstract: We report experimental findings on the impact of network structure on decentralized monitoring and punishment in public goods games. In the environment we study, individuals can only directly monitor and punish their immediate neighbors in an exogenously determined network. We examine contributions and punishment decisions in a Complete network, a Circle network, and an Asymmetric network. Average contributions are lower in the Asymmetric network, although this result is driven entirely by the player who faces only one potential punisher. We also examine whether asymmetry in the network leads some punishers to discriminate between their potential targets. After controlling for targets' contribution decisions, we find limited support for this hypothesis. However, the data indicate that some punishers may be deterred from issuing discriminatory punishment by undermonitored targets who retaliate against previous punishment more often than others. Thus, we identify an additional complication of asymmetry in the network - that it may facilitate more targeted revenge by under-monitored players.
    Keywords: networks, public goods, punishment, revenge
    JEL: C72 C91 C92 H41
    Date: 2014–12
  2. By: Benndorf, Volker; Kübler, Dorothea; Normann, Hans-Theo
    Abstract: We study the voluntary revelation of private information in a labor-market experiment where workers can reveal their productivity at a cost. While rational revelation improves a worker's payoff, it imposes a negative externality on others and may trigger further revelation. Such unraveling can be observed frequently in our data although less often than predicted. Equilibrium play is more likely when subjects are predicted to conceal their productivity than when they should reveal. This tendency of under-revelation, especially of low-productivity workers, is consistent with the level-k model. A loaded frame where the private information concerns the workers' health status leads to less revelation than a neutral frame.
    Keywords: information revelation,level-k reasoning,privacy
    JEL: C72 C90 C91
    Date: 2014
  3. By: Yann Girard (GSEFM, Goethe University Frankfurt, Germany); Florian Hett (GSEFM, Goethe University Frankfurt, Germany); Daniel Schunk (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany)
    Abstract: We study how students’ social networks emerge by documenting systematic patterns in the process of friendship formation of incoming students; these students all start out in a new environment and thus jointly create a new social network. As a specific novelty, we consider cooperativeness, time and risk preferences - elicited experimentally - together with factors like socioeconomic and personality characteristics. We find a number of robust predictors of link formation and of the position within the social network (local and global network centrality). In particular, cooperativeness has a complex association with link formation. We also find evidence for homophily along several dimensions. Finally, our results show that despite these systematic patterns, social network structures can be exogenously manipulated, as we find that random assignments of students to groups on the first two days of university impacts the students’ friendship formation process.
    Keywords: Social networks, education, link formation, homophily, cooperation, field and lab data
    JEL: C93 D85 I25 J24
    Date: 2014–11–17
  4. By: Guido Heineck
    Abstract: There is a long tradition in psychology, the social sciences and, more recently though, economics to hypothesize that religion enhances prosocial behavior. Evidence from both survey and experimental data however yield mixed results and there is barely any evidence for Germany. This study adds to this literature by exploring data from the German Socio-Economic Panel (SOEP), which provides both attitudinal (importance of helping others, of being socially active) and behavioral components of prosociality (volunteering, charitable giving and blood donations). Results from analyses that avoid issues of reverse causality suggest mainly for moderate, positive effects of individuals' religious involvement as measured by church affiliation and church attendance. Despite the historic divide in religion, results in West and East Germany do not differ substantially.
    Keywords: Religion, prosocial behavior, Germany
    JEL: D64 Z12 Z13
    Date: 2014
  5. By: Heblich, Stephan (University of Bristol); Lameli, Alfred (University of Marburg); Riener, Gerhard (Düsseldorf Institute for Competition Economics (DICE))
    Abstract: Does it matter if you speak with a regional accent? Speaking immediately reveals something of one's own social and cultural identity, be it consciously or unconsciously. Perceiving accents involves not only reconstructing such imprints but also augmenting them with particular attitudes and stereotypes. Even though we know much about attitudes and stereotypes that are transmitted by, e.g. skin color, names or physical attractiveness, we do not yet have satisfactory answers how accent perception affects human behavior. How do people act in economically relevant contexts when they are confronted with regional accents? This paper reports a laboratory experiment where we address this question. Participants in our experiment conduct cognitive tests where they can choose to either cooperate or compete with a randomly matched male opponent identified only via his rendering of a standardized text in either a regional accent or standard accent. We find a strong connection between the linguistic performance and the cognitive rating of the opponent. When matched with an opponent who speaks the accent of the participant's home region – the in-group opponent –, individuals tend to cooperate significantly more often. By contrast, they are more likely to compete when matched with an accent speaker from outside their home region, the out-group opponent. Our findings demonstrate, firstly, that the perception of an out-group accent leads not only to social discrimination but also influences economic decisions. Secondly, they suggest that this economic behavior is not necessarily attributable to the perception of a regional accent per se, but rather to the social rating of linguistic distance and the in-group/out-group perception it evokes.
    Keywords: discrimination, accent, in-group/out-group, lab experiment
    JEL: C90 J70 Z10
    Date: 2014–11
  6. By: Hanna Fromell (University of Nottingham, School of Economics); Daniele Nosenzo (University of Nottingham, School of Economics); Trudy Owens (University of Nottingham, School of Economics)
    Abstract: In this paper we show that making choices that involve conflicts between self-interest and otherregarding concerns may deplete cognitive resources and willpower and thus reduce individuals' ability to exert self-control. In a lab experiment we use a series of modified dictator games to manipulate whether subjects are exposed to tradeoffs between their self-interest and the interest of others: in a Conflict treatment the option that maximizes the dictator's payoff always minimizes the recipient's payoff, whereas in the NoConflict treatment dictator’s and recipient’s payoffs are aligned. We then measure how decision-making in the dictator games affects subjects’ performance in a subsequent and unrelated task that requires exertion of willpower. We find that subjects in the Conflict treatment perform significantly worse than those in NoConflict. This effect is particularly marked for dictators who experienced a stronger conflict during the dictator games.
    Keywords: other-regarding preferences; willpower; self-control; depletion; dictator game; Stroop task.
  7. By: Silvester Van Koten; Andreas Ortmann
    Abstract: Self-regulatory organizations (SROs) can be found in education, healthcare, and other not-for-profit sectors as well as in the accounting, financial, and legal professions. DeMarzo et al. (2005) show theoretically that SROs can create monopoly market power for their affiliated agents, but that governmental oversight, even if less efficient than oversight by the SRO, can largely offset the market power. We provide an experimental test of this conjecture. For carefully rationalized parameterizations and implementation details, we find that the predictions of DeMarzo et al. (2005) are borne out.
    Keywords: experimental economics; self-regulatory organizations, governmental oversight;
    JEL: C90 L44 G18 G28
    Date: 2014–11
  8. By: Sagi Dekel (BGU); Sven Fischer (Max Planck Institute of Economics, Germany); Ro’i Zultan (BGU)
    Keywords: public goods, punishment, reward, externalities.
    JEL: C72 C91 H41
    Date: 2014
  9. By: Astrid Gamba (Department of Economics, Management and Statistics, University of Milan-Bicocca); Elena Manzoni (Department of Economics, Management and Statistics, University of Milan-Bicocca); Luca Stanca (Department of Economics, Management and Statistics, University of Milan-Bicocca)
    Abstract: This paper studies the effects of social comparison on risk taking be- havior. In our framework, decision makers evaluate the consequences of their choices as changes with respect to both their own and their peers' conditions. We test experimentally whether different positions in the social ranking determine different risk attitudes. Subjects interact in a simulated workplace environment, where they receive possibly different wages as compensation for effort and then undertake a risky decision that may give them an extra gain. We find that social comparison matters for risk attitudes. In addition, risk aversion decreases with the size of social gains. As a consequence, subjects are less risk averse in social loss than in small social gain, whereas their risk attitudes do not differ between social loss and large social gain.
    Keywords: Social comparison, risk aversion, interdependent preferences, reference point
    Date: 2014–11–25
  10. By: Mikolaj Czajkowski (University of Warsaw, Faculty of Economic Sciences, Poland); Nick Hanley (School of Geography and Sustainable Development, University of St. Andrews); Karine Nyborg (University of Oslo, Department of Economics, Norway)
    Abstract: This paper considers the role which selfish, moral and social incentives and pressures play in explaining the extent to which stated choices over pro-environment behaviours vary across individuals. The empirical context is choices over household waste contracts and recycling actions in Poland. A theoretical model is used to show how cost-based motives and the desire for a positive self- and social image combine to determine the utility from alternative choices of recycling behaviour. We then describe a discrete choice experiment designed to empirically investigate the effects such drivers have on stated choices. Using a latent class model, we distinguish three types of individual who are described as duty-orientated recyclers, budget recyclers and homo oeconomicus. These groups vary in their preferences for how frequently waste is collected, and the number of categories into which household waste must be recycled. Our results have implications for the design of future policies aimed at improving participation in recycling schemes.
    JEL: D22 F18 Q41 Q52
    Date: 2014–08
  11. By: Kesternich, Martin; Löschel, Andreas; Römer, Daniel
    Abstract: In this paper, we investigate both short- and long-term impacts of financial stimuli on public goods provision when contributions are tied to individual harm-related behavior. We conduct a large-scaled field experiment to examine voluntary contributions to a carbon offsetting program during the online purchase of a bus ticket. We systematically vary the individual payoff structure by introducing different matching grants (1/3:1, 1:1, 3:1) and price rebates (r-25%, r-50%, r-75%). Our results show that price rebates are more effective than matching schemes in raising participation rates while matching grants induce higher contributions to the offsetting program. We suspect differences in the personal responsibility for the compensated emissions to drive this result. Analyzing repeated bookings, we find decreasing treatment effects for returning customers except for the case of 1:1 matching grants. The equal matching scheme is also the only intervention that increases net contributions of customers compared to the control group.
    Keywords: voluntary carbon offsets,randomized field experiment,public goods,rebate subsidy,matching subsidy
    JEL: H41 C93 D03 L92
    Date: 2014
  12. By: Muñoz-Izquierdo, Nora; Gil-Gómez de Liaño, Beatriz; Rin-Sánchez, Francisco Daniel; Pascual-Ezama, David
    Abstract: Based on an experiment conducted with undergraduate students from three different majors (business economics, psychology and engineering), we study the relationship between honesty and altruism. We asked participants to toss a coin with a black and a white side. Participants won a chocolate if they reported the white outcome, whereas no gift was given if they reported black. It was done privately, so they could decide whether or not to cheat. Reporting the prize-losing side (that is, being honest when losing) could result in 3 effects, depending on the 3 conditions run: (i) no penalty, (ii) paying a penalty, or (iii) paying a penalty with an altruistic end (a donation to a non-profit organization). The amount of penalty was decided by each participant and the payment was also done in private. Although we cannot detect dishonesty on an individual level, we use statistical inference to determine cheating behavior. We find suggestive evidence that economics is significantly the most dishonest major when no penalty is involved. With economists in the lead, the results also indicate that all majors cheat if a penalty is requested. Surprisingly, when altruism plays a role, economists tend to have the most altruistic behavior, followed by psychologists. However, altruism does not reduce engineers' propensity to lie. No significant differences are found regarding gender.
    Keywords: Cheating, altruism, penalty, donation
    JEL: A12 D03 D64
    Date: 2014–12–05
  13. By: Thomas Markussen (Department of Economics, Copenhagen University); Louis Putterman (Department of Economics, Brown University, Providence, USA); Jean-Robert Tyran (Department of Economics, Copenhagen University)
    Abstract: Cooperation can be induced by an authority with the power to mete out sanctions for free riders, but law enforcement is prone to error. This paper experimentally analyzes preferences for and consequences of errors in formal sanctions against free riders in a public goods game. With type I errors, even full contributors to the public good may be punished. With type II errors, free riders may go unpunished. We find that judicial error undermines cooperation and that the effects of type I and II errors are symmetric. To investigate their relative (dis-)like for error, we let subjects choose what type of error to prevent. By use of an incentive-compatible mechanism, we find that subjects prefer type II over type I errors. We find that the strength of this preference is fully in line with a motive to maximize income and does not indicate any additional psychological or fairness bias against type I errors.
    Keywords: Public goods, sanctions, type I errors, type II errors, willingness to pay
    JEL: H41 K4 C92
    Date: 2014–11–24
  14. By: Datta, Saugato; Mullainathan, Sendhil
    Abstract: Successful development programs rely on people to behave and choose in certain ways, and behavioral economics helps us understand why people behave and choose as they do. Approaching problems in development using behavioral economics thus leads to better
    Keywords: behavioral economics, development, program design
    Date: 2014

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