nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2015‒01‒14
seven papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. An individualistic approach to institution formation in public good games By Abhijit Ramalingam; Sara Godoy; Antonio J. Morales; James M. Walker
  2. Defaults and Donations: Evidence from a Field Experiment By Steffen Altmann; Armin Falk; Paul Heidhues; Rajshri Jayaraman
  3. Normative Behavioral Economics Based on Unconditional Love and Moral Virtue By Vipul Bhatt; Masao Ogaki; Yuichi Yaguchi
  4. Branding insights: an interdisciplinary journey from perception to action By Andrei, Andreia Gabriela; Adriana, Zait
  5. Digit ratio and risk taking: Evidence from a large, multi-ethnic sample By Pablo Brañas-Garza; Matteo M. Galizzi; Jeroen Nieboer
  6. Self-Regulatory Organizations under the Shadow of Governmental Oversight: An Experimental Investigation By Silvester Van Koten; Andreas Ortmann
  7. Soft Paternalism and Nudging - Critique of the Behavioral Foundations By Pasche, Markus

  1. By: Abhijit Ramalingam (University of East Anglia); Sara Godoy (University of Essex); Antonio J. Morales (Universidad de Malaga); James M. Walker (Indiana University)
    Abstract: In a repeated public goods setting, we explore whether individuals, acting unilaterally, will provide an effective sanctioning institution. Subjects first choose unilaterally whether they will participate in a sanctioning stage that follows a contribution stage. Only those who gave themselves the “right†to punish can do so. We find that the effectiveness of the institution may not require provision of the institution at the level of the group. Individuals acting unilaterally are able to provide sanctioning institutions that effectively raise cooperation. The effectiveness of the institution, however, depends on whether the “right†to sanction entails a monetary cost or not.
    Keywords: public goods, experiment, punishment, institution formation, unilateral provision, cooperation
    JEL: C72 C91 C92 D02 H41
    Date: 2014–12–17
  2. By: Steffen Altmann; Armin Falk; Paul Heidhues; Rajshri Jayaraman
    Abstract: We study how website defaults affect consumer behavior in the domain of charitable giving. In a field experiment that was conducted on a large platform for making charitable donations over the web, we exogenously vary the default options in two distinct choice dimensions. The first pertains to the primary donation decision, namely, how much to contribute to the charitable cause. The second relates to an “add-on" decision of how much to contribute to supporting the online platformitself. We find a strong impact of defaults on individual behavior: in each of our treatments, the modal positive contributions in both choice dimensions invariably correspond to the specified default amounts. Defaults, nevertheless, have no impact on aggregate donations. This is because defaults in the donation domain induce some people to donate more and others to donate less than they otherwise would have. In contrast, higher defaults in the secondary choice dimension unambiguously induce higher contributions to the online platform.
    Keywords: Default Options, Charitable Giving, Online Platforms, Field Experiment
    JEL: C93 D03 D64
    Date: 2014
  3. By: Vipul Bhatt (Assistant Professor, Department of Economics, James Madison University (E-mail:; Masao Ogaki (Professor, Department of Economics, Keio University (E-mail:; Yuichi Yaguchi (Graduate Student, Graduate School of Economics, Chuo University, Tokyo, Japan)
    Abstract: An important difficulty in many models of behavioral economics is that preferences are endogenous and unstable. Therefore, preferences may not provide the most desirable yardstick to evaluate social states. This paper proposes unconditional love as a candidate for such a yardstick. The concept of unconditional love, although sublime, is often hard to apply for practical policy recommendations. We propose an intermediary learning stage, where learning to unconditionally love is desirable, and policies that promote such learning are deemed to be good. We illustrate the use of this principle in models of endogenous altruism.
    Keywords: Normative economics, Behavioral economics, Weak Pareto principle, Principle of learning to unconditionally love, Virtue ethics, Endogenous preferences
    JEL: D03 Z18
    Date: 2014–12
  4. By: Andrei, Andreia Gabriela; Adriana, Zait
    Abstract: Our interdisciplinary study examines the brand's perceived intentions and ability, as predictors of consumer behavior. In an attempt of answering a call for research in the branding area, we found out contradictory views, both of them based on strong arguments, including empirical results. Each view has been examined by the lens of branding, social cognition and behavioral theory. We found convergent findings from cognitive psychology and behavioral theory to support one of the two views and to extract a hypothesis. Thus, we hypothesized that an effective branding process, meant to achieve both consumer trust and sales objectives, should address the brand's perceived intentions before ability. We suggest that further empirical studies are needed to test the hypothesis, although for some particular cases, tests confirmed the priority of intentions. Overall, our paper offers an integrative view of consumer underlying behaviors revealed by results of other social sciences and how should be used in brand construction process. The benefits of updating branding theories by integrating results confirmed by other social sciences are discussed.
    Keywords: brand perception; brand image; brand trust;
    JEL: M31
    Date: 2014–10–02
  5. By: Pablo Brañas-Garza (Middlesex University London, Business School); Matteo M. Galizzi (London School of Economics and Political Science, Behavioural Research Lab); Jeroen Nieboer (London School of Economics and Political Science, Behavioural Research Lab)
    Abstract: Using a large (n=543) multi-ethnic sample of laboratory subjects, we systematically investigate the link between the digit ratio (the ratio of the length of the index finger to the length of the ring finger, also called 2D:4D ratio) and two measures of individual risk taking: (i) risk preferences over lotteries with real monetary incentives and (ii) self-reported risk attitude. Previous studies have found that the digit ratio, a proxy for pre-natal testosterone exposure, correlates with risk taking in some subject samples, but not others. In our sample, we find, first, that the right-hand digit ratio is significantly associated with risk preferences: subjects with lower right-hand ratios tend to choose more risky lotteries. Second, the right-hand digit ratio is not associated with self-reported risk attitudes. Third, there is no statistically significant association between the left-hand digit ratio and either measure of individual risk taking.
    Keywords: Testosterone, 2D:4D ratio, risk preferences, risk attitudes
    JEL: C91 C92 D44 D81 D87
    Date: 2014
  6. 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
  7. By: Pasche, Markus
    Abstract: This brief note rises doubts on the argument that nudging will help people to behave more rational in terms of their own preferences. This justification of soft paternalism overlooks some methodological problems of expected utility theory which are one of the roots of behavioral economics.
    Keywords: soft paternalism; nudging; behavioral economics, utility theory, rationality
    JEL: B4 D03 D04
    Date: 2014–12–20

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