nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2015‒01‒31
nine papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Does Local Label Bias Consumer Taste Bud and Preference: Evidence of a Strawberry Sensory Experiment By He, Chenyi ; Gao, Zhifeng ; Sims, Charles A. ; Zhao, Xin
  2. More than outcomes: The role of self-image in other-regarding behavior By Astrid Matthey ; Tobias Regner
  3. Of the stability of partnerships when individuals have outside options, or why allowing exit is inefficient By Alexia Gaudeul ; Paolo Crosetto ; Gerhard Riener
  4. Equilibrium Selection in Similar Repeated Games: Experimental Evidence on the Role of Precedents By John Duffy ; Dietmar Fehr
  5. To buy or not buy (insurance)? An experiment on public funds distribution under different rooted risks By Xu, Zhicheng ; Palma, Marco A.
  6. Prestige as a Determining Factor of Food Purchases By Palma, Marco ; Ness, Meghan ; Anderson, David
  7. Are we all overconfident in the long run? Evidence from one million marathon participants. By Michał Krawczyk ; Maciej Wilamowski
  8. Relationship between attention and choice making By Grebitus, Carola ; Seitz, Carolin
  9. Religious fragmentation, social identity and cooperation: Evidence from a artefactual field experiment in India By Surajeet Chakravarty ; Miguel A. Fonseca ; Sudeep Ghosh ; Sugata Marjit

  1. By: He, Chenyi ; Gao, Zhifeng ; Sims, Charles A. ; Zhao, Xin
    Abstract: Demand for local food, particularly for fresh vegetable and fruits, keeps increasing. Consumer claimed reasons of purchasing local food often include that local food are fresher, more environmental friendly and can support local community, which implies that the local information can affect consumer’ perception of food quality. Previous research mainly focused on the impact of local information/label on consumer preference as a credence attribute that is not observable even after purchasing the products. However, the local information of food may also influence consumer perception of the other two types of important attributes, search and credence attributes. In this study, we linked sensory test with consumer willingness to pay (WTP) to determine the impact of local information on consumer perception of strawberry search and experience attributes and how these three types of attributes affect consumer choice. Results show that providing local information positively affect some of the search and experience attributes such as color, freshness and flavor. Locality information is not a significant factor to determine consumers’ WTP. In addition, freshness and color have significant impact on consumer WTP before respondents taste the strawberries while flavor and texture became dominant to have most influential impact on consumer WTP after tasting.
    Keywords: Strawberry, Local produced, Sensory test, Willingness to pay, Multivariate Tobit model, Agribusiness, Institutional and Behavioral Economics, Marketing,
    Date: 2015
  2. By: Astrid Matthey (Max Planck Institute of Economics, Jena ); Tobias Regner (Max Planck Institute of Economics, Jena )
    Abstract: We conduct a modified dictator game in order to analyze the role self-image concerns play in other-regarding behavior. While we generally follow Konow (2000), a cognitive dissonance-based model of other-regarding behavior in dictator games, we relax one of its assumptions as we allow for individual heterogeneity among individuals' standards of behavior. Subjects' self-image, their belief regarding the average socially appropriate behavior of others and our proxies for the cognitive dissonance costs are positively correlated with the dictator game choices. We also find that subjects whose choices involve two psychologically inconsistent cognitions indeed report higher levels of experienced conflict and take more time for their decisions (our proxies for cognitive dissonance).
    Keywords: social preferences, other-regarding behavior, self-image, cognitive dissonance, social norms
    JEL: C72 C91 D03 D80
    Date: 2014–12–21
  3. By: Alexia Gaudeul (DFG RTG 1411, Friedrich-Schiller-Universität Jena ); Paolo Crosetto (UMR GAEL INRA, Université Pierre Mendès France, Grenoble ); Gerhard Riener (DICE, Heinrich-Heine-Universität Düsseldorf )
    Abstract: Should people be allowed to leave joint projects freely or should they be deterred from breaking off? This depends on why people stop collaborating and whether they have good reasons to do so. We explore the factors that lead to the breakdown of partnerships by studying a public good game with imperfect public monitoring and an exit option. In our experiment, subjects were assigned a partner with whom they could contribute over several periods to a public good with stochastic outcomes. They could choose in each period between participating in the public project or working on their own. We find there was excessive exit especially because subjects over-estimated the likelihood their partner would leave. Treatments with high barriers to exit generated higher welfare overall as they fostered stability and prevented inefficient breakdowns in relationships. There were differences across treatments in the intensity with which different factors drove the choice to work alone. Differences in expected payoffs between independent and group work were more important as a driver of exit in treatments with low barriers to exit. The intensity of other factors was more constant across treatments, including whether the common project failed in the previous period, the belief that one's partner did not want to maintain the partnership and the belief that he exerted less effort than oneself.
    Keywords: barriers to exit, cooperation, outside option, imperfect public monitoring, partnerships, public good game, repeated game, social risk
    JEL: C23 C92 H41
    Date: 2015–01–15
  4. By: John Duffy (Department of Economics, University of California-Irvine ); Dietmar Fehr (WZB Berlin, Germany )
    Abstract: We report on an experiment examining behavior and equilibrium selection in two similar, infinitely repeated games, Stag Hunt and Prisoner's Dilemma under anonymous random matching. We are interested in the role that precedents may play for equilibrium selection between these two stage game forms. We find that a precedent for efficient play in the repeated Stag Hunt game does not carry over to the repeated Prisoner's Dilemma game despite the possibility of efficient play in the latter game. Similarly, a precedent of inefficient play in the Prisoner's Dilemma game does not extend to the repeated Stag Hunt game. We conclude that equilibrium selection between similar repeated games has little to do with historical precedents and is mainly determined by strategic considerations associated with the different payoffs of these similar repeated games.
    Keywords: Sentiment; Equilibrium selection; Precedent; Beliefs; Stag hunt; Prisoner's dilemma; Repeated games; Experimental economics.
    JEL: C72 C73 C92 D83
    Date: 2014–12
  5. By: Xu, Zhicheng ; Palma, Marco A.
    Abstract: The distribution of income and wealth resulting from risk-taking behavior significantly affects cooperation and risk-sharing in many areas in many governmental programs, including health insurance and agricultural production. This paper studies redistributive decision making and fairness preferences under different rooted risks using a laboratory experiment, in the treatment of which the subjects can endogenously determine whether they want to buy insurance before they face one of three possible outcomes that will be realized with equal probability. If the first outcome is realized, a high payment will be delivered regardless of whether the subject buys insurance or not. The second risk is an avoidable loss contingent upon the subject buying insurance. The third outcome is an inevitable loss, i.e., minimum payment will be delivered no matter if the subject has or does not have insurance. Then we investigate fairness preferences of randomly paired subjects who are informed about the choices and outcomes for both parties and are asked to make redistributive tasks. The experimental design mimics the scenario of risk-sharing in health insurance and agricultural production. We find that how people make redistributive decisions depends on the insurance purchase decisions and income inequality. The results provide some policy implications for improving insurance efficiency.
    Keywords: fairness, insurance, Health Economics and Policy, Institutional and Behavioral Economics, Public Economics, Risk and Uncertainty, C91, D31, D63,
    Date: 2015
  6. By: Palma, Marco ; Ness, Meghan ; Anderson, David
    Abstract: This study investigated how prestige seeking behavior influences food choices to the point of becoming a symbol of social status. Participants in the study were classified into unobserved latent classes according to their prestige and social status seeking behavior. The majority of the participants were classified as “Utilitarian Buyers” who purchase goods based on their functionality and are not concerned with the prestige or social status of conspicuous products. In addition, there were three other latent classes found and based on their characteristics they were described as “Ambitious Shoppers”, “Affluent Elitists”, and “Prestige Lovers”. Evidence was found of prestige seeking behavior motivated by invidious comparison or higher-class individuals seeking to differentiate themselves from lower-class individuals; and also motivated by pecuniary emulation, or individuals from a lower class buying prestigious goods in order to be perceived as members of a higher class. Findings from this study revealed that the effects of differentiating food labeling attributes had a higher impact for individuals classified into classes with prestige-seeking behavior to attain an elevated social status.
    Keywords: Experimental Economics, Pecuniary Consumption, Prestige, Willingness to Pay, Food Consumption/Nutrition/Food Safety, C91, D11, D12, E21,
    Date: 2015
  7. By: Michał Krawczyk (Faculty of Economic Sciences, University of Warsaw ); Maciej Wilamowski (Faculty of Economic Sciences, University of Warsaw )
    Abstract: In this project we sought to contribute to extant literature on overconfidence by identifying it in a large, heterogeneous sample making familiar, repeated choices in a natural environment which provides direct feedback. In Study 1 we elicited predictions of own finishing time among participants of the 2012 Warsaw Marathon. Their prediction errors turned out to be very highly correlated with the change in pace over the course of the run. In Study 2 we thus took this change in pace as a proxy for self-confidence and used existing field data of around one million participants. Both studies indicate that males as well as youngest and oldest participants tend to be more confident. In Study 2 we are also able to investigate national and cultural dimensions, confirming previously reported findings of relative overconfidence in Asians and providing some novel results, i.a. that relatively conservative societies tend to be more self-confident.
    Keywords: overconfidence, performance forecasts, gender differences, age effects, national culture
    JEL: C93 D01 Z1
    Date: 2015
  8. By: Grebitus, Carola ; Seitz, Carolin
    Abstract: Choice experiments are often used to determine consumers’ preferences and willingness to pay for product attributes. The design of choice experiments and its influence on measurement of consumer choices has received considerable attention. This study analyzes the influence of attention on the final choice by combining choice experiments with eye tracking. Furthermore, the role of choice set complexity on choice is investigated. Results show that in less complex designs the total gaze time, i.e., overall attention, influences the choice. In contrast, in more complex designs the time to first fixation, i.e., the first look at an attribute affects the choice.
    Keywords: Attention, Attributes, Bias, Choice experiments, Perception, Consumer/Household Economics,
    Date: 2014–08
  9. By: Surajeet Chakravarty (Department of Economics, University of Exeter ); Miguel A. Fonseca (Department of Economics, University of Exeter ); Sudeep Ghosh (Hong Kong Polytechnic University ); Sugata Marjit (Center for Studies in the Social Sciences, Calcutta. )
    Abstract: We study the role of village-level religious fragmentation on intra- and inter-group cooperation in India. We report on data on two-player Prisoners’ Dilemma and Stag Hunt experiments played by 516 Hindu and Muslim participants in rural India. Our treatments are the identity of the two players and the degree of village-level religious heterogeneity. In religiously-heterogeneous villages, cooperation rates in the Prisoners’ Dilemma are higher when subjects play with another in-group member for both Hindus and Muslims, but to a much lesser extent in the Stag Hunt game. This suggests that positive in-group biases operate primarily on the willingness to achieve socially efficient outcomes, rather than through beliefs about the actions by one's counterpart. Interestingly, cooperation rates among people of the same religion are significantly lower in homogeneous villages than in fragmented villages in both games. This is likely because a sense of group identity is only meaningful in the presence of an out-group. This, together with little evidence for out-group prejudice in either game, means religious diversity is beneficial.
    Keywords: Social Identity, Social Fragmentation, Artefactual Field Experiment.
    JEL: C93 D03 H41
    Date: 2015

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