nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2015‒03‒05
ten papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. The cognitive basis of social behavior: cognitive reflection overrides antisocial but not always prosocial motives By Brice Corgnet; Antonio M. Espín; Roberto Hernán-González
  2. Power of Joint Decision-Making in a Finitely-Repeated Dilemma By Kamei, Kenju
  3. Reciprocal beliefs and out-group cooperation: evidence from a public good game By Brañas-Garza, Pablo; Coulson, Mark; Kernohan, David; Oyediran, Olusegun; Rivas, M. Fernanda
  4. 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
  5. Good Things Come to Those Who (Are Taught How to) Wait: Results from a Randomized Educational Intervention on Time Preference By Sule Alan; Seda Ertac
  6. A mechanism overcoming coordination failure based on gradualism and endogeneity By Yoshio Kamijo; Hiroki Ozono; Kazumi Shimizu
  7. Three-person envy games: Experimental evidence and a stylized model By Bäker, Agnes; Güth, Werner; Pull, Kerstin; Stadler, Manfred
  8. The Interaction between the Return And Buying Appetite of Investors By Orhan Erdem; Gizem Turna; Yusuf Varli
  9. Are perceptions and preferences channels of transmission for social inequalities in breast cancer screening attendance? By Léontine Goldzahl
  10. Fear of novelty : a model of scientific discovery with strategic uncertainty By Besancenot, Damien; Vranceanu, Radu

  1. By: Brice Corgnet (Economic Science Institute, Argyros School of Business and Economics, Chapman University); Antonio M. Espín (Economics Department, Middlesex University Business School and Granada Lab of Behavioral Economics (GLoBE), Universidad de Granada); Roberto Hernán-González (Granada Lab of Behavioral Economics (GLoBE), Universidad de Granada and Business School, University of Nottingham)
    Abstract: Even though human social behavior has received considerable scientific attention in the last decades, its cognitive underpinnings are still poorly understood. Applying a dual-process framework to the study of social preferences, we show in two studies that individuals with a more reflective/deliberative cognitive style, as measured by scores on the Cognitive Reflection Test (CRT), are more likely to make choices consistent with “mild” altruism in simple non-strategic decisions. Such choices increase social welfare by increasing the other person’s payoff at very low or no cost for the individual. The choices of less reflective individuals (i.e. those who rely more heavily on intuition), on the other hand, are more likely to be associated with either egalitarian or spiteful motives. We also identify a negative link between reflection and choices characterized by “strong” altruism, but this result holds only in Study 2. Moreover, we provide evidence that the relationship between social preferences and CRT scores is not driven by general intelligence. We discuss how our results can reconcile some previous conflicting findings on the cognitive basis of social behavior.
    Keywords: dual-process; reflection; intuition; social preferences; altruism; spitefulness; prosocial behavior;antisocial behavior; inequality aversion
    JEL: C91 D03 D87
    Date: 2015
  2. By: Kamei, Kenju
    Abstract: A rich body of literature has proposed that pairs behave significantly differently from individuals due to a number of reasons such as group polarization. This paper experimentally compares cooperation behaviors between pairs and individuals in a finitely-repeated two-player public goods game (continuous prisoner’s dilemma game). We show that pairs contribute significantly more than individuals to their group accounts. Especially, when two pairs are matched with each other for the entire periods, they successfully build long-lasting cooperative relationships with their matched pairs. Our detailed analyses suggest that the enhanced cooperation behavior of pairs may be driven by (a) the mere fact that they have partners when they make decisions, (b) group polarization – those who initially prefer to contribute smaller amounts are more affected by the partners in their pairs, and (c) stronger conditional cooperation behavior of pairs to their matched pairs.
    Keywords: experiment, cooperation, dilemma, team work, public goods
    JEL: C91 C92
    Date: 2015–02–26
  3. By: Brañas-Garza, Pablo; Coulson, Mark; Kernohan, David; Oyediran, Olusegun; Rivas, M. Fernanda
    Abstract: This study examined latent racial prejudice towards specified out-groups among 152 Spanish college students in a two-stage research strategy using a public goods game. When asked how generous various out-groups are, Asian, and Western groups were perceived as more generous than the in-group, whereas African and Latin American groups were perceived as less generous. When participants were incentivized, with payoff contingent on the accuracy of guesses, and accuracy quantified as performance of the relevant groups in a similar task to the one employed here, participants evidenced prejudice against African and Latin American groups, and towards Asian and Western groups. Models of racial beliefs were fitted for the four groups, however we do not find satisfactory explanations for why questionnaire response and lab behaviour did not match. Implications of the use of behavioural economic games in prejudice research are discussed.
    Keywords: Beliefs; Prejudice; Public Goods Game
    JEL: C91 H41 J15
    Date: 2014–05–13
  4. By: Heblich, Stephan; Lameli, Alfred; Riener, Gerhard
    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.
    Date: 2015
  5. By: Sule Alan (University of Essex); Seda Ertac (Koc University)
    Abstract: We report results from the impact evaluation of a randomized educational intervention targeted at elementary school children. The program uses case studies, stories and classroom activities to improve the ability to imagine future selves, and emphasizes forward-looking behavior. We find that treated students make more patient intertemporal choices in incentivized experimental tasks. The effect is stronger for students who are identified as present-biased in the baseline. Furthermore, using official administrative records, we find that treated children are significantly less likely to receive a low "behavioral grade". These results are persistent one year after the intervention, replicate well in a different sample, and are robust across different experimental elicitation methods.
    Keywords: intertemporal choice, randomized field experiments, non-cognitive skills
    JEL: C93 D91 I28
    Date: 2015–02
  6. By: Yoshio Kamijo (School of Economics and Management, Kochi University of Technology); Hiroki Ozono (Kagoshima University); Kazumi Shimizu (Waseda University)
    Abstract: We examine three tools that can enhance coordination success in a repeated multiple-choice coordination game. Gradualism means that the game starts as an easy coordination problem and moves gradually to a more difficult one. The Endogenous Ascending mechanism implies that a gradual increase in the upper bound of coordination occurs only if coordination with the Pareto superior equilibrium in a stage game is attained. The Endogenous Descending mechanism requires that when the game's participants fail to coordinate, the level of the next coordination game be adjusted such that the game becomes simpler. We show that gradualism may not always work, but in such instances, its effect can be reinforced by endogeneity. Our laboratory experiment provides evidence that a mechanism that combines three tools, herein termed the ``Gradualism with Endogenous Ascending and Descending (GEAD)'' mechanism, works well. We discuss how the GEAD mechanism can be applied to real-life situations that suffer from coordination failure.
    Keywords: Coordination Failure, Minimum Effort Game, Laboratory Experiment, Target Adjustment, Gradualism, Endogenous Ascending, Endogenous Descending
    JEL: C72 C91 C92 M54
    Date: 2015–01
  7. By: Bäker, Agnes; Güth, Werner; Pull, Kerstin; Stadler, Manfred
    Abstract: In three-person envy games, an allocator, a responder, and a dummy player interact. Since agreement payoffs of responder and dummy are exogenously given, there is no tradeoff between allocator payoff and the payoffs of responder and dummy. Rather, the allocator chooses the size of the pie and thus - being the residual claimant - defines his own payoff. While in the dictator variant of the envy game, responder and dummy can only refuse their own shares, in the ultimatum variant, the responder can accept or reject the allocator's choice with rejection leading to zero payoffs for all three players. Comparing symmetric and asymmetric agreement payoffs for responder and dummy shows that equality concerns are significantly context-dependent: allocators are willing to leave more money on the table when universal equality can be achieved than when only partial equality is at stake. Similarly, equality seeking of responders is most prominent when universal equality is possible.
    Keywords: envy games,experimental economics
    JEL: C72 C91 D63
    Date: 2015
  8. By: Orhan Erdem; Gizem Turna; Yusuf Varli
    Abstract: The aim of this paper is to explore the relationship between trading behaviors of individual investors and their previous day portfolio return. We try to find which one of the following two contradicting biases dominates the investor behavior: Namely, overconfidence and disposition effect. In order to explore the direction of this relationship, daily transactions of individual investors who trade in Borsa Istanbul between 2008 and 2012 (five years) are analyzed according to several variables such as portfolio size, gender, and age. To do this, we measure buying appetite with the widely used ‘buy-sell imbalance’ which is the ratio of net buying value to the total trading value of investors. Then we explore whether there is a relationship between buying appetite and the previous day portfolio return. The main finding is that there is a strong evidence on the dominance of disposition effect and buying appetite is found to be significantly smaller when the portfolio return increases. The other findings re as follows: (1) Large individual investors (individuals with high portfolio size) have higher buying appetite than that of small investors independent from portfolio returns. (2) Gender has a significant influence on the buying appetite. Male investors have higher buying appetite than their female counterparts. (3) The age and buying appetite are negatively correlated.
    Keywords: Behavioral Finance, Overconfidence, Disposition Effect, Buy-Sell Imbalance, Loss Aversion, Portfolio Size Effect, Gender Effect, Age Effect.
    Date: 2014–12
  9. By: Léontine Goldzahl (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: Three broad types of explanations can be found relative to breast cancer screening attendance: socioeconomic characteristics (education), preferences (e.g. attitude toward risk) and perceptions. These determinants are elicited in the experimental laboratory on 178 women aged between 50 and 75 years old. By performing a mediation analysis, this study aims at identifying the main drivers of screening regularity, as it is a crucial determinant of breast cancer mortality reduction. Results show that socioeconomic determinants (both from parents and the individual) have a strong impact. Women whose mother passed compulsory education are more likely to hold a degree and to be risk tolerant and hence to screen regularly. Even if more educated and richer women tend to screen more regularly, these effects are lowered once perceptions are controlled for. Indeed, almost all respondents overestimate their risk of developing breast cancer, but the less educated respondents do so even more. This study reveals that risk preference is a channel for opportunity inequalities. On the contrary, controlling for risk and benefit perceptions tend to alleviate the role played by current socioeconomic status
    Keywords: Behavioral economics; cancer screening; perceptions; risk preference
    JEL: D03 I18
    Date: 2015–02
  10. By: Besancenot, Damien (Centre d'Economie de l'Université Paris Nord (CEPN)); Vranceanu, Radu (ESSEC Business School and THEMA)
    Abstract: This paper analyzes the production of fundamental research as a coordination game played by scholars. In the model, scholars decide to adopt a new idea only if they believe that a critical mass of peers is following a similar research strategy. If researchers observe only a noisy idiosyncratic signal of the true scientiÖc potential of a new idea, we show that the game presents a single threshold equilibrium. In this environment, fundamental research proceeds with large structural breaks followed by long periods of time in which new ideas are unsuccessful. The likelihood of a new idea emerging depends on various parameters, including the rewards of working in the old paradigm, the critical mass of researchers required to create a new school of thought and scholarsí ability to properly assess the scientific value of new ideas.
    Keywords: Economics of science; Scientific discovery; Strategic complementarity; Strategic uncertainty; Global games
    JEL: A14 C72 O31
    Date: 2015–02

This nep-cbe issue is ©2015 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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