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on Cognitive and Behavioural Economics |
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Issue of 2015‒03‒13
nine papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale “Amedeo Avogadro” |
| By: | Linda Thunström (HUI Research AB; Department of Economics and Finance, University of Wyoming); Jonas Nordström (Department of Food and Resource Economics, University of Copenhagen; Lund University School of Economics and Management); Jason F. Shogren (Department of Economics and Finance, University of Wyoming) |
| Abstract: | We examine consumer certainty of future preferences and overconfidence in predicting future preferences. We explore how preference certainty and overconfidence impact the option value to revise today’s decisions in the future. We design a laboratory experiment that creates a controlled choice environment, in which a subject's choice set (over food snacks) is known and constant over time, and the time frame is short -- subjects make choices for themselves today, and for one to two weeks ahead. Our results suggest that even for such a seemingly straightforward choice task, only 45 percent of subjects can predict future choices accurately, while stated certainty of future preferences (one and two weeks ahead) is around 80 percent. We define overconfidence in predicting future preferences as: the difference between actual accuracy at predicting future choices and stated certainty of future preferences. Our results suggest strong evidence of overconfidence. We find that overconfidence increases with the level of stated certainty of future preferences. Finally, we observe that the option value people attach to future choice flexibility decreases with overconfidence. Overconfidence in future preferences affects economic welfare because it says people have too much incentive to lock themselves into future suboptimal decisions. |
| Keywords: | Choice flexibility, Preference uncertainty, Overconfidence, Sub-optimal decisions, Food |
| JEL: | D03 D12 D83 D90 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:foi:wpaper:2015_04&r=cbe |
| By: | Carlos Cueva Herrero (Dpto. Análisis Económico Aplicado); Iñigo Iturbe-Ormaetxe Kortajarene (Universidad de Alicante); Esther Mata-Pérez (Dpto. Fundamentos del Análisis Económico); Giovanni Ponti (Universidad de Alicante); Marcello Sartarelli (Dpto. Fundamentos del Análisis Económico); Haihan Yu (Dpto. Fundamentos del Análisis Económico); Zhukova Vita (Dpto. Fundamentos del Análisis Económico) |
| Abstract: | We study whether cognitive ability explains choices in a wide variety of behavioral tasks, including riskand social preferences, by collecting evidence from almost 1,200 subjects across eight experimentalprojects. Since Frederick (2005)'s Cognitive Reflection Test (CRT) has been administered to allsubjects, our dataset is one of the largest in the literature. We divide the subjects pool into three groupsdepending on their CRT performance. Reflective subjects are those answering at least two of the threeCRT questions correctly. Impulsive ones are those who are unable to suppress the instinctive impulseto follow the intuitive although incorrect answer in at least two 2 questions, and the remaining subjectsform a residual group. We find that females score significantly worse than males in the CRT, and intheir wrong answers impulsive ones are observed more frequently. The 2D-4D ratio, which is higherfor females, is correlated negatively with subject's CRT score. In addition, we find that differencesbetween CRT groups in risk aversion depend on the elicitation method used. Finally, impulsive subjectshave higher social preferences, while reflective subjects are more likely to satisfy basic consistencyconditions in lottery choices. |
| Keywords: | behavioral economics, cognitive reflection, gender, laboratory experiment, personality |
| JEL: | C91 D81 J16 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2015-02&r=cbe |
| By: | Boris Augurzky; Thomas K.Bauer; Arndt R. Reichert; Christoph M. Schmidt; Harald Tauchmann |
| Abstract: | We complement the empirical evidence on the sustainability of weight loss achieved through cash rewards and, for the first time, rigorously examine the potential of cash rewards to prevent weight cycling. In a three period randomized controlled trial, about 700 obese persons were first assigned to two treatment groups, which were promised cash contingent on the achievement of an individually assigned target weight, and to a control group. Successful participants were subsequently allocated to two treatment groups offered cash rewards for confirming the previously achieved target weight and to a control group. This is the first experiment of this kind that finds effects of weight loss rewards up to 18 months after they were removed. Additional rewards only significantly improve the sustainability of weight loss while they are in place. |
| Keywords: | Field experiment; weight cycling; sustainability; incentives |
| JEL: | I12 I18 D03 C93 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0530&r=cbe |
| By: | Werner Gueth (Max Planck Institute of Economics); Maria Vittoria Levati (Department of Economics (University of Verona)); Ivan Soraperra (Department of Economics (University of Verona)) |
| Abstract: | We provide experimental evidence on behavior in a public goods game featuring a so-called point of no return, meaning that if the group’s total contribution falls below this point all payoffs are reduced. Participants receive either common or private signals about the point of no return, and experience either high or low reductions in payoffs if insufficient contributions are made. Our data reveal that, as expected, contributions are higher if the cost of not reaching the threshold is high than if it is low. High signal values discourage contributions and endanger the likelihood of success when signals are common, but not when signals are private. In addition, successful coordination of contributions is less frequent in a control treatment featuring a standard provision point mechanism than in the experimental treatment where the payoff reduction factor is high, although the theoretical predictions of the two games are similar. |
| Keywords: | Public goods; Provision point mechanism; Experiments; Signal |
| JEL: | H41 C92 C72 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:ver:wpaper:09/2015&r=cbe |
| By: | Evgeny N. Osin (National Research University Higher School of Economics); Anna V. Malyutina (National Research University Higher School of Economics); Natalia V. Kosheleva (National Research University Higher School of Economics) |
| Abstract: | We review the psychological theory of flow and focus on the notion of autotelic personality, arguing that self-transcendence understood within the existential tradition of Frankl and Langle can be seen as a personality disposition that is conducive to flow experience. We present a pilot quasi-experimental study conducted in a student sample (N=84) to investigate the effect of situational meaning and self-transcendence on productivity and flow experience. Students were asked to work on a creative task (which consisted in finding solutions to a social problem) in small groups. Each group was randomly assigned with an instruction presenting the problem as happening either in a distant country (low-meaning) or home country (high-meaning). The outcome variables were measures of flow, perceived meaning, and satisfaction with time. The solutions generated by students were rated by 3 experts. The results showed that the experimental manipulation had an effect on the quality of the resulting solutions, but not on the subjective experience of participants. Self-transcendent individuals tended to experience higher flow under both conditions, however, under the high-meaning condition self-transcendence exhibited a curvilinear association with the experiential outcomes. The findings suggest that self-transcendence can be considered as a candidate trait for autotelic personality and call for more replication studies |
| Keywords: | flow experience, self-transcendence, personal meaning, autotelic personality |
| JEL: | Z |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:33psy2015&r=cbe |
| By: | Cagala, Tobias; Glogowsky, Ulrich; Grimm, Veronika; Rincke, Johannes |
| Abstract: | Public goods provision often involves groups of contributors repeatedly interacting with administrators who can extract rents from the pool of contributions. We suggest a novel identification approach that exploits the sequential ordering of decisions in a panel vector autoregressive model to study social interactions in the laboratory. Despite rent extraction, contributors and administrators establish a stable interaction with cooperation matching the level from a comparable Public Goods Game. In the short run, temporary changes in behavior trigger substantial behavioral multiplier effects. We demonstrate that cooperation breeds trustworthiness and vice versa and that one-time disruptions are particularly damaging in settings with a lack of cooperative attitudes and trust. |
| Keywords: | Cooperation,trustworthiness,rent extraction,methods for laboratory experiments,panel vector autoregressive model |
| JEL: | C32 C91 C92 H41 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc14:107597&r=cbe |
| By: | Nadja Kairies-Schwarz; Johanna Kokot; Markus Vomhof; Jens Wessling |
| Abstract: | Recent health policy reforms try to increase consumer choice. We use a laboratory experiment to analyze consumers’ tastes in typical contract attributes of health insurances and to investigate their relationship with individual risk preferences. First, subjects make consecutive insurance choices varying in the number and types of contracts offered. Then, we elicit individual risk preferences according to Cumulative Prospect Theory. Applying a latent class model to the choice data, reveals five classes of consumers with considerable heterogeneity in tastes for contract attributes. From this, we infer distinct behavioral strategies for each class. The majority of subjects use minimax strategies focusing on contract attributes rather than evaluating probabilities in order to maximize expected payoffs. Moreover, we show that using these strategies helps consumers to choose contracts, which are in line with their individual risk preferences. Our results reveal valuable insights for policy makers of how to achieve efficient consumer choice. |
| Keywords: | Health insurance; risk preferences; heterogeneity; heuristics; laboratory experiment; cumulative prospect theory |
| JEL: | C91 I13 D81 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0537&r=cbe |
| By: | Martina Menon (Department of Economics (University of Verona)); Federico Perali (Department of Economics (University of Verona)) |
| Abstract: | We study the university choice of prospective students using a unique dataset enriched with “lab-in-the-field” experiments aimed at eliciting risk and time preferences of students. Controlling for assortative mating, we find that father's rather than mother's education is significantly associated with the likelihood of children's enrolment in university indicating that the intergenerational transmission of human capital is mainly channelled through the father's education. Family possessions, as measured by homeownership, are positively associated with the likelihood of children's enrolment, while parental income has a small impact on this choice. This result suggests that in our sample there is equal access to university irrespective of short-time family liquidity constraints. We also find that economic preference parameters, such as risk and time preferences, account for a small part of the prospect of enrolling in university, while subjective expectations, effort and school ability of children are strong predictors of future schooling investment. In addition, through a counterfactual analysis, sports activities among children appear to increase the university enrolment rate. Our findings provide helpful directions for decision-makers to attract talented students to tertiary education. |
| Keywords: | University enrolment, intentions data, family background, subjective expectations, cognitive and non-cognitive abilities, counterfactual analysis |
| JEL: | I21 I28 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:ver:wpaper:07/2015&r=cbe |
| By: | Chen, Daniel Li; Schonger, Martin; Wickens, Chris |
| Abstract: | oTree is an open-source and online software for implementing interactive experiments in the laboratory, online, the field or combinations thereof. oTree does not require installation of software on subjects’ devices; it can run on any device that has a web browser, be that a desktop computer, a tablet or a smartphone. Deployment can be internet-based without a shared local network, or local-network-based even without internet access. For coding, Python is used, a popular, open-source programming language. www.oTree.org provides the source code, a library of standard game templates and demo games which can be played by anyone. |
| Keywords: | experimental economics, software, laboratory experiments, field experiments, online experiments, classroom experiments |
| JEL: | A20 C88 C90 |
| Date: | 2015–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:62730&r=cbe |