nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2015‒04‒19
ten papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Working memory and spatial judgments: Cognitive load increases the central tendency bias By Sarah R., Allred; L. Elizabeth, Crawford; Sean, Duffy; John, Smith
  2. Why are heterogenous communities inefficient? Theory, history and an experiment By David Hugh-Jones and; Carlo Perroni
  3. Communication and Coordination in a Two-Stage Game By Tjaša Bjedov; Thierry Madiès; Marie Claire Villeval
  4. Canonical Riskless Choice Over Bundles: Aint No Reference Point Here By Chung, Hui-Kuan ; Glimcher, Paul; Tymula, Agnieszka 
  5. Getting a healthy start? Nudge versus economic incentives By Rachel Griffith; Sarah Smith; Stephanie von Hinke Kessler Scholder
  6. How Does Socio-Economic Status Shape a Child's Personality? By Thomas, Deckers; Armin, Falk; Fabian, Kosse; Hannah, Schildberg-Hörisch
  7. Worth 1000 Words: The effect of social cues on a fundraising campaign in a government agency. A field experiment By Michael Sanders; David Reinstein
  8. I've booked you a place. Good luck. A field experiment applying behavioural science to improve attendance at high-impact recruitment events By Michael Sanders; Elspeth Kirkman
  9. Choosing on Influence By Tugce Cuhadaroglu
  10. Not Through Fear But Through Habit. Procrastination, cognitive capabilities and self-confidence By Novarese, Marco; Di Giovinazzo, Viviana

  1. By: Sarah R., Allred; L. Elizabeth, Crawford; Sean, Duffy; John, Smith
    Abstract: Previous work demonstrates that memory for simple stimuli can be biased by information about the category of which the stimulus is a member. Specifically, stimuli with values greater than the category’s average tend to be underestimated and stimuli with values less than the average are overestimated. This is referred to as the central tendency bias. This bias has been explained as an optimal use of both noisy sensory information and category information. In a largely separate literature, cognitive load experiments attempt to manipulate the available working memory of participants in order to observe its effect on choice or judgments. In three experiments, we demonstrate that participants under a high cognitive load exhibit a stronger central tendency bias than when under a low cognitive load. Although not anticipated at the outset, we also find that judgments exhibit an anchoring bias.
    Keywords: judgment; memory; anchoring; working memory; cognitive constraints; cognitive busyness
    JEL: C8 Z0
    Date: 2015–04–06
  2. By: David Hugh-Jones and (University of East Anglia); Carlo Perroni (University of Warwick)
    Abstract: We examine why heterogenous communities may fail to provide public goods. Current work characterizes sanctioning free-riders as an under-supplied public good. We argue that often free-riders can be punished by the coordinated action of a group. This punishment can be profitable, and need not be undersupplied. But the power to expropriate defectors can also be used to expropriate outgroups. Heterogenous societies may be inefficient because minorities, rather than free-riders, are expropriated. Even if this is not so, groups’ different beliefs about the reasons for expropriation may make the threat of punishment less effective at preventing free-riding. We illustrate our theory with evidence from California mining camps, contemporary India, and US schools. In a public goods experiment using minimal groups and a profitable punishment institution, outgroups were more likely to be punished, and reacted differently to punishment than ingroup members.
    Keywords: Group Coercion, Social Heterogeneity
    Date: 2015
  3. By: Tjaša Bjedov (Université de Lyon, F-69007, France; CNRS, GATE Lyon St Etienne, 93, Chemin des Mouilles, F-69130, Ecully, France; University of Fribourg, Bd de Pérolles 90 CH-1700 Fribourg, Switzerland); Thierry Madiès (University of Fribourg, Bd de Pérolles 90 CH-1700 Fribourg, Switzerland); Marie Claire Villeval (Université de Lyon, F-69007, France; CNRS, GATE Lyon St Etienne, 93, Chemin des Mouilles, F-69130, Ecully, France)
    Abstract: We study the impact of communication on behavior in a two-stage coordination game with asymmetric payoffs. We test experimentally whether individuals can avoid a head-to-head confrontation by means of coordinated strategies. In particular we analyze whether and how quickly a conflict-avoidance take-turn strategy can emerge. First, our results show that players learn to solve the conflict by choosing opposite options at both stages of the game. Second, many adopt a take-turn strategy to sustain coordination over time and alleviate the inequality induced by the asymmetry of payoffs. Third, communication increases the likelihood of conflict resolution even when a single pair member has the right to communicate.
    Keywords: Coordination, communication, turn taking, conflict, experiment
    JEL: C91 D74 L15 H71
    Date: 2015
  4. By: Chung, Hui-Kuan ; Glimcher, Paul; Tymula, Agnieszka 
    Abstract: Prospect Theory (Kahneman and Tversky 1979), one of the most prominent models for valuation of goods and money, presumes that people have convex utility over gains and concave utility over losses; a discontinuity at something like the current wealth level or reference point. This reflects a behavioral pattern confirmed in hundreds of experimental studies where in lottery tasks people show decreasing marginal utility over gains (risk aversion) and increasing marginal utility (risk seeking) over losses relative to this ?reference?. Although it is widely assumed that a reference point is also required to describe riskless choices made over bundles of goods, there is less empirical evidence for this claim. In this paper, using incentive-compatible experimental methods, we challenge the generality of this assumption. We find that in riskless choice over bundles of goods in a canonical budget set experiment, gain-loss asymmetries are not observed even while in interleaved lottery tasks the reference point is observed, in the same subjects. Our results suggest a discontinuity between the value functions inferred from choices over standard lotteries and the utility functions inferred from indifference curves in riskless choice.
    Keywords: Indifference curve, Riskless Choice, Reflection effect; Reference point; Losses
    Date: 2015–04
  5. By: Rachel Griffith; Sarah Smith; Stephanie von Hinke Kessler Scholder
    Abstract: We compare the effects of economic incentives with a “nudge” (a policy intervention that aims to influence behaviour through changing the “choice architecture”) in relation to improving dietary choices. We study a large-scale, nationally-implemented policy – the UK Healthy Start Scheme – that aimed to increase fruit and vegetable consumption. The policy combined standard economic incentives with elements of nudge, the most important of which is a potential labelling effect. We show that the scheme was successful; the estimated intention to treat effect indicates that spending on fruit and vegetables increased by 15 per cent, or roughly two-thirds of a portion per household per day. The response can be attributed entirely to the economic incentive effects; there is no evidence of any effect from the nudge aspects of the policy.
    Keywords: dietary choices; nudge policies; targeted benefits
    JEL: D12 I18
    Date: 2014–06
  6. By: Thomas, Deckers; Armin, Falk; Fabian, Kosse; Hannah, Schildberg-Hörisch
    Abstract: We show that socio-economic status (SES) is a powerful predictor of many facets of a child's personality. The facets of personality we investigate encompass time preferences, risk preferences, and altruism, as well as crystallized and fluid IQ. We measure a family's SES by the mother's and father's average years of education and household income. Our results show that children from families with higher SES are more patient, tend to be more altruistic and less likely to be risk seeking, and score higher on IQ tests. We also discuss potential pathways through which SES could affect the formation of a child's personality by documenting that many dimensions of a child's environment differ systematically by SES: parenting style, quantity and quality of time parents spend with their children, the mother's IQ and economic preferences, a child's initial conditions at birth, and family structure. Finally, we use panel data to show that the relationship between SES and personality is fairly stable over time at age 7 to 10. Personality profiles that vary systematically with SES might offer an explanation for social immobility.
    Keywords: personality; human capital; risk preferences; time preferences; altruism; experiments with children; origins of preferences; social immobility; socio-economic status
    JEL: C90 D64 D90 D81 J13 J24 J62
    Date: 2015–04–13
  7. By: Michael Sanders; David Reinstein
    Abstract: Giving has been shown by many studies to be a social phenomenon. However, while people may desire to conform to the donation of others, it is unclear how fundraisers should take advantage of this. In this paper we conduct a field experiment in a workplace, in which employees are sent prominent messages from a colleague who is already a donor. We find that signups for workplace giving more than double when a picture of the existing donor is displayed, relative to a message without a picture.
    Keywords: Fundraising, charitable giving, peer effects; donations
    JEL: C93 D03 D64
    Date: 2014–05
  8. By: Michael Sanders; Elspeth Kirkman
    Abstract: Finding a job, especially in a recovering economy, is challenging and success is reliant upon effective job-search activity. Jobseekers Allowance (JSA) welfare benefit claimants in the United Kingdom have many competing options available to them in terms of how they direct their efforts in looking for work. Often it is hard to determine which is most productive. Unsurprisingly, Jobcentres – the organisations that support JSA claimants during their unemployment – themselves have very strong links to the labour market. For example, they are often invited to run recruitment events in direct partnership with large employers seeking to hire in bulk. At Bedford Jobcentre, we observe that, despite the relatively high likelihood of gaining work from attending such events, jobseeker attendance rates are still low and, instead, we can only assume that jobseekers may be taking part in less productive work search activities.
    Date: 2014–12
  9. By: Tugce Cuhadaroglu (School of Economics and Finance, University of St Andrews)
    Abstract: Interaction, the act of mutual influence between two or more individuals, is an essential part of daily life and economic decisions. Yet, micro-foundations of interaction are unexplored. This paper presents a first attempt to this purpose. We study a decision procedure for interacting agents. According to our model, interaction occurs since individuals seek influence for those issues that they cannot solve on their own. Following a choice-theoretic approach, we provide simple properties that aid to detect interacting individuals. In this case, revealed preference analysis not only grants the underlying preferences but also the influence acquired. Our baseline model is based on two interacting individuals, though we extend the analysis to multi-individual environments.
    Keywords: Interaction; Social Influence; Boundedly Rational Decision Making; Two Stage Maximization; Incomplete Preferences
    JEL: D01 D03 D11
    Date: 2015–04–07
  10. By: Novarese, Marco; Di Giovinazzo, Viviana
    Abstract: In this paper we use data generated within an electronic learning environment to explore the relationship between procrastination and academic performance. Our findings suggest that while procrastinators do obtain lower marks, they show the same cognitive capabilities and the same level of confidence in their knowledge as non-procrastinating students. The results also show that students are, at least in part, aware of their tendency to delay, when they choose to postpone their task, but that delayed deadlines do not improve performance. The tendency to procrastinate is more likely a behavioural tendency than a rational choice reflecting a study strategy.
    Keywords: procrastination; academic performance; cognitive capabilities; self-confidence
    JEL: A2 B4 D03
    Date: 2015–04

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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