nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2015‒05‒22
eight papers chosen by
Marco Novarese
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Cooperation and Discrimination Within and Across Language Borders: Evidence from Children in a Bilingual City By Angerer, Silvia; Glätzle-Rützler, Daniela; Lergetporer, Philipp; Sutter, Matthias
  2. Do Professionals Get It Right? Limited Attention and Risk-Taking Behavior By Foellmi, Reto; Legge, Stefan; Schmid, Lukas
  3. Combining "Real Effort" with Induced Effort Costs: The Ball-Catching Task By Gächter, Simon; Huang, Lingbo; Sefton, Martin
  4. Take a Risk - Social Interaction, Gender Identity, and the Role of Family Ties in Financial Decision-Making By Zetterdahl, Emma
  5. Strategic behaviour in Schelling dynamics: Theory and experimental evidence By Juan M. Benito-Ostolaza; Pablo Brañas-Garza; Penélope Hern´andez
  6. Risk Perception in an Arab Country By Adel Al Khattab
  7. Can providing a morning healthy snack help to reduce hunger during school time? Experimental evidence from an elementary school in Connecticut By Castellari, Elena; Berning, Joshua
  8. Re-Imagining Accountability in K-12 Education: A Behavioral Science Perspective By Brian P. Gill; Jennifer S. Lerner; Paul Meosky

  1. By: Angerer, Silvia (IHS Carinthia); Glätzle-Rützler, Daniela (University of Innsbruck); Lergetporer, Philipp (Ifo Institute for Economic Research); Sutter, Matthias (University of Cologne)
    Abstract: We present experimental evidence from a bilingual city in Northern Italy on whether the language spoken by a partner in a prisoner's dilemma game affects behavior and leads to discrimination. Running a framed field experiment with 828 six- to eleven-year old primary school children in the city of Meran, we find that cooperation generally increases with age, but that the gap between cooperation among in-group members and cooperation towards children speaking another language is considerable and increasing with age. This gap is due to both, in-group favoritism and language group discrimination.
    Keywords: cooperation, discrimination, language, children, experiment
    JEL: C91 C93 D03
    Date: 2015–05
  2. By: Foellmi, Reto; Legge, Stefan; Schmid, Lukas
    Abstract: Does information processing affect individual risk-taking behavior? In this paper, we provide evidence that professional athletes suffer from a left-digit bias when dealing with signals about differences in performance. Using data from the highly competitive field of World Cup alpine skiing for the period of 1992-2014, we show that athletes misinterpret actual differences in race times by focusing on the leftmost digit, resulting in increased risk-taking behavior. For the estimation of causal effects, we exploit the fact that tiny time differences can be attributed to random shocks. We link our findings to prior research in psychology and economics, suggesting that different ways of information processing can explain our results. In contrast to recent studies in the field of behavioral economics, we then argue that high stakes and individual experience can magnify behavioral biases.
    Keywords: Risk Taking, Limited Attention, Left-Digit Bias
    JEL: D03 D81 D83 L83
    Date: 2015–05
  3. By: Gächter, Simon (University of Nottingham); Huang, Lingbo (University of Nottingham); Sefton, Martin (University of Nottingham)
    Abstract: We introduce the "ball-catching task", a novel computerized real effort task, which combines “real” efforts with induced material cost of effort. The central feature of the ball-catching task is that it allows researchers to manipulate the cost of effort function as well as the production function, which permits quantitative predictions on effort provision. In an experiment with piece-rate incentives we find that the comparative static and the point predictions on effort provision are remarkably accurate. We also present experimental findings from three classic experiments, namely, team production, gift exchange and tournament, using the task. All of the results are closely in line with the stylized facts from experiments using purely induced values. We conclude that the ball-catching task combines the advantages of real effort with induced values, which is useful for theory-testing purposes as well as for applications.
    Keywords: experimental design, real effort task, induced values, incentives, piece-rate theory, team incentives, gift exchange, tournaments, online real effort experiments
    JEL: C91 C92 J41
    Date: 2015–05
  4. By: Zetterdahl, Emma (Department of Economics, Umeå School of Business and Economics)
    Abstract: This thesis consists of an introductory part and four self-contained papers related to individual financial behavior and risk-taking in financial markets. <p> In Paper [I] we estimate within-family and community social interaction effects upon an individual’s stock market entry, participation, and exit decision. Interestingly, community sentiment towards the stock market (based on portfolio outcomes in the community) does not influence individuals’ likelihood to enter, while a positive sentiment increases (decreases) the likelihood of participation (exit). Overall, the results stress the importance of accounting for family social influence and highlight potentially important differences between family and community effects in individuals’ stock market participation. <p> In Paper [II] novel evidence is provided indicating that the influence from family (parents and partners) and peer social interaction on individuals’ stock market participation vary over different types of individuals. Results imply that individuals’ exposure to, and valuation of, stock market related social signals are of importance and thus, contribute to the understanding of the heterogeneous influence of social interaction. Overall, the results are interesting and enhance the understanding of the underlying mechanisms of social interaction on individuals’ financial decision making. <p> In Paper [III] the impact of divorce ­­­on individual financial behavior is empirically examined in a dynamic setting. Evidence that divorcing individuals increase their saving rates before the divorce is presented. This may be seen as a response to the increase in background risk that divorce produces. After the divorce, a negative divorce effect on individual saving rates and risky asset shares are established, which may lead to disparities in wealth accumulation possibilities between married and divorced. Women are, on average, shown to not adjust their precautionary savings to the same extent as men before the divorce. I also provide tentative evidence that women reduce their financial risk-taking more than men after a divorce, which could be a result of inequalities in financial positions or an adjustment towards individual preferences. <p> Paper [IV] provides novel empirical evidence that gender identity is of importance for individuals’ financial risk-taking. Specifically, by use of matching and by dividing male and females into those with “traditional” versus “nontraditional” gender identities, comparison of average risk-taking between groupings indicate that over a third (about 35-40%) of the identified total gender risk differential is explained by differences in gender identities. Results further indicate that risky financial market participation is 19 percentage points higher in groups of women with nontraditional, compared with traditional, gender identities. The results, obtained while conditioning upon a vast number of controls, are robust towards a large number of alternative explanations and indicate that some individuals (mainly women) partly are fostered by society, through identity formation and socially constructed norms, to a relatively lower financial risk-taking.
    Keywords: Asset allocation; Behavioral finance; Divorce; Financial literacy; Financial risk-taking; Gender identity; Household finance; Panel data; Asset allocation; Behavioral finance; Divorce; Financial literacy; Financial risk-taking; Gender identity; Household finance; Panel data; Propensity score matching; Risky asset share; Risk aversion; Saving behavior; Stock market participation; Social interaction; Trust
    JEL: D01 D03 D14 D14 D83 G02 G11 J12 J16
    Date: 2015–05–13
  5. By: Juan M. Benito-Ostolaza (Departamento de Econom´ıa.Universidad P´ublica de Navarra, Campus Arrosadia s/n. 31006 Pamplona. Navarra. Spain.); Pablo Brañas-Garza (Middlesex University London, Business School, London NW4 4BT, England.); Penélope Hern´andez (Departamento de An´alisis Econ´omico y ERI-CES, Facultad de Econom´ıa. Avda. dels Tarongers, s/n. 46022 Valencia. Spain.; ERI-CES and Department of Applied Economics II, University of Valencia. Facultad de Economía. Avenida dels Tarongers s/n, 46022 Valencia, Spain.)
    Abstract: In this paper we experimentally test Schelling’s (1971) segregation model and confirm the striking result of segregation. In addition, we extend Schelling’s model theoretically by adding strategic behaviour and moving costs. We obtain a unique subgame perfect equilibrium in which rational agents facing moving costs may find it optimal not to move (anticipating other participants’ movements). This equilibrium is far from full segregation. We run experiments for this extended Schelling model, and find that the percentage of full segregated societies notably decreases with the cost of moving and that the degree of segregation depends on the distribution of strategic subjects.
    Keywords: Subgame perfect equilibrium, segregation, experimental games
    JEL: C72 C9 R23
    Date: 2015–05
  6. By: Adel Al Khattab (Al Hussein Bin Talal University)
    Abstract: The main aim of this paper is to examine risk perception in transport among a representative sample of the Jordanian public.The results are based on a questionnaire surveys carried out among a representative sample of the Jordanian public in 2013. The results showed that transport risks fell into two main categories: public and private mode of transport. Respondents assessed the probability of experiencing risk as lower for themselves than others, and they were also more worried about others experiencing a transport threat.Overall, worry was found to be the most important predictor of risk perception. Female subjects were found to emphasize worry in regard to both public and private transportation. Worry was found to be most important in regard to public transportation whereas probability assessments (i.e. cognitive evaluations) were found to be most important in regard to private mode of transport. This difference may guide how risk is communicated to the public.
    Keywords: Risk perception, Transport, Jordan.
    JEL: M16
  7. By: Castellari, Elena; Berning, Joshua
    Keywords: Food Consumption/Nutrition/Food Safety, Health Economics and Policy,
    Date: 2015–03
  8. By: Brian P. Gill; Jennifer S. Lerner; Paul Meosky
    Abstract: Since the passage of the No Child Left Behind Act (NCLB) over a decade ago, the primary lever that American policymakers have used to improve K-12 school performance is “accountability.â€
    Keywords: Accountability, K-12, Education, Behavioral Science Perspective
    JEL: I
    Date: 2015–05–13

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