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on Cognitive and Behavioural Economics |
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Issue of 2015‒09‒05
fifteen papers chosen by Marco Novarese Università degli Studi del Piemonte Orientale “Amedeo Avogadro” |
| By: | Brown, Sarah (University of Sheffield); Taylor, Karl (University of Sheffield) |
| Abstract: | This paper investigates the association between personality traits and charitable behaviour, namely donations of time and money, using data from Understanding Society, the most recent large scale UK household longitudinal survey. Due to the censored nature of the outcome variables, i.e. some individuals do not engage in charitable behaviour, we employ censored quantile regression models. Personality traits are classified according to the 'Big Five' taxonomy: openness to experience; conscientiousness; extraversion; agreeableness; and neuroticism. The quantile approach allows us to explore the effect of personality traits across the entire distribution of charitable behaviour rather than just at the mean, which has generally been the case in the existing literature. In general, after conditioning on an extensive set of controls, conscientiousness and neuroticism are found to be inversely related to donating time and money, whilst openness to experience, which has a positive effect, is the dominant trait in terms of magnitude. Interestingly, personality traits are found to have a stronger association with donations of time and money at the extreme points of the distribution of donations relative to that at the median, thereby highlighting the additional information revealed by quantile approach. |
| Keywords: | censored quantile regression, charitable donations, personality traits, volunteering |
| JEL: | C24 D03 H41 N3 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9318&r=all |
| By: | Jung, Seeun (ESSEC Business School and THEMA); Vranceanu, Radu (ESSEC Business School and THEMA) |
| Abstract: | The paper reports results from an Ultimatum Game experiment with asymmetric information where Proposers can send to Responders misleading information about their endowment. We allow for all possible gender combinations in the Proposer-Responder pairs. Proposer messages that underestimate the actual amount are quite widespread. The frequency of lying is slightly higher in mixed groups. Conditional on lying, men tend to state bigger lies than women. On the other hand, women tend to tell smaller lies when paired with men, than when paired with women. In general, women present higher acceptance rates than men. |
| Keywords: | Gender studies; Ultimatum Game; Asymmetric information; Lies; Extensive vs. intensive margin |
| JEL: | C72 C91 D83 J16 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:essewp:dr-15014&r=all |
| By: | Kelman, Steven (Harvard University); Sanders, Ronald (Booz Allen Hamilton); Pandit, Gayatri (Booz Allen Hamilton); Taylor, Sarah (Booz Allen Hamilton) |
| Abstract: | Senior government executives make many decisions, not-infrequently difficult ones. Cognitive limitations and biases preclude individuals from making fully value-maximizing choices. It has been suggested that, done properly, involving advisors or other outside information sources can compensate for individual-level limitations. However, the "groupthink" tradition has highlighted ways group-aided decision-making can fail to live up to its potential. Out of this literature has emerged a paradigm Janis calls "vigilant problem-solving." For this paper, we interviewed twenty heads of subcabinet-level organizations in the U.S. federal government, asking each questions about how they made important decisions. Ten were nominated by "good-government" experts as ones doing an outstanding job improving the organization's performance, ten chosen at random. Our research question was to see whether there were significant differences in how members of those two groups made decisions, specifically, to what extent executives in the two categories used a "vigilant" decision-making process. We found, however, that similarities between the two groups of executives overwhelmed differences: at least as best as we were able to measure it, decision-making by U.S. subcabinet executives tracks vigilant decision-making recommendations fairly closely. The similarity suggests a common style of senior-level decision-making in the U.S. federal government, which we suggest grows out of a government bureaucracy's methodical culture. We did, however, develop evidence for a difference between outstanding executives and others on another dimension of decision-making style. Outstanding executives valued decisiveness in decision-making--a "bias for action"--more than controls. Perhaps, then, what distinguishes outstanding executives from others is not vigilance but decisiveness. Contrary to the implications of the groupthink literature, the danger in government may be "paralysis by analysis" as much or more than groupthink. |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp14-039&r=all |
| By: | Chaning Jang (Princeton University, Department of Psychology); John Lynham (University of Hawaii at Manoa, Department of Economics) |
| Abstract: | Where do preferences for fairness come from? We use a unique field setting to test for a spillover of sharing norms from the workplace to a laboratory experiment. Fishermen working in teams receive random income shocks (catching fish) that they must regularly divide among themselves. We demonstrate a clear correlation between sharing norms in the field and sharing norms in the lab. Furthermore, the spillover effect is stronger for fishermen who have been exposed to a sharing norm for longer, suggesting that our findings are not driven by selection effects. Our results are consistent with the hypothesis that work environments shape social preferences. |
| JEL: | Q2 C9 C7 B4 D1 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201511&r=all |
| By: | James Alm (Department of Economics, Tulane University); Kim M. Bloomquist (Office of Research, U.S. Internal Revenue Service); Michael McKee (Department of Economics, Appalachian State University) |
| Abstract: | An essential issue for laboratory experiments to inform policy debates is the "external validity" of the experimental results; that is, does behavior in the laboratory apply to behavior that occurs in the naturally occurring world? We examine this issue of external validity in the specific context of laboratory experiments on tax compliance, using two different types of evidence. We find that the behavioral patterns of subjects in the laboratory conform to that of individuals making a similar decision in naturally occurring settings. We also find that the behavioral responses of students are largely the same as non-students in identical experiments. |
| Keywords: | marriage, experimental methods, external validity, tax compliance |
| JEL: | H2 H26 C9 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1512&r=all |
| By: | Rogers, Todd (Harvard University); Moore, Don A. (University of CA, Berkeley) |
| Abstract: | Should political campaigns in close races communicate that they may win (over-confidence) or that they may lose (under-confidence)? In six studies (three survey experiments, two field experiments, and one archival study) we demonstrate the motivating power of under-confidence. While uncommitted voters show bandwagon effects (prefer candidates who are barely winning as opposed to barely losing), supporters show the opposite (greater motivation when their preferred candidate is barely losing as opposed to barely winning). Two fundraising email field experiments (1M+ observations) show a large effect size: emphasizing polls that show that a preferred candidate was barely losing raised 55% more than emphasizing polls that show that he was barely winning. The 2012 Obama and Romney campaigns' emails reflect this insight: they were more likely to send emails reporting that they were barely losing than that they were barely winning. Sometimes leaders are more effective appearing under-confident rather than over-confident. |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp14-047&r=all |
| By: | James Alm (Department of Economics, Tulane University) |
| Keywords: | tax evasion, behavioral economics, experimental economics |
| JEL: | H2 H26 D03 C9 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1509&r=all |
| By: | Fuhai HONG (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332); Xiaojian ZHAO (Department of Economics, Hong Kong University of Science and Technology, Hong Kong) |
| Abstract: | Building on an intra-personal self-signaling game, the paper pro- vides an economic model to show that the sunk cost effect may stem from an attempt to overcome the under-investment problem associ- ated with present bias. The current self may take a costly action (which is a sunk cost for the future self) to signal the individual's ability that motivates his future self-disciplining behaviors. In equi- librium, a higher level of sunk cost gives rise to a higher probability for the individual to continue the project. |
| Keywords: | Present bias, signaling, sunk cost fallacy, limited memory. |
| JEL: | D03 D83 Z13 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:nan:wpaper:1503&r=all |
| By: | Rogers, Todd (Harvard University); Zeckhauser, Richard (Harvard University); Gino, Francesco (Harvard University); Schweitzer, Maurice (University of PA); Norton, Mike (Harvard University) |
| Abstract: | We document a common type of deception in interpersonal contexts: paltering, the active use of truthful statements to convey a mistaken impression. Paltering is distinct from lies of commission in that it involves only truthful statements. It is distinct from lies of omission in that it involves actively misleading targets rather than passively omitting to share relevant information. A pilot study reveals that paltering is a common negotiation tactic. Six experiments demonstrate that paltering in negotiation can help palterers claim value, but can also increase the likelihood of impasse and harm palterers' reputations. Indeed, targets perceive paltering as the ethical equivalent of making false statements. At the same time, palterers--and outside observers--perceive paltering as more ethical than targets do. We add to the growing literature examining the antecedents and consequences of deception, demonstrating the prevalence and consequences of paltering in negotiation. |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp14-045&r=all |
| By: | Gill, David (University of Oxford); Kissová, Zdenka (PricewaterhouseCoopers LLP); Lee, Jaesun (Cornell University); Prowse, Victoria L. (Cornell University) |
| Abstract: | Rank-order relative-performance evaluation, in which pay, promotion and symbolic awards depend on the rank of workers in the distribution of performance, is ubiquitous. Whenever firms use rank-order relative-performance evaluation, workers receive feedback about their rank. Using a real-effort experiment, we aim to discover whether workers respond to the specific rank that they achieve. In particular, we leverage random variation in the allocation of rank among subjects who exerted the same effort to obtain a causal estimate of the rank response function that describes how effort provision responds to the content of rank-order feedback. We find that the rank response function is U-shaped. Subjects exhibit 'first-place loving' and 'last-place loathing', that is subjects increase their effort the most after being ranked first or last. We discuss implications of our findings for the optimal design of firms' performance feedback policies, workplace organizational structures and incentives schemes. |
| Keywords: | relative performance evaluation, relative performance feedback, rank order feedback, dynamic effort provision, real effort experiment, flat wage, fixed wage, taste for rank, status seeking, social esteem, self esteem, public feedback, private feedback |
| JEL: | C23 C91 J22 M12 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9286&r=all |
| By: | Kelman, Steven (Harvard University); Sanders, Ronald (Booz Allen Hamilton); Pandit, Gayatri (Booz Allen Hamilton); Taylor, Sarah (Booz Allen Hamilton) |
| Abstract: | Senior government executives make many decisions, not-infrequently difficult ones. Cognitive limitations and biases preclude individuals from making fully value-maximizing choices. And the "groupthink" tradition has highlighted ways group-aided decision-making can fail to live up to its potential. Out of this literature has emerged a prescriptive paradigm Janis calls "vigilant decision-making" For this paper, we interviewed twenty heads of subcabinet-level organizations in the U.S. federal government, asking each questions about how they made important decisions. Ten were nominated by "good-government" experts as ones doing an outstanding job improving the organization's performance, ten chosen at random. The vigilant decision-making approach is designed for difficult decisions, presumed to be informationally, technically, or politically complex. However, we found that when we asked these executives to discuss their most difficult decision, most identified decisions that were not informationally complex but instead mainly required courage to make. In this context, the vigilant decision-making paradigm might be more problematic than the literature suggests. We discuss here the different demands for decisions involving complexity and those involving courage, and suggest a contingency model of good decision-making processes that requires executives and advisors to be ambidextrous in their approaches. |
| Date: | 2014–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp14-040&r=all |
| By: | Acharya, Avidit (Stanford University); Blackwell, Matthew (Harvard University); Sen, Maya (Harvard University) |
| Abstract: | The standard approach in positive political theory posits that action choices are the consequences of attitudes. Could it be, however, that an individual's actions also affect her fundamental preferences? We present a broad theoretical framework that captures the simple, yet powerful, intuition that actions frequently alter attitudes as individuals seek to minimize cognitive dissonance. This framework is particularly appropriate for the study of political attitudes and enables political scientists to formally address questions that have remained inadequately answered by conventional rational choice approaches--questions such as "What are the origins of partisanship?" and "What drives ethnic and racial hatred?" We illustrate our ideas with three examples from the literature: (1) how partisanship emerges naturally in a two party system despite policy being multidimensional, (2) how ethnic or racial hostility increases after acts of violence, and (3) how interactions with people who express different views can lead to empathetic changes in political positions. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp15-026&r=all |
| By: | Wendy Janssens (VU University Amsterdam, the Netherlands.); Berber Kramer (International Food Policy Research Institute (IFPRI), United States); Lisette Swart (VU University Amsterdam,the Netherlands) |
| Abstract: | Most evidence of hyperbolic discounting is based on violations of either stationarity or time consistency as observed in choice experiments. These choice reversals may however also result from time-varying discount rates. Hyperbolic discounting is a plausible explanation for choice reversals only if violations of stationarity and time consistency overlap. Our field experiment examines the extent to which this is the case. At different points in time, the same participants allocated a future gift over sooner-smaller and later-larger rewards with varying front-end delays. We find that most violations of time consistency do not coincide with violations of stationarity. This is surprisingly similar to what an earlier experiment on stationarity, time invariance and time consistency finds using a different design among a different type of participants (Halevy, Econometrica , 2015). Random noise in decision-making alone does not explain this finding, given that we find a significant association between changes in household wealth and violations of stationarity and time consistency. We conclude that when incomes fluctuate, one can only identify hyperbolic discounting by eliciting violations of both stationarity and time consistency through a longitudinal design for the same subject pool. |
| Keywords: | Time preferences; present bias; temporal stability |
| JEL: | C93 D03 D14 D90 G02 |
| Date: | 2015–08–14 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150097&r=all |
| By: | Schniter, Eric; Sheremeta, Roman; Shields, Timothy |
| Abstract: | We observed reports of conflicted (concurrent positive and negative) emotions activated after interactions in the Trust game. Our analyses reveal that activation of 20 emotional states following trust-based interaction is better explained by predictions derived from a multi-dimensional Recalibrational perspective than by predictions derived from two-dimensional Valence and Arousal perspectives. The Recalibrational perspective proposes that emotions are activated according to their functional features – for example, emotions help people achieve short or long-sighted goals by up or down-regulating behavioral propensities, whereas Valence and Arousal perspectives consider simpler hedonic dimensions lacking functional specificity. The Recalibrational perspective is also distinguished from the Valence and Arousal perspectives in that it predicts the possibility of conflicted emotions. We discuss the theoretical implications of having conflicted goals and the economic implications of having conflicted emotions. |
| Keywords: | emotion, affect valence, Recalibrational theory, intrapsychic conflict, Trust game |
| JEL: | C73 C91 D87 |
| Date: | 2015–08–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:66154&r=all |
| By: | Seeun Jung (ESSEC Business School - Essec Business School, Thema, Université de Cergy-Pontoise - THEMA - Théorie économique, modélisation et applications - Université de Cergy Pontoise - CNRS); Radu Vranceanu (Thema, Université de Cergy-Pontoise - THEMA - Théorie économique, modélisation et applications - Université de Cergy Pontoise - CNRS, ESSEC - ESSEC Business School - Essec Business School - Economics Department - Essec Business School) |
| Abstract: | The paper reports results from an Ultimatum Game experiment with asymmetric information where Proposers can send to Responders misleading information about their endowment. We allow for all possible gender combinations in the Proposer-Responder pairs. Proposer messages that underestimate the actual amount are quite widespread. The frequency of lying is slightly higher in mixed groups. Conditional on lying, men tend to state bigger lies than women. On the other hand, women tend to tell smaller lies when paired with men, than when paired with women. In general, women present higher acceptance rates than men. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01184964&r=all |